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The maxim “data is king” is certainly not new to the franchise world, but how these businesses utilize data faces a new frontier, in which sliced and diced information gathered from entire systems can better serve both franchisees and their customers, not to mention a franchisor. The population that remembers using card catalogs at the library and flipping through the pages of encyclopedias is dwindling: Most workers and consumers simply can’t remember a time when they didn’t have information at their fingertips.
Thanks to this dependence on technology, franchisees, customers and vendors alike expect texts or emails to be answered almost immediately, for example. A delay, even for a few hours, can be perilous to the communications process. In addition, businesses can now expect instant public feedback from several channels, from social media and influencers to rating sites like Yelp and Tripadvisor to mainstream media. Having an artificial intelligence-powered system that automatically responds quickly to unfavorable reviews has the potential to turn a bad situation into a good one.
But AI isn’t just about communications: It can help improve training and marketing programs, and can also help you make better business decisions because it can more accurately predict the future. Remember the old saying, “The best predictor of future behavior is past behavior”? Well, the newfound ability to analyze previous years’ systemwide data multidimensionally can be a huge assist in forecasting the next quarter (or the next five years) — a solid foundation on which to build. It can also be the basis for better brainstorming solutions for increasing sales, lowering costs or determining where the next franchise territories should be awarded.
A cautionary note: According to Psychology Today magazine, that “best predictor” adage only holds if the person or persons are consistent in their behavior. Core values might stay relatively the same over time, but shopping and dining patterns can be quickly altered by a hot new concept or fad. The point is that there is no crystal ball in franchising, but there are patterns and trends that help guide future decisions, so it’s crucial to have as much information as possible, not only from your franchise system but also from the competitive landscape.
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AI is changing…everything
How AI has transformed the food service business is well documented, but it has produced seismic changes to other retail segments as well. For the beauty industry, it has fueled the ability to customize both products and the consumer experience, thanks to tools such as virtual try-ons. This mass personalization also works for a variety of other products, from paint samples to eyeglasses to the right shade of blush. Because a generous segment of consumer buying has permanently switched to online forms, AI gives brick-and-mortar retailers a much-needed way to attract customers and build loyalty. And for fitness franchises, sophisticated information collection allows operators to access several data points, such as diet, workout frequency and calorie burn to personalize clients’ experiences and build that same all-important loyalty, while also selling targeted ancillary products or services.
Because AI can be expensive, especially if rolled out in a large franchise system, it’s important to ensure that associated programs streamline processes, not simply add layers of data that aren’t useful in the long run. One of AI’s roles is to help reduce costs and increase efficiency. What’s often overlooked, however, is that its preferred effect is not always saved manpower but rather a deeper dive into information that will help a company be innovative and efficient.
It’s easy to be lured by the latest and greatest tech, but not all will keep your trains running on time. Look at the actual return on investment, the amount of time and resources required and how the information is going to be used. Will it improve existing systems or simply become some unfortunate soul’s busy work?
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Putting it to good use
Whether it’s a burger-flipping robot in the kitchen, a help desk chatbot or facial recognition technology, AI needs to solve a real problem. Robots in the kitchen can replace that predictably elusive line cook position, but don’t be swayed by the “cool” factor. If you are the first to have a human-looking robot seat guests, you might find yourself on the local news, but if consumers don’t love it, who cares?
AI is especially helpful in franchise recruitment, where not jumping on a lead fast enough can mean losing it to the competition. Having chatbots or automated text messaging systems in place — armed with useful information ready to be sent automatically to prospects — can get the ball rolling until a salesperson can respond personally. Another task that can be accomplished through AI is comparing an applicant’s profile against the system’s most successful franchisees to see if there is a good fit.
This type of predictive analytics also allows a franchise to look at peripheral information such as weather, traffic patterns, upcoming holidays and slow times of day, and so can be a more reliable predictor of customer demand. This allows a franchise more certainty in ordering products, in staffing and in eliminating waste. Employee management is an art, not a science — because it takes a human touch to cut employees when the store isn’t busy, for example. But being provided with stats that better indicate when to cut employees like servers can take stress off managers’ backs. And because the key to any franchisor’s success is the success of its franchisees, these tools can improve the latter’s financial performance and validation at the same time.
With AI, auto-generated content, solutions for operational inefficiencies, answers to consumers’ questions and responses to franchise recruitment inquiries can be available 24/7. But be mindful that, just as it allows franchisors to customize responses in a variety of situations, its solutions need to be unique to and appropriate for each brand.
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Be intelligent when using intelligence
As always, do your homework before rolling out a new program systemwide, and test it strategically. For instance, it doesn’t take more than a quick Google search to see all the negative buzz about one fast-food chain’s foray into AI. As we all know too well, social media can be a blessing and a curse, and it’s not always kind to change, especially by a mega-brand.
While there’s no denying AI can benefit franchise systems in multiple ways, knowing how and when to implement it might require assistance from trusted advisers who can help you prioritize needs. Seek out technology vendors, franchise consultants and other industry insiders who have experience in dealing with these issues for other franchises, as well as knowledge of what the industry is doing. They can be valuable partners in your journey to appropriately implement AI within your systems.