Mystery (Shopping) Revealed: Some Improvements Found, But More Work Is Needed

"Mystery shopper": two words that strike fear in the hearts of franchisors with poorly managed sales departments and weak sales processes. But for those on top of their development game, who always have a finger on the pulse of their sales team, it's simply a validation of what they already know.

To provide franchisors with data they can use to benchmark and improve their sales operation, Franchise Update Media Group conducts an annual mystery shopping survey in conjunction with its annual Leadership & Development Conference held each fall. Every franchise organization that registers for the annual conference by the cut-off date is eligible to be part of the research that year.

That's when our mystery shoppers, posing as qualified prospects, go to work--making phone inquiries and filling out application forms on franchisor websites. Using a set of standardized evaluation criteria, they record the follow-up responses, which are compiled, analyzed, and presented at the annual conference. The results also are included in our Annual Franchise Development Report (click here for ordering information).

The annual exercise is a chance to take the pulse of a representative sample of franchisors to discover where they are doing well and, unfortunately in many cases, where they're not doing so well--and in the worst cases, not responding to qualified leads at all. The good news is they can use the results to learn where they need to improve, and begin immediately.

How they do it

In the website category, Franchise Update's mystery shoppers visit franchisor recruiting websites to evaluate key performance drivers including searctoh engine optimization; navigation; how compelling, organized, and informative the content is; and how effective the design, multi-media, and direct response elements are for driving more qualified inquiries to the sales team.

In the telephone category, mystery shoppers call in as qualified prospects and record the response time, what information the salesperson requests, how they control the conversation, and how they direct the prospect.

The results are scored, and the best of the best are identified and recognized with Franchise Update's STAR Awards (see story on page 26). The non-winners look on, applauding the winners and thinking about ways to improve their own results.

"Hello, how can I help you?"

For the past few years, many franchisors have been singing the blues when they saw the results, but there were some rays of sunshine evident in this year's report. The best news came by telephone.

This year, our telephone mystery shoppers called 155 franchisors and found some noticeable improvements over last year. "Only 24 percent of sales staff were available for our first call this year," said Franchise Update Media Group Publisher Steve Olson, who unveiled the findings at the conference. "But the good news is that was up 8 percent from last year."

Researchers found a marked improvement in one critical area: return calls. In last year's survey, when a qualified prospect left a message (with a receptionist or in voicemail) it was returned by the sales staff only 52 percent of the time. This year, 90 percent of the franchise sales staff called the prospect back. "This is way up and great news!" said Olson.

Marc Kiekenapp, president of Kiekenapp & Associates, conducted and oversaw the mystery telephone shopping for this year's study. "Franchisors are definitely paying more attention to the incoming calls and getting back to prospects more diligently," he noted, then joked that it took his company much longer to conduct the survey this year because salespeople answered and returned so many more calls.

Kiekenapp said more salespeople were actively getting on the calls and feeling out the prospects one-on-one, rather than quickly funneling them to the company's website to fill out a form--a good thing, he said, but there's still room for improvement. "The companies are all doing a better job of picking up calls live during operating hours, but there are still lots of calls coming in after hours. It's a good idea to be regularly checking on and returning those calls, too," he said.

In the qualification part of the phone call, salespeople were careful with the detail: all of them recorded the prospect's name; 99 percent were "enthusiastic"; and 96 percent "controlled the conversation." However, collecting the prospect's phone number and address still needs work; as do qualifying the prospect's financing and start time.

Olson suggested that franchisors mystery shop themselves routinely--once a quarter if possible. "All of you who don't mystery shop, you have to do it," he said. "It will greatly improve the performance of your salespeople, and ultimately, conversion rates."

On the web

Searching for franchise opportunities online today is a wide-open world filled with tools and resources aimed at providing assistance and guidance to online franchise shoppers. As such, the franchise recruitment website remains a vital instrument in the growth of any franchise organization. "It's the most important franchise recruitment tool in the history of what we've been doing," said Olson.

