Welcome to the More Cheese, Less Whiskers Podcast and boy, have we got a podcast for you today!
I'm talking with Noah Rosenfarb and Aaron Lee who run a company that helps franchisors and franchisees with their local digital marketing. These guys are phenomenal. I love the approach they have in putting so much thought into the things they're doing, and of course, my favorite things too, hatching evil schemes and franchising. You know, the ultimate level of syndication, is a franchise.
This conversation went by so fast, but there are so many great lessons in this, episode especially if you're in a business that helps other businesses succeed.
If you want to join me in December to hatch some evil schemes for your business, just email me dean@deanjackson.com and put 'Orlando' in the subject and I'll get you all the details.
Show Links:
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Want to be a guest on the show? Simply follow the 'Be a Guest' link on the left & I'll be in touch.
Download a free copy of the Breakthrough DNA book all about the 8 Profit Activators we talk about here on More Cheese, Less Whiskers...
Transcript - More Cheese Less Whiskers 070
Dean: Noah Rosenfarb.
Noah: Dean Jackson, I'm here with-
Dean: There he is.
Noah: My partner Aaron Lee.
Dean: Hello, Aaron, how are ya?
Aaron: Hi Dean, how are you?
Dean: I'm good.
Aaron: Very well, very well.
Dean: Well, I'll tell you what. It's Friday morning, have all my evil scheme hatching accoutrement. This is my favorite day of the week. I get to hatch evil schemes all day and particularly I'm excited because I read what you guys are up to and two of my favorite things, hatching evil schemes and franchising. Yeah, it's so great. I can't wait to hear what you guys are up to and see what we can do? Tell me what's going on.
Aaron: Thanks Dean, yeah, we love hatching evil schemes and franchising also, so that's a match made in heaven today. I've had this business about 16 years. About three and half years ago I did an acquisition that was the real lightbulb for me and realizing that I was in the wrong business and pivoting into something that was truly scalable.
As a small, creative web design agency, a critique firm, I struggled for years with really trying to figure out how to find the right balance some growth and resources. It's all human resource-driven and you either have too much staff or too little staff for the perk you have. The revenue in the marketing and sales models, it's often times very referral-driven and so there's very little predictability in forecasting and I never really had more than 90 to 120 days of visibility knowing what cash flow was going to look like next Friday.
Dean: Right, yep.
Aaron: I was really tired of that after 14 years and decided really needed to shift our model into something that would help be a more profitable business model and so we did an acquisition. We have been doing work in the franchise space and really what we boiled down to and realized is that there's a fundamental issue in franchise marketing in that's the franchise brands are built on brand equity and brand value.
In the old world of franchise marketing, the franchisor would create creative assets that would get delivered through print and broadcast media mostly. Now that the world has moved in a digital-first mentality, the controls that a franchisor has over that brand is delivered at the local level is very difficult to control.
When you hand the keys to the kingdom off to the local franchisee, who's recognizably not a digital marketing expert, that's not why they bought a franchise, often it gets very diluted very quickly and the franchisee fills like, "Okay, well I bought a franchise so I'd have a standardized playbook, but you’re not really telling me how to do digital marketing. You’re telling me how to run the store very well and how to train my employees, but I lucked up to my own devices on that."
We saw this opportunity to offer a managed service and sit in between those two agendas, the franchisor's agenda and the franchisee's agenda and help them manage their local marketing for them so that they would stay on brands, stay compliant and not have to be a digital marketing expert. They could just focus on running the store and respond to the leads that we're delivering for them. We spent the last three years basically building the systems, the processes, the team to be very, very focused on that concept.
Noah: Then my role, Dean, this is Noah. I came in as an investor last year to help us basically shed the business that didn't fit with that model and invest in the system so that we could grow quickly. We've re-branded as Iluma Agency. The agency's won the Inc. 5000 Fastest Growing Company in the last three years. We’re one of the best places to work in South Florida, fastest growing company in South Florida.
We’re really positioned now to double our business in 2018 and we think we have the systems to attract the right people to help us and also we've got the offer to get the right client. I think really what we could use your help and expertise in is how we could take the target market that we've identified for the new customers who we want to attract and take a look at how we're going to compel them, how we're going to educate them and test our offer with you?
Dean: I love it. You guys, this is like you're singing all my songs. I love it.
Noah: I've been listening to your stuff for five years. I'm one of your raving fans. I sent a quarterly newsletter out. I'm always trying to promote your stuff. I took your email marketing course at one of my other companies that I own, back when you guys did that "I Love Marketing Event" in Arizona, I had a whole mastermind group that we paid, eight of us, we joined and we did it digitally.
