Jim Penman explains why Jim's charges a small fee per lead on top of the franchise fee. Franchisees who pay per lead follow up three times more often and complete 50% more jobs from the same leads, cutting unhappy customers to one-eighth.
To one eighth as many (i.e., reduced by 87.5%).
50% more work.
25% reported no response.
3% reported no response.
75% reported the job was done.
So if you think about it, by simply changing the way we charge fees, we were able to reduce the unhappy clients to one eighth as many. And this is very important. We got 50% more work from the same volume of leads. Even our fee structure is designed to drive customers customer service. And we do this in a very unique way. Does anybody know how most franchise systems charge fees? Like McDonald's and Hungry Jackson knows. Does anybody know how they do that? That's right. Percentage of turnover, that's what they take. So whenever you go into a place and you order the Big Mac and the fries, they'll put these little coloured buttons on the cash register and that'll go straight through to the head office and they take a percentage off the top. That's how that works. So unlike the electronic cash registers, it's very difficult to know what a person is doing in a job when they're out in the field. For that reason, what most service franchises, at least in Australia, do, is charge a flat rate fee, which is the same every month. Very predictable income to the franchisor, predictable cost to the franchisee. So that's not a bad idea. But we added fairly early on a little wrinkle to this. So instead of having a flat rate fee there, we have a flat rate fee, which is a bit lower. We dropped it a bit and then we put a small fee for every lead provided. Can anybody think why we do that? Why don't we just charge a higher flat fee? Sometimes franchises get annoyed about leave fees and they say, jim, I know why you charge. Because you want more money. I said, yes, but you forget, we write the contract. We could write the flat fee if we wanted to. Why did we write it? So on average, most of the fee is still the flat fee, but we put a small fee for every lead. Why would we do that? Exactly right. If you pay for it, you value it, you're more likely to chase it up. And we did a little experiment when we first were trying these things out. We tried a few different things in the beginning and we had two groups of franchisees, some who were. This was in the very new cling division in those days, some who were paying a flat fee and some who were paying a flat T plus lead fee. And it's important they were both paying, on average, about the same fees. But then we rang the clients to see what happened and there was a big difference because when we rang the clients with the flat fee, 25% of the clients said no. Response didn't get back to me. When we rang the clients for the franchisees on the the lead fees. 3% said no response. In other words, they were eight times more likely not to contact the client when there was no lead fee involved. And what was really interesting too, when we actually looked at the conversion rate, because we asked the client whether they got the job done, the franchisees who were on lead fees, 75% had the job done with those on factors fees less than half. So if you think about it, by simply changing the way we charge fees, we were able to reduce the unhappy clients to one eighth as many. And this is very important. We got 50% more work from the same volume of leads.
Rising mental illness and falling birth rates have the same cause, it is this.....
