What is a Good Cost Per Lead for Franchise Recruitment?

Looking to Recruit Franchisees? Managing Cost Per Lead Expectations is the First Step to Cost Effective Franchise Recruitment

Leads are prospects interested in joining your franchise network. When running marketing campaigns, or advertising your franchise on a franchise directory, one useful metric of measuring performance is Cost Per Lead.

Cost Per Lead (CPL) at the simplest level, provides you with an approximate cost of how much each lead is costing you relative to your marketing spend.

The CPL can be worked out by dividing your total spend by the number of leads you have received for that period. But what is considered a good Cost Per Lead for franchisee recruitment?

What Types of Enquiries Are You Basing Your Cost Per Lead On?

It’s common to have a different cost per lead from different marketing streams. You may find that Facebook results in a £5 CPL via Facebook Instant Forms, but a £30 CPL when directing visitors to your website. Why? Because every step that requires user input or involvement, slows the user down. This is called friction. As well as having an effect on the quantity of leads, it also has an effect on the quality.

If you’re basing your CPL on every lead that comes in, a pretty low Cost Per Lead can be achieved. Lead quality aside, it’s not difficult to achieve a CPL as low as £5 per lead for most UK franchises. Forms that are too easy to complete or are misleading, often result in low CPL and quality, but higher quantity.

For low CPL enquiries with minimal user input or friction, you’ll realise that the cheap cost per lead isn’t so great after all. You’ll find that once you start sending emails, once you start working the leads, you’ll tend to find that:

• Harry F was only interested in finding out what products you use
  • You can reduce these kinds of enquiries by making it clear on your marketing that it is about business opportunities. Highlighting an investment level will also reduce poor quality prospects.
• Michael T is enquiring about a territory already taken
  • Most platforms such as Google and Facebook let you target (or exclude) by area.
• Mohammed J never replied to your emails or phone calls
  • Send them a follow up email!
• Shelby never received your email because your repeated use of the same content meant the message ended up in spam
  • It does happen. Make sure you’re including an unsubscribe in any automated communication, and don’t use the same content for new leads over and over.
• <enter name here> left a fake number or missing info
  • Make your form inputs required fields. It’ll slow people down but time wasters will not pursue completing the form.

Managing your lead generation expectations is really important. Even with some logic or friction on your forms, you’ll often still get cold and warm leads. For some brands, it can cost £50 per warm lead. Many franchisors, especially new brands, don’t realise how many leads it can take to recruit a franchisee. It becomes easier recruiting new franchisees once you’ve got the first few on board, because PR and success stories really do help. It builds trust. However if you think that getting 50 franchisees on board in 12 months is achievable, you may want to rethink that.

• If forms are too easy to obtain data from; if forms are too easy to fill out, leads may not even remember completing the form!
• An enquiry is a request for more information. The more information you display on a landing page (investment level, earning potential, for example), the less reason a person has to get in touch. This limits the number of enquiries to those that are hotter leads. This invariably drives CPL up, but too the quality.
• It’s good to get the right balance between quality and quantity. You’ll want a good mix of cold, warm and hot leads, speaking to leads on the phone helps them get a clearer picture and clears up any queries they might have.

Telling the Difference Between Hot and Cold Leads

When marketing, you could get 100 leads from your franchise advertising, only for 10 to show further interest, and 1 to convert. Those that show interest are warm leads. Those that don’t are cold leads. Those that want to take their interest further are called hot leads.

• Cold Lead – Someone who doesn’t show any further interest after the initial enquiry. You can hold onto these leads (remembering compliance with GDPR) and add to a mailing list if they have opted in. They may be cold now but they may warm up. £5 per lead is acceptable. £10 per lead is also fine, more than £20 is not great for these quality leads.
• Warm Lead – Someone who has acknowledged your initial email, perhaps clarifying more about their current situation and career aspirations. Has a good chance of arranging a call to find out more. £10 per lead is really good. £30 per lead acceptable for this type of lead. If you’re really narrowing down your enquiries, £50 is the limit.
• Hot Lead – Call scheduled or has expressed interest in signing an NDA or discovery day. Shows strong chance of conversion and putting down a deposit. £50 per lead is acceptable. Even £100 per lead would be accepted by many franchisors for this level of quality.
• Conversion – Average conversion rate for franchisee is between 1-5%. The lead has progressed to signing a deposit or franchise agreement and intends to become a franchisee. Therefore paying £20 per lead, at 1% conversion rate, works out at £2000 per franchisee.

What factors can influence the conversion rate of franchise recruitment leads? Let’s find out.

What Factors Influence the Conversion Rate of Franchise Recruitment Leads?

Some franchises do better than others at attracting interest from potential investors. There are several factors which influence not only quantity but the quality of leads. For example big fast food chains will attract significant interest thanks to their strong brand and market share. Whereas smaller fast food franchises take time to establish trust, reputation and their significance in the sector.

Make The Best Possible First Impression

Are you personally following up every lead that comes in, or are you automating the process? Email clients aren’t silly. Google and Hotmail know if you’re repeatedly sending the same content to every lead, using tools such as Zapier. As a result, your first impression falls flat on its face when your response gets found 3 weeks later in junk. You should tailor each response to its requirements. Ask more about their background and what sort of business they’re looking for. Explain a bit more about the franchise and ask them if they’d like to book a call or find out more. Ask them if what you’ve said sounds of interest to them. Finishing your email with a question encourages them to reply. If they don’t, you have reason to follow up.

Your email response should have natural looking text, along with your name and company signature. It shouldn’t need to be said, but you should only be replying with a company branded email address.