Dean: Oh, that's so great, wow. Yeah, sorry, go ahead, Aaron.
Aaron: Yeah sorry, Dean. It's funny because I've been reading the Profit Activator and going through your material, so I'm a little new were to the Dean Jackson world, but what's funny is as I was reading through it, I could hear Noah's voice like this is all the advice Noah's been giving me. I know the source of it now.
Noah: I've never had an original idea.
Aaron: There's a real at go to it all.
Dean: That's so funny. I love it. Well, you hit on the couple of things Aaron that you’re absolutely right about the franchise world that primarily what the franchises are about is an operating system. We talk about breaking businesses into the before-unit, the during-unit and the after-unit. What franchise operations generally are is during-unit platforms, right? This is "Here's the branding, here's the operating manual, the best practices, the operating kind of model for how to do whatever the franchise does," but they’re not really focused on the before-unit or the after-unit. That's where the opportunity comes in because just like you identified there's variation enters into the process.
The reason the franchisee is such a powerful business model for people wanting to start a business is that all of the variation has been accounted for and removed out of the equation as far as the operations go, "This is how we do this and these are the brand standards and the facility standards and the operating procedures and all that stuff," so that if people do what was intended, they'll get that predictable result.
As soon as you then hand over the keys to the kingdom like you said, and they want to get more business, now you've introduced variation into the process because they’re all going to be trying so many different things and so many different ways to get business. All of which, some of it might not work, some of it might work great but you kind of lose control of it. What's been your solution to that or what's been your discovery?
Noah: I think the main discovery is that you hit the nail on the head, is on the franchisor's role in protecting the brand and the franchisee's lack of compliance. Our main focus is communicating to the franchisor that there's no one better in the world than us at helping protect your brand when it comes to local digital marketing.
Aaron: The other thing that I think wasn't intended, but we've recognized that when things aren't going well at the local level, they call the franchisor and nothing solves problems better than sales, right? If we're helping them be successful, it also benefits the franchisor because most franchisors, they’re getting a fee based on the sales of that unit. The better they’re performing, the happier everyone is and the less frustration and calls that come back to HQ. If we can eliminate frustrations from the system and friction from the system that's one of the outcomes that we're seeing by approaching this system-wide.
Dean: I love it and what's your focus right now? Where do you think that you need the help or have the biggest opportunity here?
Noah: I think the compelling part for us is the hardest to define? Maybe it would be helpful if I shared with you a single target market that we wanted to talk about today and then walk you through what we think our second, third and fourth profit activators are?
Dean: Okay, that's so great, love it.
Noah: The target market for us is really, really clear. I think we're a 10 there because we’re only focused on the CEO's and CMO's of franchisors in the service business that ideally have 100 to 250 locations. We've worked with as small as 25 and up to about 5000, but we find that to get started that 100 to 250 is really our sweet spot. The reason why is because by that time they really know their brand, they really know who their franchisee is and they also know who their customer is.
One of the requirements for us is that that customer has to have a pretty high lifetime value. It's got to be about $1000 or more for us to be able to use our systems and processes and a cost-effective way. It can't be a Subway franchise or a food franchise. It's got to be someone that they’re either selling somebody something that's $100 a month, like in fitness or a massage or hair care ...
Aaron: Education.
Noah: Yeah, education, there's a lot of markets where they’re selling them something that has a high lifetime value and we can find those people on LinkedIn or through other service providers, from lists, so I think we've got our target market. The question really becomes what do we want to say to them when we connect?
Obviously, I love your idea of guides. I think it becomes a way to communicate with people on an ongoing basis, so we talked about maybe creating the 2018 guide to AI and technology for franchise CMO's, where we could bring them the latest cutting edge, what's going on in the industry, but that might be a little too broad for us.
We've also thought about what mistakes franchisors make when presenting local digital marketing to their franchisees. We thought about how to build your local digital marketing playbook. We thought about seven marketing strategies used by the fastest growing brands or how the best CMO's protect their brands, something in that genre as a way to use that as the lead magnet. We're really focusing ...
Dean: You’re on the right track with that thinking, but the compelling nature of it is what would get them to raise their hand? A lot of those things, the first one you mentioned AI and what was the first guide that you mentioned?
Noah: A guide to AI and technology for franchise CMO's.
Dean: Which is really just a kind of thing, right? It's about something. It's not a benefit or anything. I always look at these things when we're going into Profit Activator, too, here, which is all about compelling people to raise their hand. The good news is that you've got visible prospects, right? You’re not dealing with invisible prospects.
