Best Practices: Developing a Rewards Program
By Leah Templeton
Blue ribbons. Gold stars. Cold, hard cash. There are many ways to reward someone for a job well done, although most of us have passed the age when receiving a gold star is enough motivation to do our best. Still, top franchisors understand that recognizing outstanding performances remains one of the best ways to motivate franchisees, general managers and staff in an increasingly competitive marketplace. That’s why franchisors are putting more time and energy than ever before into creating incentive programs.
But what is truly the most effective method when it comes to developing a reward program for franchisees and operators? We asked several leaders of the franchising industry to share what works for them and offer tips and advice on how to design a program that will help franchise systems excel.
Customize your program
Always remember that each franchise concept is different and above all, the rewards system should be tailored to the specific strengths of your brand and franchisees. Franchisors with successful rewards programs understand the importance of customizing incentives and criteria around the brand’s uniqueness. It also needs to be attainable, easy to understand, but exclusive enough to create a sense of special achievement.
For example, fast-casual chain Wingstop created its Top Gun program to reward its highest-performing franchisees in the areas of cleanliness, the food quality and hospitality. Scott Lack, regional vice president, explained that the name of the award is a nod to Wingstop’s aviation themed restaurants.
“Wingstop restaurants have an aviation décor and theme, so we focused on that aspect when we created this program,” said Lack. “The Top Gun award is one of the most coveted accreditations that a Wingstop store can receive. It’s achieved by only about 10 percent of our restaurants each year. Not only does it recognize people for a job well done, but it gives them a little something extra to strive for. Work and fun don’t have to be exclusive, this is a way to make it fun and give it a competitive edge.”
Moe’s Southwest Grill created a monetary rewards program that honors top operators and general managers by investigating each store’s “Total Quality Index.”
“The TQI is made up of guest satisfaction, quality and cleanliness and comp same store sales,” said Moe’s Pres. Paul Damico. “To make sure we get the more accurate and impartial data we work with third-party services to help us collect the information.”
Moe’s then allocates $230,000 in cash prizes to the top five general managers with five regions.
“We wanted to give our operators a bonus that the franchisor actually pays,” he said. “This program really puts the focus on our criteria and working with third-party groups ensures we get a statistically-valid response to how our stores are performing.”
Damico said the program was designed to honor individual store operators versus the franchisee. “Our program was really created to recognize the general managers. They are the people who touch and talk with the customers every day. They’re the front line.”
Franchisee Guy Campbell, who operates nine Moe’s stores in the Tampa area, is more than happy to pass the money on to his stores and general managers.
“I’ve had three or four stores that have received the cash prize, and I can say first hand it’s been a great motivator,” he said. “We’re a competitive group. We really talk it up internally and discuss store sales and set goals for ourselves. The bragging rights to getting a great TQI score are almost as effective as the money! I’ve had GMs miss the goal by a fraction of a point, then come back the next year to win it.”
Big Program, Small Budget
Whether your concept is made up of 50 units or 500, you’re probably looking at the budget and wondering how to make room for a rewards program. But a well executed plan that has the full support of your franchise network doesn’t have to break the bank.
Don Larose, the senior vice president of franchise development for Express Oil Change, has found that one of the best ways to congratulate successful franchisees is public recognition.
“The company convention is one of the best places to congratulate top franchisees,” he said. “Our system awards trophies to our top-performing franchisees and their store managers so they can be recognized in front of peers and spouses. Given that most franchisor budgets are too small to provide a financial reward to an already financially successful franchisee, public recognition is often the most meaningful to them.”
Another tip if the budget is tight–get creative. Keep in mind that a trophy can give an operator bragging rights that last a lifetime. But instead of the usual tin cup, make the most of it.
The top honor bestowed on a Wingstop franchisee is a golden goose statue which is given to the franchisees with the highest sales and highest sales increases each year.
“The Golden Goose is the top honor,” said Lack. “We award them at our national convention in front of the entire franchise network. The recipients pose for photos with our CEO and get recognized in front of their peers. It’s a huge honor and one that really means something within the brand because geese fly in a V-shaped formation so it’s easy to keep an eye out for every member of the flock, and communicate and coordinate with the group. Fighter pilots use the V-formation for the same reason and that deeper meaning is a great analogy for how we support our franchisees.”
Plus, not only is it unique to the system, but it’s a great conversation piece for anyone who walks into a Wingstop and sees a golden goose sitting on the counter.
Larose agrees that it’s the sentiment that counts.
“Franchisors are limited only by creativity,” he said. “One way to create a long-lasting special recognition program with legs is to have a custom ring made featuring your company’s logo, and award the ring to all franchisees who achieve some superior level of performance. Each year that the franchisee achieves that level again, a small diamond can be added. The cost for that is about $75 a piece. So for a reasonable cost you’ve created a symbol of success, with personal pride as the motivating force.”
Support from the CEO
A franchisor could create a seemingly perfect program that takes all the best ideas into account, but if the CEO and corporate office aren’t behind the program, the franchisee will know it.
To truly execute a solid rewards program, the company CEO, executive team, franchise business consultants–the entire corporate staff–all need to be behind the project 100 percent.
According Campbell, that’s the number one reason the Moe’s program has taken off.
“Paul Damico, our CEO really gets behind the program,” said Campbell. “And if the brand’s leader and president get behind it, that excitement really trickles down and motivates. It creates a teamwork unity and collaborative effort that we’re all invested in.”
Evolve the Program
There’s a good chance your concept already has a rewards program in place. But, how fair is it? If you reward stores that have the highest revenue, are you considering the regional discrepancies that have been brought about by the recession?
For example, a franchised unit in Florida was most likely hit harder by the recession than a location in Texas. Moe’s recently modified its program to account for the economic downturn.
“We altered our program’s guidelines a bit, so that if you can’t quite hit the sales numbers, but you’re excelling when it comes to quality, you’re still going to be rewarded,” explained Campbell. “Moe’s wanted to create a program that evolved with its franchisees and the economy.”
Some Key Considerations
- Do you want to reward operators based on revenues, quality control or both?
- What form of measurement or grading system should be used?
- Does your program account for the economy and regional sales discrepancies across the country?
- Which department is the best equipped to oversee the program?
- How will you publicly and internally recognize the award recipients?
- Don’t forget the new guy. Be sure and create a program that honors your top veteran and rookie franchisees.
- The common goal of a rewards program is to make the overall brand better, which makes customers happier.
“The purpose of a franchise rewards program should be to make the brand stronger,” added Campbell. “Because when the brand is strong, operators are better, managers are better, and that means that customers are happier. That’s really the ultimate goal.”
Leah Templeton is an account supervisor with BizCom Associates, a public relations and marketing agency that specializes in franchising.