How to Use CRM Software to Drive Franchisee Profits

When franchisors talk about customer relationship management (CRM) software, they usually mean the systems they use to manage their franchisees. But if your franchisees aren’t using that same CRM system to capture information about their customers, you’re missing a valuable opportunity to help franchise owners grow their profits.

The communication problem that limits franchisee profitability

While many franchisors have robust CRM systems for managing their own relationship with franchisees, there’s a big disconnect. The franchisees’ own CRM systems are often far less advanced. Franchisees might record customer information in a different CRM program or a simple spreadsheet. It’s not uncommon for franchisees to keep handwritten records – or to collect no customer information at all.

Not only the method of data collection but the type and amount of data collected can vary widely across a single franchise system. Some franchisees may capture detailed customer information including purchase histories and cell-phone numbers, while others have only a list of customer emails. As a result, it’s difficult to analyze data across the system to create benchmarks or track purchasing trends.

This lack of consistent, easily shared data results in inefficient and untargeted marketing efforts. Profits are lost because customer data doesn’t reach the franchisor-level marketing experts who could help franchisees craft better campaigns.

“We’ve operated in an information vacuum,” says Brian Spindel, president and chief operating officer of 700-location business-center franchisor PostNet in Denver. “As franchisors, we’ve been focused on getting paid our royalties and finding franchisees – so we never got down to the customer level.”

Competitive disadvantage: franchise systems vs retail chains

Franchisors have fallen behind the national chains in consistently gathering and using end-customer data to drive national marketing efforts, Spindel says. A good, fully integrated CRM system should allow for the easy capture and analysis of data on three key marketing metrics: recency, frequency and monetary value, known to marketers as RFM. In plain language, franchisees need to know:

how recently customers shopped
how often they visit
how much they spend

While most major retailers can easily identify their highest-revenue customers and make them unique offers – or target customers that haven’t visited in a while with special deals to lure them back – many franchise owners lack the customer data to accomplish these basic marketing tasks.

“I tell our franchisees if your customers know more about you than you know about them, you’ve got a problem,” says Spindel, who recently oversaw a major CRM upgrade at PostNet. “Franchising is years behind chain retailing.”

Integrated CRM enables sophisticated marketing

In today’s super-competitive franchise market, the organization that develops a consistent system for capturing and understanding customer data gains an edge over competing franchisors. Spindel considers integrated CRM a must for successful franchisors today.

“Some of the franchisors that aren’t doing this well are going to go away,” he says.

Have questions about how to use CRM to help franchisees grow profits? Sonoma Partners has answers. Contact us to learn how franchise systems can use the Microsoft Dynamics CRM platform to manage both their franchisees and their end customers.

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