Finding somebody who wants to buy a franchise is an invisible prospect because you don't know who's thinking about that right now, but someone who owns a franchise, a franchisor and especially at that level, at the 100 to 250 level, they’re on the radar, right? You know who they’re and you can get right to the individual, the CEO, the CMO. You've got the opportunity to narrow yourself. You mentioned or I saw in one of the emails that William sent me, you mentioned you got 100 ... I think I saw that that you have 100 of them identify?
Noah: We service, yeah, we have about 100 target market contacts that's in our profile.
Dean: Right, so these are the ones that would be your dream clients? These are the ones that you would like to start with? Okay, perfect.
Noah: Yeah, so we know who they’re and now it's a question of ... We have a great offer for them and it's what do we do because we don't want to walk up and ask them to marry yes. Our offer is that what we could do for them is we'll do a local brand audit. We'll go out. They'll give us their brand standards guide and then we'll pick 10 locations of theirs and we'll go out and check to see if they’re meeting their brand standards. We look at their social accounts, their reputation management, their lead caster, their local search, their emails and we'll go back and deliver them a free report that says, "Hey look, just out of this small sample here's what we see as areas of improvement for compliance."
Dean: Gotcha, that may get somebody's attention, but let's bookend. You've got your target audience here. The way I like to start this before-unit conversation is to bookend your crystal clarity on who your audience is with Profit Activator 5 "What's the dream come true result that you’re going to be able to create for somebody?" Rather than think it through linearly, let's jump and see what's the end result that you can do for somebody if you could just wave a magic wand and get into a relationship with them, what would you do?
Aaron: It's great that you bring that up Dean because that was ... Noah and I were talking about this ahead of time and that was the thing that stuck out to me that if you solve that problem it sort of lifts all the other profit activators forward. One of the things that I was also going to add to the target market list of why we like that number of units, the 100 to 250, is that at that point the executive team at the franchisor has started to experience the pains that we solve. They’re already starting to deal with things going off the rails at the brand level and franchisees who aren't following the rules and diluting the brand and they’re frustrated. They’re trying to grow their franchisee unit sales ...
Dean: Yeah and the bottom 20% becomes a noisy enough group that it can turn into a mob, so you start to have some urgency around that, right? Yep.
Aaron: I think we have spent most of our time up until now focusing on how do we drive dream results for the franchisees and I would say we’re at a nine, ten right there. We're right on that brink of ... We have the systems and processes. We just want to make sure that we're consistently delivering dream results. There's still some variability.
What we haven't spent time doing is translating that what is the dream result for the franchisor, who is ultimately the gatekeeper? If we get into the franchisor as an approved agency partner, then selling through the franchisees becomes a very natural ... We have a process for that and we can follow that. I think we haven't really encapsulated and that's I think for me the biggest takeaway from this is how do we really and truly encapsulate that as a compelling reason to do business with us, proving us as an agency partner?
Dean: Yeah, so paint the picture for me, so describe for me what ...
Noah: Well, part of the dream come true is that their franchisees are following the rules. They want to know that they’re not putting out there offers that aren't approved. They’re not using strategies and tactics that aren't approved. They want to know that they’re not diluting the brand. That's the franchise CMO's big concern.
Aaron: And the sales are increasing.
Dean: I was going to say, yeah. That would be erased in a lot of ways with the sales increasing because I think that the franchisees would be less likely to go off book if the actual things that they’re doing retreading a result, right? Maybe it's where there's no direction or really clear profitable way for them to do it, but they start experimenting and going off-book with their own self-interest in mind, right? I believe that any franchisee that's doing anything, you have to think that they’re coming from the right place in that their desire is to grow their business. It's not to undermine the franchisor.
Noah: They never think they’re doing anything wrong.
Dean: Exactly.
Aaron: Dean, I think just spoke to something that's very, very important that it's a nuance that we've learned is when I started into this I had this epiphany one day that this was going to be the thing that was going to save us was that if the same store all over the country, so it's the same brand, it's the same message, so we'll just do the same thing everywhere and it'll work.
What we've realized, and I think this is where the source of the pain is, is that it doesn't work the same in every single market. The brand message has to be, there has to be an allowance for some level of innovation within the brand standards. When you hand that over to the franchisee, their idea of how to innovate that is to go off-brand, to introduce things that are not approved.
Dean: Yeah, I get it.
