When your mission is to grow a brand nationally or globally, and your income is based on the success or failure of that mission, your perspective tends to be vast and wide. Yet experience and results demonstrate that we have the greatest amount of success marketing using the narrowest messaging and geographies available. The core idea behind FranFocus, is to help our clients FOCUS on a handful of their ideal markets; states, counties, designated market areas (DMA) or even zip codes. We usually ask for at least three markets to start, but not more than 10, based upon available budgets. But that’s when we get the glazed look.
If you job is to increase the number of franchisees, licensees, distributors, vending machines or whatever it is you need to grow, you typically do not CARE where your next location pops-up. We get that. But if you had the ability to choose where your next buyer comes from, and their location would actually HELP you sell more and grow your brand, why not get more strategic about your expansion plans for the next six to 12 months? That’s when the light bulb comes on. Here are some key factors that we use to help our clients cherry pick the markets that could be most valuable for expansion:
Geographic Validation: If your opportunity is retail or restaurants, it would be more challenging to sell your opportunity into a new market when you don’t have restaurants near-by so prospects could easily go and experience your brand. That’s why some brands become regionally successful. So if your brand is having great success in one particular region or market, look to adjacent markets as your higher priorities for expansion. Your cost per lead will be less because some people in the market will already have brand awareness and your cost per sale will be less as well because your candidates can take a quick car ride and experience your retail or restaurants first hand.
Market Volume: Decades ago I helped my first franchisor employer establish a formula to determine how much retail bedding was sold, by household, on an annual basis. With this formula we could look at ANY market, even a zip code and give a fairly accurate estimate on how many mattresses and box springs that zip code would buy each yet. We could draw a circle around a location, or potential location, and say within an five mile radius this market buys $1,200,000 in bedding every year. If can achieve 20% market penetration in year one we could expect X in annual sales, 30% by year two would equal Y and if we max out at 50% that would be $600,000 a year in sales, just from within that ring. Obviously there are other factors at play, (see Competition below), but this formula, combined with demographic data, helped us target expansion markets and resolved disputes between franchisees about rights to adjacent markets.
Competition: How many gas stations does your town have? I live on an island off the southeastern coast of North Carolina, with about 10,000 permanent residents – along with hundreds of thousands of tourists during the Summer -and we have TWO gas stations. Do we need another? When targeting markets, in addition to market volume, we also need to look closely at what are the other competitive options your target demographic has. Sometimes the existence of competition is benefit because it has pre-exposed a need and a demand for your product or service. In other cases, arriving too late to the party, when buying habits have been firmly established may mean a market failure for you and your local partners.
Logistics: If your opportunity relies upon the movement of physical goods by semi-truck or container ships, logistics can easily play a role in your decision making. If you are in the Midwest and need to move goods by truck past the Rocky Mountains, it may be better to focus on more local expansion than flying out that candidate from California interested in a single unit. If your partners will pay increased shipping rates because of the location they desire, it’s obviously important that those details be discussed early in your dialog so no one questions why their net profits might be less than others more geographically advantaged.
State Regulations: When it comes to franchising, the rules and regulations established by each state can change from year to year. If your opportunity is a restaurant that depends on alcohol sales, you may want to consider expanding into Georgia before Florida. If your opportunity is elder care, you might want to consider South Carolina over North Carolina, who has much more stringent regulations for in-home care. And we will not even touch upon the vastly different tax implications that vary from state to state.
We are certain that we haven’t introduced you to any obscure concepts that you haven’t considered before, but collectively these factors should help you eliminate some markets from aggressive promotion and cause others to rise above as priorities for brand expansion. These are the markets we want to hear about! These are the markets where we can get local with our marketing, driving local candidates to your local landing page (LLP) for lead generation and generate significant interest in your brand to help find your next success story!
If you’re not sure what a Local Landing Page is – please watch the three minute video on this page!
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