How do you measure success? The answer for this question might have several answers. In other words, success could be measured in different ways. It is not so wise to compare your franchise with another to measure its success. Rather these 9 important KPIs for a successful franchise, will help you see the areas that reflect your growth. Let us get started.
This is one of the basic areas that your franchisor will be looking at. Since the royalty is based on gross sales. Do not compare your gross sales with that of other franchisees in a different location. Rather compare it with your past performance to understand if you are doing better than previously.
The rankings are not to be taken as an ego boost. It merely helps point out what is working and what is not. The real purpose of franchising is to be able to enjoy being wealthy. In other words, the true purpose of franchising is to be able to enjoy the quality of life, time and money.
This is the most relevant factor from a revenue standpoint that will point out your success. Learn from your fellow franchisees about their profit, even if they mention it as a percentage of gross sales. However, remember that gross sales and ranking do not mean much if the revenue is low.
This one is tricky. The growth rate shows the rate at which your company is growing or shrinking. But the numbers of a franchise cannot be compared to others. For instance, a franchise that goes from $250,000 to $300,000 has grown by $50,000, or 20 percent. A franchise that goes from $1,000,000 to $1,150,000 has grown by 15 percent. Twenty percent is more than 15 percent, but $150,000 is more than $50,000. So which is doing better? It can be understood only from the net profits.
This one is as good as profits. Because it is customer satisfaction that leads to profits. In other words, a happy customer will buy more and refer more. And this can be measured by Net Promoter Score (NPS), Customer Satisfaction Score (CSAT) or Customer Effort Score (CES). You could even use online reviews and star ratings to understand your customers’ satisfaction.
Repeat customers mean good service and new customers mean good marketing. Franchise business growth is all about gaining new customers and turning them into your regulars. It is important to understand how often regular customers give you repeat business and the amount of their spending. This will enable you to calculate your marketing budget and customer acquisition cost.
This is the amount spent per transaction. Growth needs more sales and bigger sales. You can do this by focusing more on up serving instead of upselling. Which means you work harder to make your customer happier than before.
Employees are as important as your customers. Make sure they are happy, so they can serve happiness to the customers when they walk in. Find ways to understand how they feel. Measure it and quantify it so it is easier to track it over time.
Keep a close watch on your Profit and Loss statement. Boost the revenue-generating ideas and kill the dead products. Always watch out for any holes or wastages. Maintain a tight budget and stay vigilant.
It is better to compare yourself with your past performance. However, you may look to other successful franchisors for inspiration and learning.
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