A frequently updated blog with relevant articles can significantly increase a website’s search engine rankings.

More importantly, it can be a very effective marketing medium in which to set your franchise offering apart.

Integrating social media sharing features are a simple and time efficient way to help increase readership, engage audiences, and boost brand awareness.

• Design a blog that accurately reflects the brand image.
• Consider having a blog that is solely dedicated to franchise development. This blog can be post franchisee success stories, financing options available to the prospective franchisee, newest franchise unit opening, etc.
• Optimize your blog content with key words relevant to your industry and opportunity.
• Add social media sharing and Facebook “Like” buttons to each blog post.
• Encourage readers to share articles with their friends and peers.
• Invite readers to comment and be prepared to reply.

Integrating social media into both your digital and traditional advertising can increase overall response rates and yield a higher return on investment (ROI) from your advertising.

Specifically, integrating a social media strategy into your franchise portal advertising is important to fully optimize and take advantage of social media. The most reputable franchise lead generation portals (of which Franchise Opportunities Network is one such company) are constantly searching for ways to generate more value for their franchise clients.

Collaborating with the portals on a social media strategy is where much of the “low hanging fruit” in online lead generation resides.

• Add social media calls-to-action (CTAs) into your traditional advertising to encourage readers to engage with your franchise offering online outside of the traditional website. As to your franchise portal advertising, make certain that your brochure on the website is replete with CTA’s.
• Publish the number of Facebook Fans, Facebook Likes, and/or Twitter followers to help enhance your brand’s credibility and provide third party endorsements.
• Again, integrate social media into other online marketing efforts such as email marketing campaigns and develop dedicated landing pages to help increase search engine rankings and automate word-of-mouth marketing.
• Create advertising campaigns that encourage content sharing.
• Direct readers to an offer-specific web page (landing page) or a franchise development website instead of the franchise’s website home page. Doing so will improve your ability to track and optimize the performance of the advertisement.

Properly integrating social media into a website enables users to distribute website content to their friends and colleagues across the internet. Franchisors should strongly consider creating either a separate website or a sub-domain off of the main website that is dedicated solely to franchise development.

• Integrate Facebook Stories: display success stories from existing franchisees on the website — testimonials are your greatest asset. Integrate social media icons into your website and cross-link to social properties.
• Encourage website visitors to become Facebook Fans and distribute your content to their Facebook Friends through the use of Facebook Widgets and sharing tools.
• Publishing to Facebook: This enables Facebook members to publish Status Updates directly from your site, notifying their Facebook Friends of your content.
• Live Stream: Facebook Friends can view live video on your website while chatting in real time about what they are watching. This can be useful for tradeshows, special events, and conferences.
• Publish your live Twitter feeds in a section directly on your website. For B2B franchises, promote your LinkedIn profile by adding LinkedIn badges to the website.

Probably few in America recognized, however, that Dr. King was instrumental (perhaps, theologically speaking, he was the instrument) in laying the ground work for America’s economic success over the past 40 years.

Granted, there are many in America who are still struggling to find their piece of the American Dream. But for all that has gone awry over the last three years it is useful to consider—if just for a couple of minutes—what our country might have looked like economically in 2010 had Dr. King never been born. As Clarence so effectively demonstrated to George Bailey in the film It’s a Wonderful Life regarding what life would have been like for the people of Bedford Falls had George Bailey never been born, so to shall this brief essay explore what our country might have looked like had Martin Luther King, Jr. never been born.

Dr. King was an extraordinary man. He led an extraordinary life and he set forth extraordinary ideas at a pivotal time in our nation’s history. But for all Dr. King’s accomplishments he was not, however, a perfect man. His personal failures are now well-documented. But it is not just his personal failures that have been highly scrutinized. Dr. King’s writings and speeches evince a certain amount of frustration—some would say hostility—to the American economic system. Indeed, Dr. King was not an advocate of free-market capitalism. Rather, he was an ardent supporter of a socially charged economic justice platform that favored affirmative action and unions. And, not surprisingly, he believed in the redistribution of wealth. David Garrow summarized Dr. King’s economic philosophy in his Pulitzer Prize winning biography as “democratic socialism”. There are still others who believed him to have been a Marxist. Irrespective of what label is applied the fact is that Dr. King was the right man at the right moment in history with exactly the right admixture of morality, philosophy, charisma, and economic policy to accelerate our country’s quest in becoming the “city on the hill”.

