260. Grand Opening Rush… Then Leads Drop: How Franchisees Fix Marketing & ROI (Matt Ross)

Speaker A: Welcome to the Ask April Porter podcast where franchisee performance meets real world business strategy. I'm April Porter, attorney, former judge and multi unit franchisee and the authority on franchisee performance. Each week I share actionable insights, proven strategies and inspiring conversations with top entrepreneurs and franchise leaders. All to help you grow your franchise or small business to achieve what I call swag. Sanity, wealth and gratitude. Success without sacrifice. To claim your swag, apply these hard earned lessons from seasoned entrepreneurs. We're gonna do that now. Let's dive in. This week we have a treat from the franchising community. Matt Ross, who over the last 20 years has built two of the most innovative consumer education brands in the world. And you're gonna recognize the names of his first one for sure, which was School of Rock, where he company from an early stage venture into the world leader in music education for kids. And then his current endeavor, which is the One River School, a company whose mission is to transform art education in America. Welcome Matt. We're thrilled to have you on the show.

Speaker B: Thank you. Thank you for having me.

Speaker A: M. All right, so you got into franchising, um, with School of Rock and that was actually your concept school of

Speaker B: a guy named Paul Green was the founder Philadelphia 1998. He dabbled with it for a while. I joined, they had five units, they were kind of running out of cash. It was 2005 and I pulled the ripcord on a 20 year career in the media business because I felt so passionate about what they were doing. So I got in there and really built it.

Speaker A: I had the pleasure of being, uh, at one of the IFA conferences and again, for those of you that haven't ventured into IFA yet, that stands for International Franchise association. And there's always a networking reception where they usually bring in a band and they brought in the kids from School of Rock who played in a 10 piece band and then they traded in and out with new kids. They were phenomenal. I think, uh, music education is so important for kids. It's a language we all speak. So I understand your passion and getting involved in that.

Speaker B: Yeah, there's so much I could speak to there. It's like team sports for music. There's just so much that it does for kids and teens. There's adults who do it and I'm really proud of what we built, but I'm really proud of what they built after I left too. Because now is 400 plus units globally and they're continuing to grow and it, uh, just, it delivers an experience that's unique in the market. So I, I, I really just remain proud of it.

Speaker A: It is unique in the market. Um, and I think that given your background in marketing and media, that's something that you probably look for. Um, I'll mention the, the acronym USP to a lot of franchisees who have no idea what that is until we get into the education about it, the fact that it's a unique selling proposition. And I think that's kind of what you're talking about. They are hitting the nail on the head with School of Rock and also what you're trying to do with the One River School.

Speaker B: Yep. Well, you know, you hear the term first mover a lot and you hear point of difference. You know, differentiation is so important in establishing a lane that is uniquely yours. Then you have to do it really well. Right. So, so there's so many things that go into building a business, whether it's being at the franchisor level or just a franchisee in a local community. How is your service or product different from everyone else? How do you deliver a repeatable, high quality service? So then the world starts flying the flag on your behalf. Right. You need to build super fans to really, really have a sustaining brand that does well over time. And you know, we were able to do that at School Rock and my current brand, One River School is actually doing it now as well.

Speaker A: From your perspective, just having so much experience in this realm, what is it that you're seeing and what's uh, your take on all of that?

Speaker B: Yeah. And just to give your audience just a little more perspective, I spent 20 years in marketing media solutions in the radio space, uh, building multi level promotional strategies for brands. So advertising consumer behavior expert. I think I have earned that badge. You know where I see it right now is I don't think we truly understand yet what the AI influence will be relative to the algorithms online, how Google search queries are managed and how they change and how your performance marketing changes. So I think time will tell. I could tell you that what I would say to all of your listeners is there's data and analytics all day long that can guide your strategy and tactics and allow you to refine. But what's happening right now is with AI is there's a whole nother, as I uh, would call dashboard that can be built relative to how will AI also influence what used to be just basic performance marketing and how do you use it to maybe test different variables. So I'll give you an example. At uh, One River School we teach art and digital design and digital Media. So when we put our pay per click advertising online, the question is, is what images should we show, what language should we use? And where AI is helping us right now is they will trial and work with us to iterate the combination of the right headline, the right copy points, the right image, it might be a uh, 14 year old boy showing a, ah, finished artwork versus you know, another kid working in the studio, head down and which one performs better and then they'll iterate and give us multiple versions of both. So I think there's going to be over the next three years a, a a revolution in how AI will help performance marketing, pay per click marketing to continue to refine the efficiency, the cost effectiveness of acquiring customers through pay per click advertising. That's how I see it.

Speaker A: I actually own an AI company as well, Franchise Vault AI. And so some of the things that we're seeing is even helping franchisees understand what is a personal brand and why is that important in the local setting Regarding how AI is picking up your business to as a search result when people are asking. Right. So I think there's a, a whole nother side of it where AI is looking for who is the expert in the community.

Speaker B: Yes.

