05 Oct THINK OF YOUR SALES TERRITORY AS A FRANCHISE
Salesforces operate like franchises in many organizations, but few consider the similarities. If sales pros understand the implications, it should increase sales opportunities and closed sales. Let me explain.
Some well-known franchisors include McDonald’s, 7-Eleven, Pizza Hut, Dunkin Donuts/31 Flavors, Subway, Taco Bell, and Allstate Insurance. Entrepreneurs usually own the franchises. Businesses such as Starbucks, Barnes & Noble, CVS, and Walgreens are chains, not franchises, and are owned by the corporation.
Typically, when one licenses a franchise from the franchisor, the following applies:
- A franchise is very entrepreneurial. Success or failure is determined solely by the owner
- A franchisee is the owner and does not have somebody to report to
- There is a proven business model (less risk and failure rate)
- The franchisor provides training to all franchisees
- The franchisor usually provides access to capital
- The rights to sell products or services in a defined territory
- The franchisor has developed a market-proven product
- The franchisee must seek his own customers and is responsible for his own profits or losses
- The franchise is responsible for its own real estate, equipment, and inventory
- The franchisee must prepare their own cash-flow forecasts
- The franchisor has a lot of control over pricing
- There is brand recognition and a centralized marketing function
- The franchisor provides marketing collateral, logos, and standard customer contract forms
- The franchisee has a lot of autonomy
- The franchisee can hire (and fire) as he wishes
- The franchisor receives a royalty payment on all sales
- The franchisor holds quarterly or annual sales meetings to update all franchisees
- Often, there is an existing customer base
- The franchisee will network with others in the area to increase visibility
- The franchisee often provides add-on value services
With some minor modifications, the above list can also describe how a sales pro should operate in a sales territory.
The sales territory can be thought of as being remarkably similar to a franchise. The company provides the products, sales training, central marketing, a website, price lists, contracts, legal support, best practices, and opportunities to network with successful sales pros at sales meetings.
Sales pros don’t need access to capital or make royalty payments, since the company receives the revenue and (usually) pays commissions on closed sales or recurring revenue. The company is responsible for staffing, internal systems and procedures, and company benefits.
Suppose sales pros approach their territory as a franchise and understand they are solely responsible for generating their new business and maintaining the existing revenue base. In that case, they will be much more proactive. They will not wait for the company to provide them with leads but will plan marketing activities such as email campaigns with telephone or text follow-up; they will seek new prospects outside of the company’s business channel or website, prepare proper customized messaging and create appropriate marketing material to support the campaign; and will operate in a manner that optimizes revenue and minimizes expenses. The sales pro will also want to ensure greater customer satisfaction and long-term, recurring revenue because it is in his territory.
Sales pros with an entrepreneurial attitude will be more successful than those who don’t, especially those who wait for the company to provide leads. (I call those “quota sloths.) They are much more self-motivated and proactive. They enjoy the position’s autonomy but will engage their manager when necessary. They understand the value of timely and accurate sales forecasts to management. They have an attitude that they “own” their sales territory and treat it like their business within a company. The sales pro will put more energy into generating qualified leads and following up on them. That will result in more sales.