Franchises as a Vanguard of the SMB World

Franchises are a distinctive and vibrant SMB segment. By almost every metric, franchises act differently from the overall SMB population. Franchises tend to “live large” — they do things in a big way, starting with ad spending. At an average of over $87,000 in LCM Wave 18, franchise spending on advertising and promotion is well above the average ad spend of even our SMB Plus Spender group.

Franchises use more targeted marketing and advertising, are more engaged with their customers, and are also more disciplined across the full range of activities required in reaching and serving customers. They use more marketing tools and platforms, loyalty programs, mobile marketing, social media, cloud platforms, etc.

In particular, franchises are well ahead of other SMBs in their use of personalized, targeted digital media and platforms including Pinterest, mobile coupons and deals, text messages, Twitter ads, etc. Looking at the media usage findings from LCM is like looking into a new media laboratory (look out, MIT!).

Franchises estimate that about one-half of all their sales in the next 12 months will be through discount programs. This arrestingly-high reading is actually consistent with other behaviors of franchises — such as their near-saturation use of loyalty programs (and the personalized, targeted media mentioned above). Franchises are building close and deep relationships with their customers, and they’re accomplishing this by using a host of digital media and platforms.

The bottom line: Franchises might be viewed as a vanguard — showing us where the rest of the SMB world is heading.

Clients of the BIA/Kelsey Advisory Services can find the full report here.