Featured in the July 2009 issue of Franchising World
It’s a jungle out there
Franchises are proliferating (more than 3,000 at last count), and so are the channels through which they are attempting to reach their franchisee prospects and consumer customers. As of last month, there were 186 million active Web sites trying to attract the 1.5 billion online users, all of whom are fighting to be at the top of Google’s search results. No small task considering there are 2.5 billion searches every day.
With increased competition and complexity comes increased pressure to reduce price and increase quality standards – good news for consumers but challenging for franchise systems trying to sustain a business model that delivers good margins for their franchisees. Add to that an economic downturn and all businesses are searching for ways to differentiate themselves and retain and grow their customer base.
Your service can set you apart
You don’t have to be Nordstrom to develop and retain loyal clientele on the basis of your outstanding service. In a franchise system that means you have to not only set service standards, but also have a way of measuring how well they are executed. The TWO MEN AND A TRUCK® franchise system is rated the No. 1 moving company in the country for customer satisfaction by J.D. Power and Associates. Despite its local, downhome image, it is totally buttoned-up when it comes to customer service. TWO MEN’S focus on professional service helps differentiate the company from competitors and supports a higher price point and higher margins for its franchisees. The outside third-party endorsement validates its claim.
Listen to your customers but lead with your heart
By now everyone should understand the importance of listening to the voice of the customer. Customer research can help you diagnose how you are doing, identify and evaluate new opportunities and sell in programs to your system. But don’t fall into the trap of relying on research for all the answers or provide the vision for your brand. That has to come from inside the organization.
Think about it. If all your competitors are asking their customers (and yours) the same questions, and receiving and acting on the same answers, pretty soon you will all be delivering the same services and making the same claims–a kind of brand convergence. If you audit a competitor’s claims as part of your brand definition process, you will probably find your competitive matrix is filled with the exact same claims from one competitor to another. Everyone claims great quality, great service, exceptional products, great taste, “yada, yada, yada.” If you want to be different, if you want to be a “Passion Brand” that can command higher prices and customer loyalty, you need strong founding values and a core belief that unifies your system around a sense of purpose and attracts like-minded franchisees and consumers.
Ben & Jerry’s is a great example. Check out its Web site at www.benjerry.com . This is not cause-related marketing. These are core beliefs that are integrated into the fabric of the company’s brand. They are reflected in a three-part mission, the products created and the openness with which Ben & Jerry’s interacts with consumers. It gives the company personality, 500,000 fans on Facebook and creative license to create a topical product like “Yes Pecan” in support of now-President Obama during the 2008 campaign.
Granted, not everyone can be Ben & Jerry’s, but all brands should have a “raison d’être,” a reason for being that is about more than making money. Find it, talk about it, and share it internally and with your customers. Openness, transparency and authenticity are the watch-words for the current decade. (Two really great books on the subject that you might want to check out are “The Open Brand” by Kelly Mooney and Dr. Nita Rollins; and “Creating Passion Brands” by Helen Edwards and Derek Day.)
What’s your passion?
So, how do you find your passion point, brand essence or unique selling proposition that is going to set you apart? Typically it involves a thorough analysis of your company, your customers and your marketplace. Very often, like Ben & Jerry’s or TWO MEN AND A TRUCK it can be found in the values of the founders. Sometimes it is found by looking not at what you do but how you do it and the resulting customer experience that you provide.
The Learning Care Group is an interesting example. A holding company with five different childcare brands, it has grown through acquisition. To date, its strategy has been to retain the individual brand identities as some compete with each other in the market. The company’s challenge was to reposition and re-brand each one so they were distinct but related to the family. The company discovered there really were significant differences in the curriculums, their approach to early childhood education and the environment of each school. Identifying their core strengths and customer benefits gave them each a distinct key appeal that resonated with the values and beliefs of the particular mom they wanted to attract.
Sometimes you need to reinvent yourself
Even brands that thought they had their market position figured out are finding that they need to re-examine who they are, what they do and why they are better or different in today’s market. Changing market conditions may require that brands change or innovate to survive and thrive. As the competitors and consumers raise the bar on service and quality standards, brands must continually strive to differentiate themselves. You could certainly debate whether we really need another pizza chain, but consumer tastes and preferences are constantly evolving. It may be surprising that there is room for growth in such a crowded category, but in fact, mature brands continue to evolve while less developed and new brands, such as Marco’s Pizza, Ciao Mambo and Pizza Presto are still able to find new niches in the market.
In the early days, Domino’s Pizza owned the pizza-delivery category and was able to thrive with a keep-it-simple strategy of offering two sizes of pizza, one beverage and guaranteed 30-minute delivery. When competitors Pizza Hut and Papa John’s entered the delivery market, consumers suddenly had a variety of delivered products to choose from and Domino’s went through a period where it lost market share. Then it figured out that the customer wanted product choice and that new product news was a driver of sales in the category. Domino’s also had to figure out how to operationally handle increased complexity and how to be successful promoting products at a lower price points. Today it offers four different crust styles, salads, breadsticks, chips, specialty pizzas, Buffalo wings, hot sandwiches and multiple beverages. Like many fast-food businesses it has had to innovate to stay competitive.
Focusing on customer needs can help overcome resistance to change
It is really important that your franchisees understand that just because they are buying into a proven system today, it doesn’t mean it won’t need to change to meet the needs of the customer tomorrow. Just as Domino’s Pizza franchisees had to learn to make and take new products, they also had to embrace a centralized POS system that today enables customers to order on-line or from their mobile devices anywhere in the country. The competitive benefit of providing convenient customer access and the ability to collectively analyze customer transaction data, ultimately outweighed the perceived benefits of maintaining their own systems. Focusing the system on meeting the needs of the customer helps overcome barriers to adoption of new innovations.
Open and on-going
Your brand is a reflection of the sum total of the experiences and perceptions held by your consumer or customer. And consumers today have a greater ability to directly influence perceptions of your brand than ever before. It is, therefore, imperative that you actively engage with them in conversations about your brand, that you make sure they understand your core values, and feel good about doing business with your company. The more fans you have, the more defenders of your brand you have. When there is a complaint or a problem, it is an opportunity to demonstrate your values and create more advocates. By being open and transparent, by sharing your core belief and values, by telling stories and letting your customers tell your story for you, you make it easier for others to identify with your brand. That goes for franchisees as well as consumers.
Figuring out how to differentiate your brand in today’s increasingly complex and competitive world is not something you can do once and relax. The world is changing too fast. Someone out there is figuring out how to eat your lunch. While the following list summarizes the key points covered in this article, do not think of it as comprehensive or linear. Positioning your brand for competitive success is an on-going process of discovery and reinvention that, hopefully, never ends.
1. Listen to your customers, but lead with your heart.
2. Tell your brand story, what you believe in, why you do what you do.
3. Create a brand personality that people relate to and want to engage with.
4. Make believers out of your franchisees and their front-line staff so they can live the brand.
5. Engage your customers consistently and openly at every possible touch point.
6. Measure your performance and be prepared to embrace change and innovate to stay current and relevant.
7. Return to No. 1.