Table of contents
Everybody knows that marketing your franchise is valuable — but determining how valuable can be tricky. In this post, we talk about how to figure out the ROI of your marketing campaigns.
When you’re making any decisions regarding your franchise business, one of the most-crucial calculations to consider is whether the juice is worth the squeeze. Whether it’s new hires, new products, or new locations, every decision is ultimately gauged by whether or not it’s making you more money than it’s costing you.
Where this gets tricky is when you’re trying to evaluate the ROI of a franchise marketing campaign. In much of the industry, a campaign’s success is gauged by inference and indirect measurements — if your sales increased after you ran an ad, conventional wisdom would say the ad was probably effective. But that doesn’t take into account mitigating factors, other possible explanations for the traffic increase, or random market fluctuations.
Agencies will often show off how many view-based metrics a creative earned, like impressions or pageviews, but translating those basic numbers into a true return-on-investment can be tricky.
We know marketing is crucial for the success of your franchise, but how do we determine how well our marketing is working? Read on:
Contents
Read This: reach your customers while they watch and wait, with BalihooTV
Understanding Franchise Marketing
We’ve talked before about mastering the fundamentals of franchise marketing, but franchise marketing is a unique animal among businesses. The biggest difference is the more-decentralized structure of franchise operations, where franchisors provide overarching brand guidelines and strategies (and occasional national-level ads) but franchisees may still run point on their own local efforts, adapting the national model to suit their own local conditions and customer preferences.
In short, franchise marketing may still be standardized, but it needs more flexibility than most. A two-pronged approach that has the franchisor boosting brand recognition at the macro level, while the franchisees pursue hyperlocal opportunities on the ground, is a common setup. It’s not the only one, however, so keep the unique qualities of your own franchise operations in mind as we continue.
Online and Offline Metrics for Measuring ROI
Determining what sort of ROI you’re pulling down from your marketing campaigns will depend on a slew of metrics, both online and offline, that combine to tell you the story of your campaign.
- Conversion Rate (CVR) tells you the percentage of website visitors who complete an action you specify. It can be something like making a purchase or signing up for a subscription, reaching out for a quote or getting your monthly newsletter. Your conversion action will depend on what the goal of your campaign was, but whatever the action is, you should have a dollar value assigned to it. For example, if you tend to get one hundred-dollar purchase for every hundred subscribers to your newsletter, you’d probably value a single newsletter subscription as being worth a dollar (or a little less, to leave room for profit, but you get the idea)..
- Cost Per Acquisition (CPA) tabulates the average spend needed to acquire a new customer. Assuming you’re able to track your new customers back to your marketing efforts, this is a simple divisible formula — amount you spent on marketing divided up by the number of new customers. Tracking your customers back to your marketing can be tricky, however — more on that later.
- Return on Ad Spend (ROAS) measures the revenue generated for every dollar spent on advertising. While CPA just measures the number of customers, ROAS factors in the amount those customers are spending. You can have two campaigns that have the same spend, the same number of new customers, and the same cost per acquisition, but one may be generating sales of your cheapest product or service, while another campaign might be landing you bigger-ticket clients.
- Engagement Metrics: Measurements of your online metrics like Impressions (number of views your ads got) Click-Through Rate (CTR, number of users who clicked on your ad) and more may not tell you directly what sort of revenue your ad campaigns are generating, but they can give you a window into how your audience is responding to your creatives.
Now, while these are all useful metrics, the key to measuring the ROI of your campaigns is being able to draw a direct line between your creatives and any impact those creatives are having on your sales. You want a roadmap, not an Ouija Board.
So how do you connect the dots? The secret is all in attribution.
Executing an Influencer Marketing Campaign
You know how sometimes, when you go to a store, the commission goes to the salesperson who rang you up? Even if you did all the shopping yourself or, worse yet, a completely different salesperson was bending over backwards to help you make your selections?
The problem there is one of attribution, i.e. who gets the credit for a sale. In advertising, this can be a similarly-thorny issue. Misattribution with your marketing could mean accidentally diverting funds away from what’s converting towards something that isn’t, or failing to account for the ways non-converting creatives were actually contributing to your overall bottom line.
