Are in-store variations in brand affecting your franchise revenue?
Published 2017-04-26

Can being a franchisor deliver on those visions of business growth, bankable, steady income and global expansion? Absolutely. And it doesn’t require an overwhelming, top-down overhaul, total rethink or cause friction for franchisees. Even better: it’s based on something you already have, that’s already built and articulated. Now, all you have to do is refine and streamline.

It’s called your brand equity. And it has a significant affect on your franchise’s total revenue.

Getting paid to be who you are?

There are two parts to branding effects on revenue. Can you get paid to be who you are? Yes. One part of that statement is about who you are — the brand.

The second part is “being paid”. And that relies heavily on customer satisfaction and consistency. For franchises, whether they are service-based, a restaurant/cafe outfit or retail, brand identity depends not only on the product sold but the interactions customers experience in-store.

For all those asking, “Do brand variations in-store really translate to revenue changes?”, let’s just drop this very simple and subtle answer right here:


Why? Because the franchise model inherently depends on multiple outfits. Sometimes, they’re company-owned but, many times, franchisors rely on a franchisee-owned structure and this means relying on your franchisee for more than royalties.

It means that there could be fractures across the board and variations, not only in customer service, but the outfits of physical locations themselves.
For example: a fast-food franchise brand decides to revamp the customer experience, keeps the brand elements the same but has decided to change the meaning of the brand from “fast-food” to “convenient dining experience”.

Alongside this brand revamp, the franchisor and management is focusing on upgrading physical locations with plush couches, fireplaces, a new coffee bar, touch-screen ordering screens and wifi services.

This is known as a “re-imaging” campaign, which more and more restaurants are opting into, whether they’re company- or franchisee-owned. The effort is to “make people more comfortable and maybe linger a bit” and the result is for franchisees to “see a strong return on the investment in hospitality,” says John Betts, president and CEO of McDonald’s Restaurants of Canada Ltd.

If franchisees are responsible for investing the money (and choosing to at all) to make these renovations, however, even providing incentive payouts may not be enough to have individual locations bite. Franchisors can expect revenues to be consistent for “upgraded” locations and flagging for those locations that have not taken part in re-imaging, especially when the contrast between “before and after” is stark.

But these brand variations in physical locations have a very firm and definitive effect on revenue reported.

A study conducted by the management consulting firm Oliver Wyman concluded, “your customers want a consistent in-store experience”.

So let’s take a look at what happens when they don’t experience consistency. Consistent customer experience relies on a linked system of operations. This is because there are several touch-points a customer comes into contact with, while they walk through a physical location.

Roughly cast, these areas are:

  • Offer design, which is the store concept, branding and image design, omni-channel management
  • Site and network operations, which is the on-site interactions: roles, personnel staffing, customer-facing activities, site management, measurement and rewards
  • Offer support, which is made up of all the support activities for the product or service: advertising, promo, CRM, supply chain management, administration and info management and the actual product or service’s pricing and on-going management

Unlocking the value from in-store operations depends on the consistent execution of each of these areas in every location. In fact, Oliver Wyman finds that,

“Effective site operations…yield improvements in the customer experience that fall straight to the bottom line. Consistent execution leads to high customer loyalty, more repeat business, and greater latitude to expand the offer…with turnover rates that are 50% or more below industry norms.”

The numbers will hit you – consider this:

  • Customer count and sales may vary by a factor of three across individual stores
  • Oliver Wyman reports variance in customer experience (i.e. brand management across the three areas noted above), drives 25% to 35% of performance differences
  • Improving store-level operations consistently, yields a high return of investment, resulting in sales increase of 10% or more

A linked operating system

Like our prescribed 4 C’s to franchise success put the customer experience at the very center, so to do in-store operations (that are representative of the overall brand, by the way) have to be linked with the customer-centric focus.

The resulting circuit of operations in each of your brand’s physical locations should look like this:

Three areas of consistency

Yes, advertising and marketing efforts make a big difference in brand recognition but loyalty — which yields such golden eggs as repeat customer revenue and even transforming restaurant customers into shareholders or investors in the brand — hinges on the consistency in these three key areas.

Customer journeys

In the good old days, there was one store-front and one opportunity to affect and interact with a customer.

Now, in the digital age, there are multiple channels of interaction, multiple touch-points where a customer experiences brand messaging, positioning and value, and multiple areas where he or she can vent about the less-than-satisfactory experience they went through.

It’s easier, today, to conceptualize the customer experience, then, not so much as a one-time show or performance or even a consistent event that happens every time they visit.

No. Rather, it’s more like a journey – because there is a flow, from start to finish, multiple intersections and crossroads, opportunities to get lost down a sales funnel or be properly directed based on their actions.

According to McKinsey & Company, consistency in customer journeys is the single-most important overall predictor of overall customer loyalty. “Banks, for example, saw an exceptionally strong correlation between consistency on key customer journeys and overall performance,” says McKinsey.

Emotional consistency

Of course, trust in the franchise brand is a major part of consistency. This includes trust in the fact that each experience will be consistent and the concept will meet customer expectations at every interaction, across locations.

Emotional consistency depends on how reliable a franchise brand can be in its management’s ability to address issues and how empowered on-the-floor, in-store employees are to respond to customer requests for a change in orders, customizations in order or returns and exchanges.