There are those that would grant Dr. King his due with regards to his civil rights accomplishments, but argue vociferously with the assertion that Dr. King’s economic philosophy was instrumental in moving forward the economy. This type of dichotomous thinking is flawed as it fails to recognize the indivisible nature of Dr. King’s body of work. It is all too easy to look back over the intervening 40 years and point to certain ineluctable facts as proof that Dr. King was right when it came to civil rights but wrong on the economy. But Dr. King’s Christian message of peaceful protest could only have been delivered and ultimately accepted alongside the economic message of “democratic socialism”. The African-American community—especially those living in the segregated South—did not want to hear about the merits of unrestricted free-market capitalism. The community wanted justice; justice in all its many forms. Dr. King advanced both social and economic justice for his community. The concomitant—some might say unintended—benefit that America received from his agitation for justice was that our economy grew—and continues to grow– because of those exact same efforts.

Simply stated, the advancement of the African-American community with regards to civil rights has had an incalculable positive impact on our nation’s economy. The number of small businesses that are today owned and operated by African-Americans is much larger than it was when Dr. King penned “Letters from Birmingham Jail”. The buying power of the African-American community is of an order of magnitude larger than it was when Dr. King led a civil rights march from Selma to Montgomery. While Dr. King might not have espoused the free-market economic philosophy held by so many in the small business community, the economic success that the African-American community has enjoyed over the last 40 years because of Dr. King has redounded to the direct benefit of nearly all in the small business community.

But to see it simply through such racially myopic glasses is misguided, however. For the success of the African-American community has not been sealed within racially segregated economic walls. To the contrary, as within any free-market economy, the more consumers there are the better. Consequently, all members of our American economic community have benefited from the rise of the buying power and increased net worth of the African-American community. And so to recur to the question that must be given some additional thought: what would America look like today had Dr. Martin Luther King, Jr. never been born? More specifically, what would our economy look like? Would small businesses today be on the cusp of another greater economic run? Would the past 40 years have produced the various large companies that have grown from humble beginnings?

No country’s economic future is foreordained. Nothing is set in stone. The Venetians once had one of the greatest economies in the world. Now the City of Angles is not even the largest economy in Italy. More recently, the Irish had an economic future that looked as bright as the sun. Now, the European Union struggles to bail out its Celtic member. It is, of course, impossible to know what our country might be like today had the world not been graced with such an extraordinary individual as Dr. King. What we do know is that Dr. King was a man of the cloth who carried forth a message of civil justice that forever changed our nation. Given the economic success—albeit incomplete economic success– of the African-American community it is well-nigh impossible to make a convincing argument that our country would be in a better economic position today had Dr. King not risen to prominence in that critical time in our nation’s history. The economic life of a country cannot be separated from its religious, cultural, and social roots. Dr. King transformed our nation in ways that probably cannot be ever fully appreciated.

Dr. King did not support supply-side economic theory. He was most likely a bit to the left of John Maynard Keynes. Of what consequence is that now to us? Like his personal failings we must look not at his “errors”; but, rather we must recognize his supreme contributions. For it is in his contributions that we see why it is that American’s are called upon to celebrate this man’s life and to delve further into the ramifications of his body of work. The economic success of America might not been realized in the exact manner he intended. But for many in both the African-American community and the larger American population economic success came about in ways that Dr. King could not have dreamed. There is a theological saying that God writes strait with crooked lines. Dr. King was first and foremost a minister. And so it may well be that from Dr. King’s religious point of view he might concede that his crooked line of economic thought produced a strait-line in economic advancement for all Americans.

With that said, America finds itself again in a difficult economic situation. Dr. King remarked: “when our days become dreary with low hovering clouds of despair, and when our nights become darker than a thousand midnights, let us remember that there is a creative force in this universe, working to pull down the gigantic mountains of evil, a power that is able to make a way out of no way and transform dark yesterdays into bright tomorrows. Let us realize the arc of the moral universe is long but it bends toward justice.”