Aaron: I think for us what we've had to do is find that balance and be that trusted partner to the franchisor that says, "We'll manage the innovation piece within the brand," so the franchisee, we can tweak things for Kalamazoo, Michigan, versus San Diego because the audience in Kalamazoo reacts differently to this message than the one in San Diego does but still keep you true to what the essence and the character of the brand is. I think by introducing and managing that gap is where we've been most effective in creating those consistent results.
Dean: Now talk specifically about the results that you can get for somebody, whether historical or what you would ... I always like to say as a thought process is what would you do if you only got paid if your client gets the result? What would you do if you only got paid ... First of all, you'd have to identify what's the result that you can actually deliver that turns into money, right?
Any of the stuff protecting brand standards and brand auditing and all those things are not actually one-to-one directing money to the bottom line. They’re things that are around that, circling the wagon around it, but it's not the thing that drives the revenue. What specific things do you or have you done that can drive money to the franchisees and then deploy throughout the organization, the outcome that you’re able to create if you can point to or brag about what you've done?
Aaron: Yeah, absolutely and that's a great question. I think that gets to the heart of it. Really, most of our focus has been on delivering qualified leads to the local franchise owner or management to either close sales, great transactions, things of that nature, as well as the other side, which is customer retention. It's either new traffic or recurring traffic to the same location. The variable that in most situations that we don't control is the sales process itself at the local level, right? We’re making a warm hand-off introduction. This is someone who has raised her hand and said, "Yes, I want what you’re selling and tell me more," and "Here you go Mr. Franchisee, take it away."
Dean: That will be a dream come true for the franchisee, right? That's the dream come true. "I'm fully prepared. I've read my owner's manual. I've been in business. I can operate this franchise. If you deliver me people, they'll be happy."
Aaron: The variance that we've seen in different systems is how much emphasis and training has been built around that sales process at the local level? Some of them do it much better than others and realize that that's the business they’re in and some people think they’re in some other business. It's the Field of Dreams approach, like "We'll just be a great business and people will show up and walked what we're offering."
Dean: Right, you get it.
Aaron: We've even thought further down the line of actually taking the lead and walking them to the front door. I think that's sort of a three to five year vision of even adding more value to what we're doing, but I think today's solution is a very qualified, warm introduction or re-introduction at the franchise level.
Dean: Yeah, can you give me some of the highlights of some of the things that you've been able to do that have produced a result? What's your home run result that you've been able to create for people to take your shining examples of what you've been able to do?
Aaron: I think it really comes down to really the anchor client that we have built this program around and that's Orange Theory Fitness. Orange Theory Fitness has been a huge success in the franchise world and has gotten a lot of recognition for their growth. We've been working with Orange Theory since there were two locations. They now have 900 open and another 300 or 400 sold. We just came back from their convention in San Diego last week and there were 1700 people there. We've been very intimately involved in recognizing that growth and being part of that growth across the whole country and beyond.
I think our great success story is being part of that process and helping them become who they’re today. I'm certainly not going to sit here and take credit for all of it, but we were definitely have been very instrumental in helping their franchisees be successful and from that we learned all of these nuances and we've taken that same approach to other brands now. I think what we realized is that it wasn't an Orange Theory unique situation is that whether we were talking to a home repair services franchise, when you get into the mechanics of and the dynamics of what's going on between the franchisor and the franchisee, they all seem to have the same issue today.
Dean: Yeah, oh right.
Aaron: It's very transferable and so we've taken that. We work with a salon brand that we've done nationwide tests. We've seen 7% to 10% year over year lift in their sales when we’re running campaigns in those salons.
Noah: They had to tell us, "Turn off the campaigns. We’re getting too many customers."
Dean: Right, right, that's awesome.
Aaron: We know how to sell this.
Noah: I think specifically that dream come true experience is a little bit different for the franchisor than it is for the franchisee, so we’re really good at it with the franchisee because really their metric is what does it cost me per lead? We're delivering leads at a cost that they find either acceptable or exceptional, but when it comes to the franchisor the dream come true for them is, "Obviously, yes, please service my franchisees in the same way and get them good, high quality leads at a low price," which we could do expertly.
But the second part the franchisor is focused on that the franchisee isn't is around the brand assets in developing the brand story and making sure the brand narrative is conveyed in social media and through the advertising programs and it's hitting the market in a way that's consistent.
Dean: Would you guys say ... Sorry Aaron, go ahead.
Aaron: The one quick thing, and I think this gets to the point of why we're on the call today. Me being a brand guy for almost 30 years now, my inclination is to not follow your process.
Dean: Right, I get it.