But it also means that there’s an ongoing relationship between the brand and the customer, assuming that the customer will be a repeat.

Promise delivery

A brand is so much more than its constituent images, logos, fonts, campaigns, products, services, messaging, keywords and phrases, and even its customer experience.

Yes, it is an amalgamation of that. But, perhaps more esoterically, brand value can be articulated in the consistency of its promise — that is to say, how often and with what frequency, across all platforms, does it deliver what it purports to value to its customers?

Promise delivery is one of those overlooked areas that requires franchise brands to “walk the talk”, so to speak.

McKinsey & Company points to Progressive Insurance’s perceived promise, which was a part of its identity as well as its competitive edge, of being a company that offers lower rates while also being technologically responsive and savvy.

Here, the promise that is being externally communicated defines what operational and internal realities must exist to align the customer-facing brand with its internal values. Among other things the conceptual know-how and Standard Operating Procedures come in play. For staff to be able to deliver on brand promises they need to have access to information on what that promise means and how to do it. Management need tools to follow up and secure so “things actually get done” the proper way in the right time. Digital platforms with Operations Manuals and digital checklists to drive all those important daily routines will go a long way in synchronizing all outlets with customer exepectations.
How to be brand true

Employees first

Brand truism #1: external images are great (and required). But internal culture absolutely counts. It’s the linchpin between a tepid customer experience and a stellar, transformation performance.

Many franchise brands place a lot of effort in marketing and advertising portions of CRM – the “offer support”, according to the Oliver Wyman study, but they miss out on educating and supporting employees.

According to a recent report by Gallup,

This includes enveloping employees with:

  • Detailed and comprehensive on-boarding support
  • On-going training and upgrading opportunities
  • Clearly articulated channels of opportunity and internal company growth
  • Education and knowledge-based activities, in-store trainings and review periods
  • Transparent and flowing information, no-one should be left in the dark.
  • Extensive (and well-tested) customer scripts and non-verbal interactions and cues
  • Carefully selected candidates for employee positions and a great hiring process that matches brand messaging and culture

In short, brand loyalty, like compliance, is a two-way street. It must come from within if it’s ever going to come from without or be seen as authentic — which is an especially important factor to today’s consumer (who increasingly looks and behaves like a millennial)

 Systems can be sexy

In order to be able to support employees and franchisees, performance systems and streamlined systems of communication are an absolute must.

Especially when franchise operations come under the franchise-owned, rather than company-owned, model and plans for expansion include not just regional but national and global efforts, the challenge to operate as one single unit, across multiple locations, is likewise multiplied.

In short, it can get real messy, real fast.

If you think systems and processes are one of those hard pills you have to swallow and fear that your franchisees see compliance in a similar way, a common internal platform is a solution worth considering.

Your store’s operating system must address four key components in order to be useful in supporting franchisees and their employees as well as translating to customer satisfaction, increased revenue from consistent performance:

  • Role-based communication and strategies
  • Store management policies and practices readily available 24/7
  • Support tools for daily customer facing routines, eg checklists
  • Co-worker feedback and performance transparency

The truth is that gaps in revenues across locations should be a huge warning flag and a focus of senior management to begin a rigorous and critical assessment of whether your internal platforms match your external ambitions.

Cultivating a “media” mindset

Gary Vaynerchuk said it first,
 folks: in this day and age, we’re all media companies.

It’s an interesting way to look at content that is being put out there. But the story becomes even more interesting when brands that have nothing to do with the media – those, like franchise brands, that simply harness media marketing – start to reconfigure themselves based on this idea.

Now, this doesn’t need to be as extensive as having media affect operational decisions and details. But it does mean that there should be an awareness and a mindset embraced that visibility and transparency are more important than ever before. Developing a “media” mindset goes past simple press releases or write-ups. It means that in-store promotional events, across locations, should occur consistently, according to an “editorial calendar” of sorts.

This means that customers always have the opportunity to benefit from a sale going on at their location. Examples of franchise outfits that nail this idea are pizza franchises that always have a “walk-in special” or “weekly promo” for delivery.

This requires advance planning from franchisors, who must zero in on more than just seasonal shifts (the holiday season, for example) and move to consistency in promo, almost as though they are “publishing” the brand. It also means testing new opportunities for market expansion. Especially as more and more of the buying power rests in the hands of millennials, who express different desires (and desire differently) than their other generational counterparts, franchise brands would do well with testing expansion into newer markets.

This might look like a franchised coffee brand offering more than simply signature beans or accompanied food but being willing to expand into branded products and community classes.

Stop storytelling like it’s 2007

There’s no doubt that customer satisfaction and experience hinges upon brand alignment, value and promise. And this has a huge impact on revenue earned across physical locations. The good news is that, if you want to experience consistency in your brand’s bottom line and create noticeable impact on revenue numbers, the first thing you must address is internal operations.

There’s no need to make big capital gains, perform massive re-imagining campaigns and upgrades. In fact, there’s no point in doing any of these cosmetic changes without first supporting employees or introducing a streamlined, internal communication platform first.

Yes, your customers notice brand variations in-store. And they’re rewarding you with their wallets — or not!


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