Local Store Marketing Part 1

Call it local store marketing (LSM), area marketing or just building your business, what you do within your area, shopping centre or community to drive sales and grow customers  is vital to the long term success of your business.

If you are part of a large franchise organization they may call it “below the line marketing.”  That’s because you are normally the one paying for it and it is separate from any national or state marketing initiatives. Some franchisors use part of the franchise fees to pay for LSM, even going as far as giving you an LSM package or guidelines and some ideas of what has worked in the past. Good for them but don’t kid yourself, you are still paying for it and if it is part of your franchise fees I doubt you will see much of it if you don’t use it.

For the small business owner who is not a part of a large franchise organization it is even more important to plan and execute your own LSM. In fact it will be the same as any franchise business – setting budgets, marketing calendars and promotions.

So what are the main differences between national and state marketing and local store marketing?

Just quickly, any national or state promotion run by your franchisor is normally mandatory and may or may not be targeted to your customer demographics, but takes a wider view and should target the average customer that your concept appeals to. The up side to these types of promotions are that they normally use media be it TV, radio, print or signage that you as an individual business owner may not be able to afford but is funded by the marketing component of your franchise fees and is paid for by all within the franchise.

LSM targets the demographics in the area that you draw your guests from and you as the local business owner know more about your customers than any large franchise organization ever can. It is usually more cost effective and the returns can be greater if the LSM is thought out and implemented well. Some of the best LSM can cost nothing more than the discount given provided that it is presented well and gives more value for money than your customers expect. LSM also has the fantastic ability to be stopped if you find it is not working and replaced by something else or even continued past its planned end date if working well. Something that a national promotion with expensive media buys cannot do. Did I say “ Just Quickly” sorry about that, I get a bit long winded sometimes….

So what are the best types of LSM?

That will depend on the type of concept and how much you are willing to allocate to your LSM budget.

It could be as simple as the chalkboard you see outside of many cafes and small restaurants, local loyalty programs or targeting local businesses with permanent discounts or as complicated as setting monthly budgets with a year long LSM plan, setting monthly promotions, daily specials and doing the research to understand your local demographics. It does not stop there. If you are serious about driving your sales you will also do the work after each LSM activity to gauge the effectiveness and cost of each activity. Make adjustments and add new ideas for the next time.

OK, that’s enough from me. More on LSM at a later time and with some ideas on what to do and when. In the meantime if anyone has any great ideas or LSM that you know works for your concept or believe may work generally for food concepts, please respond and share your ideas and best practise.

Franchisor Ethics and Responsibility

Let me tell a story about a large award-winning international franchisor that have ( as all do) a number of unprofitable outlets which never will be profitable for one reason or the other (i.e.) shifting demographics, location, etc. Most franchisors of this size, after providing operational, monetary and marketing assistance to the ailing franchisees (in this case two consecutive business owners) would make one of two decisions: a) find a tenant to assume the lease and exit the business or b) close the business and walk away dependent on financial reality.

Did they do that? No. With this large franchisor it was a matter of “Who can we sell this franchise to now?” Of course they were thinking of the exit fees paid by the failed franchisee, the initial franchise fee to be paid by the incoming franchisee and all other various and sundry fees that go along with any franchise business. Of course, both of the franchisees are partially to blame – due diligence was not done to an extent that would have set off alarm bells. Sound financial and legal advice was not sought and perhaps in one of the cases, the brother of the franchisee – a fine accountant by any suburban standards – was probably not the wise choice for advice that could result in financial ruin for the owner of the doomed business.

What’s my point? How culpable is the franchisor in this situation? Do they not have a duty of care and responsibility to all of their franchisees to steer them in the right direction; to ensure to the best of their ability that anybody taking up the mantle of their brand has a good chance of success?

Fortunately in my 30 years in the franchise business, I have not seen this happen often. Let’s hope this practice is rare and if not, nearing extinction. I understand that the rules of caveat emptor are at play but at some point unscrupulous and greedy practices affect all of us and should be exposed or brought into the open. While what they are doing is perfectly legal, it is totally unethical.

R. Stevens

 

Is This Damn Recession Over Yet?

When this “recession’ started, the media strove with reports of doom and gloom to assist the economy on its downward spiral. Now as various experts and government agencies talk about rebuilding and keeping the momentum going – I’m wondering…..what momentum? Have we turned the corner? Are we seeing week on week of positive sales growth? Are factory order books filling up? Are those factories rehiring workers they laid off a few months ago? And do those workers feel comfortable spending those wages on a $12 lunch, a $4 coffee, McDonalds with their kids after a day out on Saturday?
Well I’m not seeing it…..yet.

Talking to my franchisees on this subject (a common topic of conversation in the past year) they are starting to have some good weeks. Better than last year but not every week and not predictable. Some of the real growth is positive even on the previous year, that gives us all some optimism and it is spreading. BUT….with the latest world news that PIIGS (Portugal, Italy, Ireland, Greece and Spain) will require multi-billions (euros) in bailouts to keep the European economy stable and the Middle East with its enormous debt levels – one thing is certain, all is not well with the world economy.

So back to the original question….Is this damn recession over yet?