Because of this, there are several different approaches to measuring attribution, and a few tricks you can employ to make your attribution more accurate.
- First-Touch Attribution: This one gives the weight of any conversions to whichever ad the user encountered first. Even if they saw dozens in different places, which means it fails to account for a series of ads wearing a buyer down over time, or reinforcing your brand messaging.
- Last-Touch Attribution: More of a “straw that broke the camel’s back” model, this one applies the conversion to whatever the most-recent ad encountered before the sale. Of course, the problem here is that it downplays the contributions the rest of the ads may have made to the customer’s journey.
- Time Decay Attribution: Working similarly to Last-Touch, Time Decay attribution weights the attribution like grading on a curve, and gives more credit to touchpoints closer to the conversion event, recognizing the influence of recent marketing efforts on customer decisions.
- Click-Through Attribution: This works by setting up a specific website that corresponds to the ad, so that clicking on that ad goes directly to that landing page. This isn’t without problems: for one, it’s still a last-touch attribution model since it ignores any previously-seen ads. For another, aside from specific interactive ads, it’s hard to use this model in CTV campaigns.
- Position-Based Attribution (U-Shaped Attribution): primary weight to the first and last ads your customer encountered, with a little weight reserved for the ones in-between. This gives the first ad credit for introducing your customer, and the last ad credit for being the one that pushed them over the edge.
- Multi-Touch Attribution: This is an attempt to address the weaknesses of the other models by combining them, and using various formulas to apply weight to each touch the user encounters on their sales journey. It’s obviously a fairly time-consuming process compared to the other, more-automated methods.
Overall, Multi-Touch Attribution is going to net you the most-accurate information about where your sales are coming from, but each of these have their potential uses, and different campaigns might employ different metrics depending on what you’re trying to do. So how do you implement these?
Challenges And Solutions For Effective ROI Attribution
Measuring ROI in franchise marketing presents several challenges that require careful consideration, but there are approaches you can take that mitigate them.
CHALLENGE: Data Fragmentation. One of the biggest issues when trying to mount this kind of campaign is that your data is going to be stored in several different places. Separate independent franchisees may have different pictures of how well your marketing is working.
SOLUTION: Integrated Data Systems. One of the best ways to analyze your data is to get all your data together in one place. Integrating your online marketing data with your franchise POS data will give you a more-complete picture, which is what a lot of these strategies are about.
CHALLENGE: Attribution Complexity. As we’ve established, it can be hard to trace your business outcomes directly back to your marketing efforts. The customer journey can be a winding one, where they re-encounter your messaging multiple times on the way to a sale.
SOLUTION: Forming Partnerships: Franchisees are busy doing the work of keeping your business running, so diverting their energies towards analyzing marketing analytics is probably not the most-effective use of their time. Teaming up instead with someone else who can help provide real-time insights on your marketing analytics is a great option, and allows you to utilize the more complicated multi-factor attribution strategies that give a more-complete picture.
CHALLENGE: Local vs. National Strategies. Balancing local marketing initiatives with national or regional campaigns impacts ROI measurement due to varying market dynamics and consumer behaviors.
SOLUTION: Collaboration Between Franchisor and Franchisees. Though this is a key strategy for almost any initiative, promoting collaboration and communication between franchisors and franchisees can help collect more data, provide crucial context, and maximize the return on the data you’re collecting.
As you can see, there are answers for most of the most-pressing issues facing franchisors and franchisees as you untangle the mystery of ROI.
Final Thoughts
Measuring ROI and effectiveness in franchise marketing campaigns demands a strategic approach that integrates online and offline metrics, employs effective attribution models, and navigates challenges unique to the franchise environment. By leveraging data-driven insights, optimizing marketing strategies, and fostering collaboration between franchisors and franchisees, franchises can maximize ROI, drive sustainable growth, and strengthen their competitive position in the market.
If you’re a multi-location business looking for every edge you can get, Balihoo has the solutions you need. Built from the ground up to tackle the concerns of franchise marketing, our proprietary platform allows you to launch and manage campaigns from a single dashboard, with Balihoo’s team helping you master the insights you’ll need to truly optimize. From display and paid search to CTV and digital-out-of-home, Balihoo is on top of it. So get started today by reaching out to our team.