For many in our country these are dreary days. We simply have too many people unemployed. We do not have enough consumer confidence, and as a result our economy is struggling to get back on its feet. Better times are ahead, however. If anything can be proven from Dr. King’s life it is that better times may well not come in the manner we now recognize, and, more importantly, that the guide showing us the path to these better times may not be the person we expect. Bright tomorrows lay ahead.

There has been a lot of ink spilled recently about the plight of the small businessman in the recession. In particular, there has been a great deal of discussion as to whether franchising as a business model has done relatively better or relatively worse than non-franchised businesses. There is no definitive answer. If the answer is that franchises have done relatively worse why might that be the case? There are myriad answers—from excess liquidity in the capital markets to the simple fact that franchising did so well over the past two decades that it was only natural that it would experience a temporary set-back.

Another possible reason, and the subject of this essay, may be that by its very nature franchising has a greater inherent risk profile due to the fact that franchising necessarily entails the transmission and transference of trade secrets and confidential. Consequently, the more popular a franchise becomes the more difficult it is to maintain its trade secrets and confidential information. This, in turn, impacts the long term economic health of the franchise. A franchisor therefore makes a bet that it can parlay its franchise system into a profitable venture without losing the value it already has staked in its trade secrets.

So to the extent that the growth of a franchise system impacts the ability of the franchisor to carefully monitor its trade secrets, the financial health of the franchise will be affected. The growth of franchising has not been driven by thousands of uniquely derived and/or recently invented products. The growth of franchising, and the ensuing fragmentation of many markets within franchising, is a direct result of former trade secrets and confidential information being disseminated in the market place. Unlike patents, which carry a protectable interest of 20 years, trade secrets are protectable for an indefinite period of time. Realistically speaking, however, trade secrets do not usually provide indefinite value to the franchisor. The more popular the franchise becomes the more likely it is that someone in the future will either receive trade secret information or will reverse engineer the trade secret. Thus the problem obtains in the ability of the franchisor to protect the trade secret long enough such that the franchise itself has enough brand loyalty to compensate for any dissemination of information that may have formerly been classified as trade secrets.

Much, if not all, of the value in a franchise is contained in the unique manner in which the franchise is sold and the unique nature of the product itself i.e., its trade secrets. The ability of the franchisor to sell franchise units is a direct function of a prospective franchisees belief that the franchisor has created a product and a product distribution system that cannot be easily replicable. The value of the franchise is necessarily derivative of how easily a non-franchisee (or ex-franchisee) can replicate the franchisors’ offering. A franchisors “gold” lies in its trade secrets. A franchisor derives value from its franchise system because its unique system is not generally known by the public. Therefore a franchisor must be diligent in preventing the unique means and methods it has of conducting business from being readily known by the public.

What is a trade secret exactly? The Uniform Trade Secrets Act—which has been adopted in some form or fashion by more than 40 states– defines trade secrets as

Information, including a formula, pattern, compilation, program, device, method, technique or process that: i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The Restatement of Torts identifies six useful factors to consider in determining whether something is a trade secret:

1) The extent to which the information is known outside of the business,

2) The extent to which it is known by the employees and others involved in the business,

3) The extent of measures taken to guard the secrecy of the information,

4) The value of the information to the business and to competitors,

5) The amount of effort or money expended in developing the information, and

6) The ease or difficulty with which the information could be properly acquired or duplicated by others.

The fundamental function of contract law is to deter contracting parties from behaving opportunistically toward one another in order to encourage the optimal timing of economic activity and obviate costly self-protective measures. It is an ineluctable fact of human nature that during times of difficult economic circumstances people are more prone to exhibit behavior that pushes the envelope on what society considers fair business practices. People are more inclined to put to the test exactly what is considered legal and/or acceptable when it comes to business dealings. This is evidenced by the rise of litigation on contractual disputes over the past two years. Some of these disputes are a function of one party simply not being able to adhere to its side of the bargain. But more than a few are likely the function of one party testing the limits of the terms of the contract. Stated differently, one party to the contract behaves in an opportunistic manner.

