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How to set up a loyalty program for Franchise Formulas
How do you set up a loyalty program specifically for a franchise formula? We’d like to share some of our experiences that we have accumulated over the years with loyalty managers or marketers that are confronted with that task, or who are in the process of orienting on how to start with the realization of that objective. Connect with us if you’d like to know more and want to discuss your specific case.
How do you set up a loyalty program specifically for a franchise formula?
- Define program objectives: Start by clearly defining the objectives of the loyalty program. Is it to increase customer retention, drive repeat purchases or to encourage customer advocacy? Knowing your specific goals will guide the design and implementation process. Try to express your goals in measurable goals and KPI’s.
- Understand franchisee needs: Conduct research and engage in discussions with franchisees to understand their individual needs, challenges and capabilities. Consider their operational capacities, resources, and customer base to ensure the loyalty program aligns with their requirements.
- Implement a centralized platform: Establish a centralized loyalty platform that is capable of easy data access and that can be managed by both the company and franchisees, like you can do with VEMT’s platform. Your weapon of choice should enable seamless tracking of customer transactions, reward accumulation and redemptions across all franchise locations.
- Provide franchisee training and support: Offer comprehensive training and ongoing support to franchisees to ensure they understand the loyalty program and can effectively communicate its benefits to customers. Provide them with marketing materials, guidelines, and regular updates to facilitate their participation. Ideally, the platform provides embedded online training, like VEMT’s platform does, so training can be done consistently and without you being involved in all franchisee locations.
- Ensure consistency and branding: Maintain consistent branding and messaging across all franchise locations. Develop standardized loyalty program materials such as (digital) membership cards, signage and promotional materials to create a unified customer experience. This consistency helps customers recognize and associate the program with the company, regardless of the franchise location they visit.
- Incorporate customer feedback mechanisms: Include customer feedback mechanisms within the loyalty program, such as surveys or review platforms, to collect insights and continuously improve the program’s effectiveness. Actively engage with customers and franchisees to address concerns, implement suggestions, and enhance the overall experience.
- Monitor and analyze program performance: Sounds simple, but is often overlooked. Regularly monitor the program’s performance and analyze key metrics such as customer retention, average spend, and redemption rates. Identify trends, patterns, and areas for improvement. Use this data to refine the program and make data-driven decisions, but also provide the franchisees with the data relevant to them to enable them to make their own decisions, accelerate the impact of their campaigns and to empower local marketing.
- Foster collaboration and communication: Establish open lines of communication between the company and franchisees. Conduct regular meetings, share best practices, and encourage knowledge-sharing among franchisees. This collaborative approach ensures a sense of ownership and engagement, leading to a more successful loyalty program.
- Recognize and reward franchisee success: An important success factor: we have learned that any franchise formula based loyalty program should acknowledge and reward franchisees who actively participate in the loyalty program and contribute to its success. This recognition can be in the form of incentives, exclusive benefits, or public appreciation within the franchise network. Celebrating achievements motivates franchisees to continue their efforts and strengthens their commitment to the program.
Setting up a franchise loyalty program also poses unique challenges compared to setting up a loyalty program for a regular retailer. Here are some key challenges specific to franchise loyalty programs:
- Consistency across locations: Maintaining consistency in the loyalty program experience across multiple franchise locations can be challenging. Franchisees may have different operational capabilities, varying levels of customer service, and diverse marketing strategies. Ensuring a unified customer experience becomes crucial to prevent confusion and maintain program effectiveness.
- Franchisee engagement and buy-in: Securing franchisee buy-in and active participation in the loyalty program can be more difficult than with regular retailers. Franchisees may have their own independent business goals and priorities, and convincing them of the program’s value and aligning it with their objectives requires effective communication, training, and support.
- Brand alignment: Consistency in brand alignment is critical for franchise loyalty programs. Franchisees may have varying levels of adherence to the brand’s standards and guidelines, which can impact the loyalty program’s messaging, design, and overall customer experience. Ensuring that the program reflects the brand’s values and reinforces its positioning is a challenge that needs to be addressed.
- Data integration and technology: Integrating customer data from multiple franchise locations into a centralized system can be complex. Each franchisee may use different point-of-sale systems, databases, or customer management tools. Ensuring smooth data integration and leveraging technology to track customer transactions, points, and rewards across the franchise network requires careful planning and technical solutions.
- Franchisee autonomy and customization: Balancing the need for franchisee autonomy and program customization with maintaining consistency can be a challenge. Franchisees may want to tailor the loyalty program to their local market, which can create complexities in program design and implementation. Striking the right balance between customization and standardized program elements is crucial.
- Program funding and cost-sharing: Determining the financial structure of the loyalty program can be challenging in a franchise model. The cost-sharing between the company and franchisees needs to be fair and transparent, taking into account the varying sizes and profitability of different franchise locations. Establishing a sustainable funding model that incentivizes franchisee participation without burdening their financial resources is essential.
- Communication and training: Effective communication and training are vital for franchise loyalty programs. Ensuring that franchisees and their staff understand the program’s mechanics, benefits, and customer-facing communication is critical for its success. However, delivering consistent training and support to a geographically dispersed franchise network can be a logistical challenge.
- Franchisee turnover and onboarding: Franchisee turnover is a common occurrence in the franchise industry. Onboarding new franchisees and seamlessly integrating them into the loyalty program can be a challenge. Ensuring that new franchisees are educated about the program and provided with the necessary tools and support requires efficient processes and ongoing communication.
With these attention points and the listed risks, you should be prepared to build your franchise based loyalty program. Talk with us to discuss your specific use case and create the basis for success.