Aaron: I want to go out and plant the flag in the ground and shout from the mountaintop of how great we’re and wait for everyone to show up. No one's challenging me to say, "There is another way and that's where we find ourselves today."
Dean: It's so funny that you said that because the question I was about to ask you just as you start to say that was do you consider yourselves more of a brand agency or direct response agency and it's kind of interesting thing. You just answered it because I'm hearing in the sort of answer is that you’re giving. It's really the brand is the central thing that we've been talking about. When Noah said the franchisee, their interest is leads at an affordable cost, that's really the first conversation we'd had about leads and about that part of it. It's interesting, Aaron that you brought that up because that's where the predictability comes in.
Aaron: Yep.
Dean: Yeah, driven from that, while the brand is really helping along the way. The interesting thing about an operation at 100 to 250 is that you've got a really great opportunity to deploy once you figure out ... I've used a phrase that I look at is "Creating that scale-ready algorithm." When I look at that, I'm looking for something that can work repeatedly. Thinking franchise prototype thinking and applying it to the individual unit with an eye on creating something that can be deployed to all of the franchisees.
Noah: Which we kind of had this word that we used at the beginning when Aaron and I were brainstorming "a local digital marketing playbook." That if we could develop that for the franchisor ... Because they’re all missing that. They all really are scared to produce that themselves because the technology is changing quickly. The local piece is too hard for them to understand on a granular level and they really don't want to be in the business of telling people how to market locally. They’re good with the nation-wide campaign. There are good with the television campaign, but they don't want to do the local piece and so they’re kind of ignoring it.
Dean: It all happens locally though, that's the thing. The franchisee, they’re only concerned about local.
Noah: Exactly.
Dean: That's the whole thing. The national part is what attracted them to join that movement in a way, which is I would call at 100 to 250 those are emerging franchises, right?
Noah: Correct.
Aaron: Yeah.
Dean: But they’re on their way. But you do hit that ceiling of complexity at that level, where it becomes now almost like base camp, too, in a way where you've got now enough of an infrastructure that at that level you've got a C-suite and everybody's in the right positions kind of thing. One of the things that has really been helpful is helping understand the metrics that drive those things. I don't know whether you take a really metric-based approach to it? When I say "metric" I mean results-based metrics of more along the lines of what no one was describing where your cost per lead and the conversion process and creating that before-unit machine for a franchisee.
The good news is that you've got that granular opportunity to test small in one unit. Once you figure something out to then be able to test it in smaller, a small group of them and know what happens. Part of that is really thinking through how can we create it? What would be a dream come true for the franchisee? It’s just like you said if people are walking in the door ready to do whatever the business does, not that they’re handed the recipe book or the things. The real dream come true would be that they can set it and forget it. That they put the money in the top and out comes the new clients.
Aaron: Right, I think for me, what I believe we can attain and achieve is a model where what's a lead worth to you? How many do you want?
Dean: Yes, that's exactly right.
Aaron: What we've done is we've simplified it. The process we said, "Our service fee is a flat flee. I think it's $1000 a month, plus whatever money you want to spend on ads." We don't charge more or less for ads. It's just that's what it is. But ultimately, if I could translate that into knowing that X, Y, Z Fitness Center or A, B, C's Hair Salon, to them they know a customer's worth $100 and I could sell them a lead for $25 and they'd only be ... If it only ends up costing us five dollars to produce the lead that's an even better business model to me. The challenge is that each franchise is a bit different. There's a process to mete out. I can't say for everybody it's going to be $25 a lead. Each brand has a different number.
Dean: Oh absolutely, yeah, that's part of the thing of understanding what that number is, understanding the metric that gets those. If you look at it that cost of acquisition is the driving metric for every franchise, for every business really. The before-unit ultimately comes down to what's might cost of acquisition and is that a number that I would cheerfully pay knowing what I know about what that one new client is going to turn into? When I look at the model that we have is what's going to happen to them when they go through the during-unit? What's the initial value of doing whatever we do with them and then in the after-unit, what's the lifetime value of these?
Noah: We had an interesting opportunity the other day. A potential client came to us and said, "I will pay you to generate 200 people walking into my door wanting to buy my product. How much will that cost?"
Dean: That's great.
Noah: We're still not in a position to know exactly until we test because one of the things we found, which is it's frustrating and surprising is that the same brand we might be able to generate leads at one location at two dollars and another location at $120. When we look at the swath of them, the median might be at $20 or $22 or $25 and the average might be around there also, but we've got this huge bell curve.