With fewer real dollars being exchanged in the marketplace, the competition to achieve relative wealth in our society is magnified. Thus a party to a contract who during better economic times might have not been inclined to behave opportunistically might during leaner economic periods test the limits of what is permitted under the contract. Because the licensing of trade secrets is so often the prime repository of the value of the franchise, understanding what a trade secret is and how to protect it is of particular importance in franchising.

By definition, a franchisor allows an erstwhile stranger to license, distribute and sometimes produce the very product that the franchisor created and upon which it relies to generate revenue. Given the nature of the franchisor/franchisee relationship franchisors need to be acutely aware of the opportunities for harm that inhere in the franchisor /franchisee relationship. During the best of times, the franchisor/franchisee relationship is balancing act of mutual self-interest. During times of economic uncertainty, the franchisee may find itself struggling to keep its business afloat. Or maybe worse even, as the franchisee finds itself as Bruce Springsteen put it “with debts that no honest man can pay”. Through no particular fault the franchisee may be faced with financial difficulties; difficulties that the franchisee may think could be alleviated extra-contractually or opportunistically. And so an opportunistic franchisee may seize upon the chance to exploit loop holes in a franchise agreement. The opportunities for harm most often manifest themselves in the dissemination of trade secrets and confidential information.

A franchisor must therefore be extremely diligent in its protection of its trade secret information. It starts and ends with the franchisor being certain that it has done all it can do to keep the trade secret information confidential. As an initial matter, only employees who need to know the trade secret information should be allowed to learn of the exact nature of the trade secrets. Second, the franchisors employees and officers should sign confidentiality agreement acknowledging the confidentiality of the trade secrets and expressly prohibiting the dissemination of said information.

The next step is to clearly identify the trade secrets in the franchise agreement. The agreement must make clear that the trade secrets are being licensed and not sold. The franchise agreement should also require the franchisee’s to have its employees sign confidentiality agreements similar to the one’s the franchisor The franchisee should be required to take reasonable steps to preserve the confidentiality of the trade secret information.

It is also a good idea to have a compliance officer monitor the use of the trade secret information. The compliance officer would be in charge of conducting audits of the franchisees. A concomitant obligation of the franchisees would be to provide compliance reports to the compliance officer which demonstrate that the necessary precautions are being taken to protect the trade secret information. If it is discovered that trade secret information has been misappropriated, a franchisor is going to need to prove inter alia that has taken reasonable steps to protect the secrecy of the information. Adhering to the aforementioned recommendations will ensure the franchisor a better position in the fight.

The popularity of franchising as a method of doing business will inevitably have its peaks and its valleys. Its robust popularity will come back. But the very thing that makes it effective as a means of doing business is the very thing that makes it risky. The higher the risk, however, means the greater the return. And so it is that the more popular the franchise becomes the more chances it has of falling prey to an opportunistic franchisee–the more chances it has of having its trade secret information lost. But every new idea one day will die and that’s a fact. It is therefore important for the franchisor to protect its trade secret long enough to build up its brand such that the death of the trade secret merely gives rise to the birth of a household brand with no need for recourse to the courts.

No successful business venture can long survive without strong, thoughtful leadership. When franchisees make the decision to enter into a franchise system they do so because they have confidence in the leadership. Whether that initial confidence is sustained over the life of the franchisee/franchisor relationship is by and large in the hands of the franchisor. Where does that initial vote of confidence derive? Many times it is the product of other franchisees’ testimonies as to the positive nature of the franchisor’s leadership.

Because of the challenging economic times in which we live the prospective franchisee is much more thoughtful in his/her decision on whether to become a franchisee. More than ever, the franchisee wants to see and/or hear evidence that the franchisor is going to “live up to its word”. The franchisee wants to have confidence that when the bullets are flying the franchisor will not leave them behind on the battlefield.

What exactly does displaying this type of leadership look like? History is replete with examples of superior leadership and examples of poor leadership. An example of both bad and good can be drawn from the American Civil War.