If your emails are going to spam, check with your hosting company to make sure you have SPF, DMARC and DKIM set up. Refresh content regularly and try to avoid including financial figures in the email body.

Some Franchises Do Perform Better Than Others

Cost Per Lead can very considerably between franchises. For some brands, it can cost £20+ per individual lead. There are many factors which influence how many enquiries a brand will receive. Factors that influence lead volume and cost of lead can be down to:

Cold Leads are Not Ready to Progress

You’re unlikely to find many people that are out of an existing career ready to drop a four, five or six figure franchise investment and get started straight away.

A business is a big commitment.

Whether it’s a small home based, low cost franchise business, or a restaurant, becoming a business owner requires readiness – a stage that could take months, even a couple of years. One of the biggest factors for leads not converting is the prospect’s readiness. They’ll get some brochures online, take a look and “think about it”. I’ve done it. We’ve all done it.

Subject to data consent, there’s no reason why you can’t communicate with these prospects again in a few months to see where they’re at. Just be sure to comply with GDPR, ensure opt-in for email or SMS, and don’t hold data longer than necessary.

You’re Targeting the Wrong Audience

Maybe your marketing is not delivering the appropriate message, or maybe your target audience isn’t properly refined. Software like Google Ads, Reddit Ads and Facebook Ads allow you to target by age group, gender and location. The ideal ad should be targeting people between mid twenties and mid fifties. Further narrowing down your target area to the cities nearest your existing franchisees. If you have franchisees across the country then target the entire UK. If you’re starting out, the cities nearest to you are those more likely to have heard of your brand. It works better for meet-ups and discovery days as well.

Most ad services work on cost per click or cost per thousand impressions. To get the best return on ad spend and therefore the best cost per lead, narrow down your audience as much as possible to the right audience.

How Much Does it Cost to Recruit a Franchisee?

The costs to recruit a franchisee depends on many factors. How much you’re spending, where you’re spending it, and how you are handling the leads. Provided your emails aren’t going to spam, provided you’re manually following up the leads and showing an interest in the person making the enquiry, a conversion rate between 1 and 5 percent is typical for good quality leads (warm-hot leads).

Leads aside, the cost of recruiting a franchisee incorporates a number of other costs, such as legal documentation prep, territory work and of course, time out of your own schedule. At the lower end, you’re looking at a four figure number at least. Even if you don’t spend a penny on marketing, and a conversion comes via your own website, be prepared to travel to meet with the candidate, arranging interviews, discovery days, the works.

How to Increase the Quality of Franchise Leads?

Lead quality very much depends on how the information is presented to the prospective candidate. If you’re withholding any information that a prospect might be interested in prior to enquiring, this lowers quality of leads. Unmatched expectations, such as:

• Investment out of their budget which wasn’t clear on the profile or marketing
• Royalty fees have been declared, but its not clear why they are collected and what you’re using them for – transparency like this really helps
• Investment is adequate, but its not clear what they get in return – the investment needs to sound worthwhile otherwise they may feel it more cost effective to go it alone instead
• If you’re targeting people unaware that there is even an investment required – if the candidate wasn’t expecting to hear they need £10,000 capital for example

It’s things like this that lower the quality of the leads. If the offering isn’t transparent enough, you get a drop off in interest. For good quality franchise leads, people must know what they’re getting for their money. Therefore you can increase lead quality by making your profile or marketing as informative but attractive, as you can. If you’re advertising on a franchise portal like Franchise Planet, we can help you include the necessary information such as by creating a listing from your prospectus.

Open Up Your Brand

Discovery days are a fantastic way to encourage leads to visit you, ask questions openly and find out more. Attending a discovery day shows interest. For a lead to take the time, make the journey, shows commitment.

Tell Your Story

Transparency of your brand is important. Make your brand’s story clear and include background about your history in both your profile and franchise prospectus. A graphical timeline looks great, tell people about your business, what you do, when you were formed and what progress you’ve made.

Share Franchisee Experiences

Sharing progress from existing franchisees is a fantastic way to build up your online profile and brand trust. Interviews with franchisees, including success stories, are always a winner. By exploring the journeys of other franchisees, you can use this to connect with potential candidates.

So What is a Good Cost Per Lead When Recruiting Franchisees?

You could say £3 per lead is a good cost per lead. It is – for diminished poor quality leads.

Fine tuning your marketing and targeting can help improve your lead quality without compromising quantity. For example asking a few more questions on forms for postcode, capital and timeframe make a lot of difference. It slows people down but those that can’t be bothered are unlikely to progress anyway. Short forms attract poor quality leads. Forms that are too easy to fill out.

With a good quality franchise profile, and good quality targeting on paid marketing campaigns (if you’re using them), £20 is a good cost per lead. It’s also an achievable one. £100 per lead is also acceptable, for hot leads — leads with strong interest in your brand, with the right capital, in an ideal area.

Ultimately it is important to manage your expectations. Franchise recruitment isn’t cheap. If you’re looking to spend £100 on a boosted Facebook post and hope to get 10 franchisees, it’s simply not going to happen. However in the long run, fine tuning your brand presence online and adjusting your marketing tactics to target the right audience, you’ll find good quality leads can be found for as little as £20 per lead.

Interested in driving more leads for your franchise recruitment? Why not get started with a free listing on Franchise Planet. Looking for more franchise enquiries? Our paid franchise ads can help boost more enquiries. We’re proud to be working with some of the best franchises in the industry. Is your franchise one of them? Get in touch today.

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