The good news is for the franchisor and the franchisee is we've invested in a portal that they could visit, where they can see all of the data, they could see all of the ads they could see all of the ad spend. They could basically get down to whatever level of detail they want to check our homework and we show them everything we've been doing that benefits them and what it ends up costing them for a lead.
Dean: That's awesome. Part of this thing when you’re creating those is set a baseline. Knowing that when you duplicate anything 100 times if you deploy it to 100 franchises, you’re going to immediately get variation in the results, right? To understand what's the best way to drive variation out of the process to establish a baseline that's acceptable?
If it depends on the franchisee doing something extraordinary, there's going to be a challenge with that because it requires them to actually do something. If you can get to a point where, just like you described that franchisee coming to you saying, "We want to hundred people," that's what they’re all looking for. They just all …
Noah: At the end of the day, you hit it on the head. They want people walking in the door wanting to buy and they'd like to tell us how much they’re willing to pay for it and they want us to accept the risk. That's the dream come true experience for them.
Dean: It really is, isn't it? We look at that and we realize that the dream scenario for you if you take it on that way, for them to come to you and say, "If you can give me $200 for this one, I'll introduce you to the franchisor and there's 1000 more people just like me or 200 people just like me." That's where the dream comes in.
Aaron: Yes.
Dean: Part of that that really requires a direct response kind of approach to it. One of the interesting things that can help with the process is to get the franchisees to think outside of an expense model for their advertising and think in terms of a capital investment model, where their lead generation ...
Noah: They’re planting their orange grove, right?
Dean: Yes, that's exactly right, especially in things that have an ongoing relationship or the things that are higher-priced things. It sounds like you've found your sweet spot that services that are sort of higher-priced or recurring more regularly. That they have a strong after-unit to them.
Noah: Correct, well ideally, they've got to be willing to pay something between $25 to $35 for a lead and that's only worth it if they’re selling their customers something for $800, $1200.
Dean: Yeah, I like it.
Noah: The only thing I don't want to lose sight of, Dean is that we never go direct to a franchisee to do their marketing. We always go first to the franchisor because we want their support, permission and access. First, we need to sell the franchisor that they want us involved with their franchisees, in spite of the fact that we could go direct to the franchisee. Many of them aren't precluded from doing business with us directly. That's just not the way we want to do business ...
Aaron: Because there's such an investment upfront to figure out how to make it work for one that it works better when the franchisor makes the investment to help us build a model and then tailor it to all the different ones. We're coming in with the brand assets in hand. We understand the brand and we're not trying to go around the brand. With helping enhance it.
Dean: Yes, that's absolutely right. Part of it, it might help to have some sort of advance work on knowing the category that you’re talking about, like to be able to have some sense that you will be able to do that. The great thing about the local marketing is that you can really test in isolation, especially digitally and online. You’re not having to reveal your hand kind of thing.
It's not risking a lot of exposure as you would be doing a national campaign or a broadcast or print campaign in a regional market, so you've got the opportunity to really target and hone that in. In the before-unit, being able to get that cost of acquisition at an acceptable level that's a really great and worthy goal. That if you can show that what they’re at right now and with the goal of trying to beat the control in a way that doesn't require the franchisee to actually do anything. That's the win.
Noah: I would say, I don't know this for sure, but my guess is most franchisors do not know what the average cost per lead is at each of their different, local units and how that varies by region. They just don't have the data.
Dean: Right and that's part of the thing, the job of this is just like they've set up the brand standards. The important thing is to set up the standardized marketing metrics. That's why when you look at overlaying 8 Profit Activators on any business, you see immediately that it fits for every business and it's there, whether they’re consciously paying attention to it or not. Every business has a before-unit, whether they recognize it and acknowledged it and are measuring it and know what's happening and they've got in after-unit. That's often a great entry into a conversation like that because it's an asset that they have that is largely under-performing in most situations.
Noah: The “After area?”
Dean: Yep.
Noah: Yeah.
Aaron: Yep.
Dean: When you look at it, if they look at how many clients they have and how much revenue those clients generate and how many referrals those clients generate, Profit Activator 7 and 8, that there is often a big bump possible with very little, very low cost. We've had situations where even with a nine word email has made amazing differences.
Noah: Yeah, we've seen that, too.
Dean: Yeah, right, right, even showing people how to measure and separate out a portion of their business that is after-unit, when you figure out what the right rhythm of the business is, whether you measure that on an annual basis or if it's a seasonal business through the season, whatever that is, every situation has its own unique way of describing what the metrics are. But essentially what we're looking for in the after-unit is to determine the return on relationship. That, "We've got this many clients and this is how much they generate on an annual basis."