As an example of the type of leadership—or lack thereof– that would be detrimental to growing a franchise is the response to President Lincoln by General George McClellan concerning his failed attempt to capture Richmond. With an army of 100,000 men General McClellan laid siege to the Confederate defenses of a mere 25,000 men that were defending Richmond. Through a combination of both tactical and strategic blunders, McClellan failed to take Richmond in what become known as the Seven Days campaign. Rather than taking responsibility for his failure, General McClellan did what would in today’s parlance be pejoratively known as “CYA”. In dispatches back to Washington he declared:

“I am in no way responsible…I have not failed to represent repeatedly the necessity for reinforcements….If the result is a disaster, the responsibility cannot be thrown on my shoulders.”

And in another missive he wrote:

“ I again repeat I am not responsible for this….As it is, the Government must not and cannot hold me responsible for the result”.

Nobody wants to work for corporate leadership who sloughs off responsibility. In every corporate failure there is blame to go around; just the same way that in every corporate victory there is praise to be dispensed to the many who contributed. A franchisor can have the best advertising and franchise lead generation campaign around and it will be all for naught if its current franchisees have evidence that the leadership behaves like General McClellan when under fire. For this mistrust in the leadership by the franchisees may be transferred to the prospective franchisees who may then decide against signing on to be governed by this brand of “leadership”.

The type of leadership that does inspire confidence and that will provide fertile grounds for a positive word-of-mouth campaign was exhibited by General Robert E. Lee after his defeat at Gettysburg. Although the historians cannot agree on whether General Lee’s battle plan at Gettysburg was brilliant, reckless, arrogant or just foolhardy, all agree that his plan was not carried out as ordered by his subordinates. While reflecting upon the massive casualties his army sustained and the stark realization that any chance the Confederates had of winning the war was all but lost, General Lee blamed no one but himself.

General Lee remarked to his men:

” All good men must rally….General Pickett…your men have done all that men could do; the fault is entirely my own…All this has been my fault—it is I that have lost this fight and you must help me out the best way you can.”

General Lee could have blamed his subordinates. He did not. He took full responsibility for his actions, and his men and his fellow countryman respected him for doing just so. Stated simply, Lee showed what McClellan did not: leadership. Whereas General McClellan became little more than a footnote in history, General Lee has been roundly praised for his leadership by both his critics and proponents alike.

American business is in a pitched battle. It is battling to regain the economic citadel of 2007. A major participant in this battle is the franchise community. As such the franchisors must recognize that they are asking prospective franchisees to step out of their comfort zone, pick up an economic weapon, and join the battle. Franchisors are asking prospective franchisees to take risks in a very risky world. They are asking prospective franchisees to trust in their leadership. But it all starts with the current franchisees.

And so franchisors need to demonstrate the type of “the buck stops here” style of leadership that inspires confidence among current franchisees. For it may well be the case that the current franchisees are the best advertising a franchisor has in the economic battle in which we are all now joined.

]]> http://www.franchiseopportunitiesnetwork.com/blog/franchise-leadership-lessons-learned-from-generals-lee-and-mcclellan/feed 0 http://www.franchiseopportunitiesnetwork.com/blog/franchise-lead-generation-portals/the-importance-of-selling-in-earnest http://www.franchiseopportunitiesnetwork.com/blog/franchise-lead-generation-portals/the-importance-of-selling-in-earnest#comments Mon, 26 Jul 2010 13:32:03 +0000 Admin http://www.franchiseopportunitiesnetwork.com/blog/welcome-to-ad-engine/the-importance-of-selling-in-earnest The Importance of Selling in Earnest

Too often are franchise sales people guilty of not selling in earnest. Yes, they will say that they are giving an effort but the evidence is clear that they are not really giving it their full attention and effort—they have failed to recognize the importance of selling in earnest.

At FranchiseOpportunities.com we are responsible for generating more than 25,000 franchise leads per month. As such I am privy to many a franchise sales call “dropped-ball”. We receive feed-back on a regular basis from prospective franchisees informing us how well and how poorly the franchisor’s sales call have gone. For example, last week I received this e-mail from a prospective franchisee:

Between the unprofessional contact made today, and the spelling error in the email, we will not be pursuing a business venture with you. We would prefer to invest elsewhere. Good luck with your franchise.