To evaluate the franchise recruitment websites, Franchise Update teamed up again this year with Boris Bugarksi, CEO of mUrgent, an email and search engine marketing firm. New to the mix this year was Franmogul, a firm that specializes in helping franchisors with their development needs. Franmogul assisted in the process of evaluating online response and effectiveness. This year's online mystery shoppers researched 132 franchisor recruitment websites during the course of the study. Some areas showed improvement this year, but the results still show other areas have room to grow.

Of the 132 franchisor websites sampled by our qualified mystery shoppers, 79 "never picked up the phone and called the leads that had requested information on their franchise and met their criteria," said Tim Holadia, president and CEO of Franmogul, "and 32 never called or emailed at all."

Holadia says that's far too many. "We hear everyone complain about the number and quality of leads, but how do you know the quality if you never contact them at all?" he asked. "People assume that Internet leads are not quality, and they leave substantial opportunity on the vine."

Also, he said, many franchisors have headed in a direction of relying on technology rather than on personal contact. "Technology is a great tool but should be used in addition to the personal contact," he noted. "In an economic environment when new franchise sales are at an all-time premium, we need to treat all leads as the next franchisee until they prove otherwise."

Notes Bugarski, "Probably the most substantial difference that we found this year compared with last was the use of a unique starting point on the franchisor recruitment website. In 2009, we found only 6 percent of the websites had one, and that number grew to 28 percent this year. This strategy is unquestionably driving up conversion rates." A unique starting point encourages prospects to "please begin here" on the website. The best websites also have a step-by-step navigation process that mirrors the franchisor's sales process. As Olson is fond of pointing out, prospects don't know how to buy a franchise, so it's up to the sales team to guide them through the process.

In other positive news, mystery shoppers found the use of Google Analytics rising. Bugarski said his long-running joke--that 80 percent of franchisors don't use Google Analytics and the other 20 percent have lost their passwords--is finally changing. "You're pouring all of this money into online development initiatives and you don't know how effective you are without using a tool like Google Analytics," he said.

The mUrgent team also fund that, at least for now, social media links were not having a significant observable effect on franchise recruiting. "We're just not seeing leads coming from social media," said Bugarski.

Our mystery shoppers found that many franchisors had created new websites or freshened up existing sites since last year's survey. But, Bugarski said, it doesn't seem to be changing buyer behavior. "Prospects are still spending the same amount of time on the websites--around two-and-a-half minutes."

During Olson's presentation of the online mystery shopping results, he hammered home the fact that only 40 percent of franchisors called back the qualified "prospects" who made contact through their websites. "Of course that means 60 percent never called the prospect back," he said.

Olson recommended that franchisors employ a lead qualifier to help improve their numbers; our research found that only 30 percent currently do this. He suggested that to increase conversion rates, franchisors consider outsourcing this function to a lead follow-up service.

The final analysis

While the overall results of this year's mystery shopper survey are mixed, they show the that franchisors are making progress in their recruitment efforts.

Looking back on this year's data, Olson emphasized the importance of franchisors monitoring their sales teams and development processes and making the necessary adjustments. "Much of the progress that was uncovered in this year's study indicates that more franchisors are getting serous about their development departments," he said. "I think we can say that they are upgrading their sales teams and replacing members who aren't cutting it. These are the kinds of things that are necessary to compete in today's economic environment."

Stats: Telephone Mystery Shopping

• 155: number of franchise companies called
• 24%: sales staff available on the first call (up 8% from 2009)
• 48%: calls that resulted in messages on voicemail or with a receptionist (down from 84% in 2009)
• 90%: franchisors that called back the qualified telephone prospect (up from 52% in 2009)

Stats: Website Mystery Shopping

• 132: number of franchisor recruitment websites visited
• 36%: franchisors that never responded to qualified leads
• 23%: franchisors that sent only an email response (and never called)
• 60%: franchisors that never called the prospect back