Noah: We have a referral program for all of our franchise units, but generally the franchisees aren't looking to invest there because they’re very focused on lead gen like most people like a first date more than they like a third date. They always want a new first date and I think if we can...
Dean: They don't realize the value, they don't realize the return on that, they don't realize that it's the place where they can spend the least amount of money for the highest yield because these people already know you like you trust too.
Noah: That concept in and of itself is a great nugget for us to walk away with, too.
Aaron: Yep.
Dean: Part of that is something that ... Because alone for everybody can move the needle. If you create a renewal campaign or a retention campaign or a referral campaign that is email-based, very low cost, zero cost really to deploy the cost of goods for it is an incredible scalable thing. It's almost like a magic trick that you can show somebody. If you’re thinking digital, the thing that really is the underlying asset of all of it is the names and email addresses of people who are your clients and obtaining the names and emails of people who could be your clients. That's really the digital asset that we’re looking for.
Noah: Yep.
Dean: Those things, being able to come into a franchisor from that state of looking at things that they can do to establish those metrics because the franchisors have never looked at it in that way either. It's amazing to me how most of the time people are looking at the top line, the expenses in the bottom line. Those are the three points on a P&L that any business owner looks at and they lump everything is, "This is what we made. This is what cost us to make it. This is what's left at the end of the day," without really taking that care to divide where is this revenue coming from? Even going that one level deep and helping them establish what's the return on relationship in the after-unit? What's the multiplier in the during-unit?
If you just take the top layer swath of this is the things that can fuel and fund the before-unit new acquisition. It's almost like I talk about it if I was a golf coach and you were hiring me to help you improve your golf game, your golf score. The first thing I would do is focus on your 5-foot putts and get you to be a better putter from 5-feet-in so you don't 3-putt. That's going to immediately improve your score going out. Then I would get you better at getting the ball from off the green into that 5-foot circle and then we'd go back-
Noah: Everybody's focused on the driving range.
Dean: They want to get the new driver and drive the ball 20 yards further, but they still then fall apart that we've got to take it from Profit Activator 3 all the way to Profit Activator 5.
Aaron: Yeah.
Dean: When you look at those assets, the asset of the clients that you already have, getting them to come back more, refer their friends, taking the during-unit, what you have is when somebody's in the process to multiply what happens in that experience, we take the during-unit timeline from the moment they say, "Hey, I'd like you to help me," until the moment that the transaction is done, what's happening in that experience that could raise the value that could raise the average ticket price?
All of those things are easy to deploy because it's already moving and then looking in the before-unit looking at the prospects that they already have, the unconverted prospects. If you just take what they've already had, all the people who have inquired or raised their hand at some point and just send a nine word email to them saying, "Are you still interested in whatever," those three magic tricks alone are really easy ways to go in and lead a relationship with somebody, where it's zero risk on their part, zero cost on their part but can start you off in the relationship where things are in their favor. Now it becomes, now you've set the stage of really being able to optimize all of these other things, reading with revenue from them.
Noah: The other brilliant part of that Dean is I can see if we approach a franchisor that the fear is limited. If we said, "Let us just take a look at your after-unit with a couple locations and see if we can create a higher yield our relationships," because we're not displacing any of the current digital marketing that they’re doing. We're not messing with the before-unit, which is the thing that everybody's is focused on anyway.
Dean: Of course, that's exactly right, yeah. You’re focusing on the things that they know if they had the time. It would be difficult for them to think otherwise that it wouldn't make a difference. It's just if they don't have the time to focus on it?
Noah: Yeah.
Aaron: Yeah, so really I guess coming back to the number two in terms of compelling to the franchisor, CMO, brand compliance is almost a feature more so than the benefit in that, obviously, we're going to do that. But it's really about driving the success of the franchisee, so they’re a happy franchisee, which will lead to higher franchisees and happier franchisors. Leading with the leaky bucket, there is a lot of things that you can't pay attention to that we're experts at that will help make franchisees happier and not introduce new risk.
Dean: Yes, you’re absolutely right. Yeah, you’re absolutely right. When you look at it, you’re starting with ... You've got 100 people and they’re visible. It's not even as important. You literally could sort of jump into Profit Activator 3 with those 100 people in a way because you already know that the one so educating and motivating them. You might create a newsletter or a journal or a magazine or something that is an educational piece, like franchise breakthroughs or something that is highlighting content-amonials of the types of things that you’re working on, where you can present these ideas, where you present the philosophy of creating a before, during and after-unit. Or looking at the return of relationship or understanding these metrics and within those offer a next step.