Cordially, A. Kann

Clearly, the salesman failed to sell in earnest. The manner in which he could have prosecuted his duties in a more earnest fashion can be found in a line from Oscar Wilde’s play The Importance of Being Earnest.

In the play Algernon Moncrieff quips

If I am occasionally a little overdressed, I make up for it by being always immensely over-educated.

While this line may drip with satirical arrogance franchisors would do well to find the importance in the sentiments behind the lines. To wit: that one must always be on the top one’s game when one is selling, and each sales person must be able to compensate for a short-coming in one area of his/her presentation with a stellar showing in another area.

Many are the instances in which I hear from a prospective franchisee that the franchise sales person was either unprofessional and/or unprepared. Algernon Moncrieff would have considered this person to be “under-dressed”. Of course it should go without saying that sartorially speaking being a little over-dressed is always better than being under-dressed. To extend again the metaphor to franchise sales, the franchise sales person who is a “little overdressed” will almost always come out ahead of the franchise sales person that is underdressed. For one can never be over-professional or over-prepared when one is talking to a prospective franchisee. (As an aside, I would argue that all sales people should be literally a “little overdressed”. It becomes much too easy to not give an earnest effort when one has too casual an attitude about the sales call. Therefore, professional attire should be de rigueur in all sales rooms.)

As far as being over-educated, a sales person can never be over-educated. Unfortunately, too many franchise sales teams come across as being the opposite of over educated—they are seen as un-educated. In what form does this take shape? First and foremost in the form of poorly constructed e-mails. Many are the e-mails that I read from franchisors that are replete with misspelled words and poor grammar. But I also know that many prospective franchisees find poor grammar on the phone to be a big strike against the franchise.

But education is not simply scholastic. To be educated is to understand the nuances of the sales process—specifically, when to push and how hard to push? Too many times we are told by prospective franchisees that the franchisor’s sales persistence is viewed as rudeness and/or a failure to respect the privacy of the individual and his or her wishes on when to be contacted and by what means. I am fully aware that there is a delicate line between pushiness and persistence. But the franchise sales team with the most franchise sales is the team that walks this line with the greatest aplomb.

The recession has made the franchise sales person’s job much more challenging. There is nothing any of us—franchisor or franchise portal—can do about it. What can be done is to make certain that sales people are both “over-dressed” and “over-educated”.

The web is replete with web designers who have “over-designed” websites. Where simple CSS would suffice the web designers have used Flash. And too numerous to count are the sites that are so mind-achingly complex that the user fails to engage the site in the way the designer (and more importantly, the owner) had anticipated. This phenomena is not unlike what can occur when architects “over-design” buildings. It is therefore instructive to investigate whether the movements in building architecture over the last 100 years can be instructive in any manner. Specifically, whether web designers might be able to learn from the modernist architecture movement of the last century. Overly ornate designs; designs without relation to the function of the building and its intended use by its occupants; and designs that evince no understanding of the landscape in which the building was constructed are all “problems” that modernist architects sought to rectify. One such architect in particular was Richard Neutra.

Neutra was a Viennese born architect who attained prominence in America as one of the great modernist architects. He designed many homes in the Southern California area. Homes designed by Richard Neutra combined Bauhaus modernism with Southern California building traditions. Neutra’s houses were dramatic, flat-surfaced buildings placed into a carefully arranged landscape.

“Neutra believed that the architect should strive for a response to space and time that may be only fleeting, yet in its intensity becomes truly memorable.”

Neutra studied how occupants used a building and how those occupants flowed from room to room. He based his designs on the needs of the owners and occupants.
Neutra used courtyards, sliding glass doors and walls and mirrors to reflect exterior views; all of which encouraged a relationship between occupants and nature. His designs were complementary to its surroundings. The buildings did not overpower the landscape. Stated simply, nothing was over-designed in a Richard Neutra home. Coves were simple, doors were left untrimmed and landscaping was important but minimal. In a Neutra designed building there was an emphasis on purpose and quality over quantity.

It takes no great leap of imagination to see how similar ideas can be used in website design. To enter a Neutra designed home is to understand immediately the purpose of the home AND the character of its owners. A website should strive for a similar effect. Websites must not be a confusing mess that is nothing more than the result of an ego-driven designer. Less is more.

A designer must strive for the user to use the website effortlessly. The user must use the site in a manner that is both conscious and unconscious. At the point where the user is conscious of having to navigate a site the purpose of the site is perforce vitiated. In the same way that Buddhist meditation requires one to not think about not thinking, the end-user should not think about navigating around the site. The site should offer a feng-shui environment that is purposeful but not apparent. Navigating the site should be organic, and the process should exhibit the same free flow of time and space that a Neutra home exhibited. A website should be designed to satisfy the regular user as well as the one-time user—and this satisfaction should occur in the same way and to the same degree.
Neutra remarked that

A building can be designed to satisfy “by the month” with the regularity of a provider. Or it can give satisfaction in a very different way, “by the moment,” the fraction of a second, with the thrill of a lover.

Web designers would do well to study more closely how exactly he did so.

W.C. Garth Snider

Part II.

Analogizing vertical lead generation sites to retail shopping malls.

To understand more clearly why it is in the interest of both the Concept and the VLGA to allow for the end-user to inquire about as many Concepts as possible, it may be helpful to view the VLGA as a retail shopping mall. The VLGS owner purchases and develops a website where it plans to advertise other company’s products in order to generate interest in said companies. Similar to stores that choose to rent space in a mall, Concepts rent space on the VLGS. In both instances, both Concept and storeowner are free to choose not to enter into a contract with either the VLGS or the mall owner. People go to a mall exactly because there are many stores to choose from and that is exactly what is attractive to the consumer – the ability to go to one destination and investigate the quality, type and price of many different products with the opportunity to ultimately purchase one or more items. Each shop owner could find its own retail space and hope that its location is sufficient to garner enough traffic to stay in business. Similarly, Concepts can advertise only their product on the Internet through either SEO and/or SEM efforts. But by doing so the Concept forgoes the chance to be found by consumers who might not have been interested or been able to find its product initially.

To analogize back to the mall example, people may not have known that they were going to buy a shirt from Store A when they decided to go shopping; in fact, they may have set-out to buy a pair of shoes at Store B. But upon seeing the shirt at Store A realized that they would rather have the shoes instead. This transaction likely would not have occurred had it not been for the dynamics of the retail mall. Of course, the owner of Store A will complain that it lost a sale precisely because of the retail mall – or more precisely because Store B and by extension, the owner of the mall and his decision to rent to Store B. What this analysis fails to understand is that but for the mall, Store A might never have had the opportunity for the sale in the first instance. This would be the case if Store A was a less well capitalized company and/or one that sold products that were not as well known such that being in the mall was the only way Store A could have remained either profitable or the way that it maintained its greatest profitability. Whereas both Store A and Store B would like to have the event of the sale without any competition from the other, the only reason for the sale was competition that resulted from the dynamics of the retail mall. Neither the mall owner or Store A or Store B could remain in business if Store A got an “exclusive” right to sell its wares in the retail mall environment.

Similarly, a VLGS must allow for further the options available for the end-user as that is the way that the most amount of traffic is driven to the site. This in turn drives the most interest to the individual Concepts advertised on the sites. Whether an individual Concept can affect a sale is dependent on its sales efforts and the attractiveness of the product. That an individual Concept may ultimately lose a sale to another Concept is simply the “cost” of doing business. If a Concept can purchase a significant amount of traffic to supply sales leads needs, and get a ROI that is greater than the VLGS then it should do so. But for most that is simply not the case. As in the case of the storeowner who is more profitable being a tenant of the retail mall as opposed to a stand-alone retail location, the ROI on leads purchased through a VLGS is greater for the vast majority of Concepts because of the time, cost, and complexity of generating leads on the Internet.

W.C. Garth Snider

Copyright 2009.  All rights reserved.