Noah: Nah, it's great. Dean, as you always, you’re a master.
Dean: Holy cow, is that the our already, wow.
Aaron: You’re having too much fun here, Dean.
Dean: Exactly, I’m like, "Wow, that's something."
Aaron: Yeah.
Dean: All right, what did you hear? I want to see how this has shaped the thinking.
Noah: I'll tell you my thinking has totally shifted to instead of being focused on a before-unit and results of that before-unit, which is the metric that everyone in our industry is competing with, we should take and after-unit first approach to attracting new customers into our funnel because that's a unique way to approach them and we'll be able to present a lot of content-amonials around that that will have value to them and it would be new.
The second thing is looking at positioning our offer, the dream come true experience for the franchisor and the franchisee around people that are walking in the door, wanting to buy at a price that's essentially fixed and how we can move towards that as being the goal because we know that's really what they want.
Dean: Yeah, then you can have that conversation on the back of they already know you, like you and trust you because now that's an after-unit conversation in your business that you’re having with them. Do you understand what I mean by that?
Noah: Yep.
Aaron: Yep.
Dean: You've flipped-flopped it in a way, right? You've started your before-unit focused on their after-unit, which nobody else is doing and now once you’re working with them on their after-unit, that's your during-unit and then you're after-unit. Nurturing a lifetime relationship with them is getting the opportunity to focus on their before-unit. You've slid into that rather than competing with everybody else, trying to in there before-unit business.
Noah: I think so many of them, including us sometimes, lose sight of that only 15% of people are buying in 90 days and 50% of them are waiting to buy later in the year.
Dean: There's the thing, if you start talking about maximizing their after-unit stuff and then you start talking about their lead conversion process ... If they’re doing a lot of stuff, they’re probably generating some number of leads, but they don't have a conversion process, especially not a long-term conversion process. You come in like a hero and help them with a nine word to email, revive the dead leads that they have already given up on and show them an ROI on that is crazy.
Aaron: Yeah.
Dean: Aaron, what about you?
Noah: How about Aaron? What's your takeaway, Aaron?
Dean: Yeah, I was going to say what did you hear, Aaron?
Aaron: My takeaway I guess is if we’re truly a direct response-focused company that we need to act like one also, yeah. Taking on the mindset of our customer and I think that when you demonstrate it, you don't have to explain it so much. It's not a claim anymore, it's an example.
Dean: Right, that's exactly right. It's a content-amonial.
Aaron: Yeah, in addition to what Noah said that was my additional takeaway is "walk the walk."
Dean: Yeah, well, I'll tell you what guys, I've really enjoyed this. Where are you guys?
Noah: In Miami.
Dean: You're in Miami? In Miami, okay, perfect. I would love it if you would to my Breakthrough Blueprint Event in Orlando in December. I'd love to spend three days with you guys going over all this stuff because your business is as suited for it as any business I can imagine? You guys are so far down the road on it, it's great.
Noah: Great, we'd love that.
Aaron: Thanks Dean.
Noah: Dean, you’re awesome.
Dean: Okay guys, thanks and we'll talk to you soon.
Noah: Bye-bye.
Aaron: Bye.
Dean: Bye ... Wow, so you can tell I had a lot of fun with that episode. It's really nice to see guys that have such an incredible opportunity. The model that they’re using is so perfectly suited to the 8 Profit Activator. I think the line of thought that we had around starting with the after-unit, having that conversation with any business if you’re doing a business to business sort of arrangement focusing on the things that there's less competition that are going to have an immediate upside that are going to get you into a relationship with a business owner and so what you’re able to do and then from that platform of trust, then move into talking about their before-unit.
This literally is one of my favorite episodes, so I think you’re going to re-listen to this and there's a lot of lessons that you can apply to your situation. That's it for this week. If you want to continue the conversation, you can go to Morecheeselesswhiskers.com and download a copy of the More Cheese Less Whiskers Book. You can be a guest on the show by clicking on the "Be a Guest Link," and I'd love to have you on and hatch some evil schemes with you.
I mentioned to Noah and Aaron that we do Break Through Blueprint Events in Orlando, where we get to spend three days going deep in applying the 8 Profit Activators and building a blueprint for your business. Small group, 10 to 12 people, three days completely focused on having these kinds of conversations and three days go just as fast as this podcast went. It's my favorite way of interacting with people. If you'd love to come to that send me an email Dean@Deanjackson.com and put "Orlando" in the subject line and we'll get you all the details. Okay, have a great week and we will talk to you next time, bye-bye.