]]> http://www.franchiseopportunitiesnetwork.com/blog/the-macro-economics-of-vertical-lead-generation-sites-part-ii-analogizing-vertical-lead-generation-sites-to-retail-shopping-malls/feed 1 http://www.franchiseopportunitiesnetwork.com/blog/the-macro-economics-of-vertical-lead-generation-sites http://www.franchiseopportunitiesnetwork.com/blog/the-macro-economics-of-vertical-lead-generation-sites#comments Thu, 03 Sep 2009 18:20:00 +0000 Garth http://www.franchiseopportunitiesnetwork.com/blog/the-macro-economics-of-vertical-lead-generation-sites This blog entry is the first in a series of two blog entries discussing the macro-economics of vertical lead generation sites.

Part I.

An oft-cited criticism of vertical lead generation sites (“VLGS”) is that end-users have the ability to request information on multiple concepts. This, so the argument runs, dilutes the attention making it more difficult for any given lead-desiring concept (“Concept”) to convince the end-user to pick its product over the others for which information was requested. It is hard to argue that such is not the case. For if choice is limited then limited choices will obviously be made. The problem with the argument is not in its probity, it is in its mistaken simplicity and its lack of grounding in reality. A VLGS is nothing more than online information directory. Since the scope and reach of a directory is a function of the amount of revenue the directory can generate, it is unrealistic to expect that a directory limit the interest in, and therefore the information provided by, any one Concept.

A VLGS, like a directory, cannot operate efficiently if the number of Concepts for which information can be requested is limited. Both VLGS and directories are dependant upon generating a deep interest across a broad swath of Concepts. Limiting the number of inquiries that can be made by one end-user degrades the efficiency of the VLGS business model, and will eventually limit the efficacy of the model. No VLGS, nor any business for that matter, can limit its operational efficiency without some form of commensurate revenue increase as a counter-weight and expect to stay in business. To understand why this is the case one must first understand the economic and operational principles behind a VLGS.

A VLGS aggregates traffic for the use and benefit of the paying Concepts which have paid to be listed on the site and/or are paying for leads that are generated by the site. This is primarily accomplished by directing keyword search results toward a single website. One of the advantages of a VLGS is its directory style business model, to wit: it can offset the relatively high cost of purchasing a unit of advertising by diffusing the interest in the site across many paying Concepts. It is this operational efficiency that is degraded when a VLGS limits the interest in paying Concepts.

But the vertical lead generation model is equally as beneficial to the paying Concept as it is to the VLGS because of the time and cost associated with trying to drive traffic in increasingly very competitive marketplaces. The available SERPs on the major search engines is not growing, and in fact can be said to have achieved a certain amount of stasis in many categories. Few are the times when a new website can achieve top level organic placement, let alone top level placement on enough keywords to drive a high volume of traffic. Additionally, the cost of paid traffic continues to increase.

Moreover, one of the realities of online marketing is that there has been too much hype made of the “long-tail.” For consumer driven purchases the majority of traffic is not on branded keywords or obscure keywords but rather a reactively small sub-set of keywords that drive the majority of the traffic. For example, whereas there may be many searches on the word McDonald’s Franchise, a much smaller number of searches will be entered for MacD’s Franchise – even if MacD’s happens to be a subsidiary of McDonald’s and/or viable competitor. Similarly, while there may be quite a few searches on the term “food franchise” there are many fewer searches on the term “hamburger franchise.” While there are still people searching for “hamburger franchises” the opportunity cost of spending money in the relatively slight hope that a sale will result from their search is often times outweighed by the cost of not being included in a directory.

This is where the VLGS true value add proposition is realized. VLGS are adept at sifting through a large amount of traffic in order to provide only the most qualified of leads. It does so, by pooling its resources to get traffic on all relevant terms, as well as terms that are not in the specific industry but are within the general theme of the action being requested. Some of this traffic will not of a sufficient quality to warrant purchasing again i.e., the money will have been wasted. But the purchase of the “wasted” traffic will not destroy the model precisely because the model is built on scaling a great amount of traffic purchases into leads. Whereas an individual Concept may spend through its yearly advertising budget in a month or less were it to attempt to do this on its own and run into similar traffic difficulties, a VLGS can weather the storm and continue to produce quality leads. Moreover, some of the traffic that would need to be purchased to produce the leads would be cost prohibitive to many Concepts in the first instance.

W.C. Garth Snider

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