Speaker A: In this particular space. Right. And whether it's a company or a person. But if you're doing content and you're doing a volume of content strategically that the, that you're the owner of the company and you're helping to train the AI, if you want to call it an algorithm.

Speaker B: Um, yes.

Speaker A: You know, to recognize you as the expert on a local level and then to recognize the brand. And that's obviously the difference between the franchisees responsibility and the franchisor's responsibility. But the brand on a national level in that same lane. And then I think uh, right now there's such a, a potential that hasn't existed quite to this degree before where those things can feed on each other. If the franchisor is really doing that job and the franchisee locally is doing that job, then AI is getting it from everywhere it looks. You know, that brand is the authority in that space.

Speaker B: Completely agree with you.

Speaker A: Yeah. Well, something else we had talked about was just the consumer side of things and really being able to anticipate consumer behavior, which really is human behavior. What we always try to talk about, I'm sure you'd agree, is how the audience values what we are providing. Right. Where's that? Where did they place value on it? And uh, once we understand that then we can talk about that more in our messaging and Connect those dots faster to shrink those sales cycles. What are some of the practices you put in place, given your background, to really help your brand have that strategic marketing advantage that maybe other brands that don't have the background you do might be missing?

Speaker B: Yeah. So you know what, there's a number of things that come to mind. Number one, there's the question around how much brand marketing to do versus customer acquisition marketing. And it's different, you know, if you think, if you go back classically and you go back in time when people advertised on television, it was to establish a brand position in the market, to build a general awareness. And then what did we use? We used the yellow pages and we used the white page to actually get people to find our phone number and buy. Right. Nowadays when people are advertising online and they're looking for clicks and they're looking for inquiries, and they're looking for people to come to their website and maybe fill out a form, enroll, you know, sometimes we get stuck so much in what I would call the transactional component, which is about an offer price, a sale, and it's, you know, et cetera, et cetera. And we forget that we also need to build this sort of pillar. The position is we've got the best pizza anywhere in the world. And if you're a pizza restaurant, right. And, or in my case, we've built a business that is transforming lives through transforming transformative art education. And that's different than saying come here for our Memorial Day sale. So I think what people need to try and figure out is how much are they talking about their core promise, what they do to help humans? And why should people have an interest in, in their service and then supplement or compliment that with what I'd call performance marketing. That gets the clicks, that gets the engagements, that gets people to walk in the door, call, send an email form and it's a balance. And I found that when I'm doing it properly, I'm doing it in a way in which I'm building this general market awareness where we cut through the clutter as the leader in the space. And then I'm also getting people to knock on our door through our performance performance marketing. So I think it's both. And we forget to do the first one these days because we're so stuck in how many inquiries am I getting, how many calls am I getting? And I think the better you do the brand side, the more it feeds the tactical side.

Speaker A: I do think that that's where the franchisors focus needs to be. What I keep. What I see very often with the franchisees is the opposite. I see them continually at a local marketing level to invest in things that are truly more brand awareness focused. And they're putting huge investments in brand awareness and not really as many investments in pushing people through the rest of the funnel. And then they'll make another dump of investment in the, you know, the offer right at, right at the end. And then they're frustrated because they can't figure out why they aren't getting more conversions. And it's like we, we've missed the whole conversation in the middle. That takes someone from stranger to buyer.

Speaker B: Yes. There's another thing here and obviously there's a spectrum of customers, sorry, franchise concepts that all have different, uh, what I would call metrics and economics in their business plan. So some are repeat business, repeat customers. Where if you get a customer to try you like a gym for instance, right. What you want to do is then retain them for three years so you have a lifetime customer value metric. I'm not sure how much you talk about that on your show, but like if someone signs up and spends $25 for the first month, my job now is to make sure they stay for five years or whatever that is at an average of $50 a month. And I'm going to wind up having thousands of dollars for that. That offsets that acquisition cost. So do your um, listeners, do they think through the lens of lifetime customer value, what is the cost to acquire that customer and what is the multiple? So the multiple is the lifetime customer value divided by the cost. And inevitably if there's multiple is north of some number, they should spend more and more and more. And what I think a lot of people unfortunately don't do is spend enough money in advertising and marketing. Let me give you an example here. When I was building School of Rock, we had this great concept. The typical customer, let's say spends $300 a month. Do that math, that's $3,600 a year. And the margins were really good. So you know, and they might spend five years with us, but our typical franchisees didn't spend enough money. Cause they were looking at that current month's cash flow, that next month's cash flow. Typically a little more anxious about the near term expenses as opposed to building the platform over a 36 month window. So I think when you're investing in advertising and marketing, you're really trying to say where do I want to be 18 to 24 months from now? And what sustaining ongoing investment do I Need to make sure that I get enough inquiries, tire, tire kickers, trials, and then it's on me to build a great experience. I'm not sure if that exactly answers your question, but I just don't think people invest enough as a percentage of

Speaker A: revenue teaching them how to understand these values, how to not be afraid to look at them. So many of our franchisees are really terrified to look at their numbers because they're fearful it's going to tell them they're failing. So that is one of the things that we go over is lifetime value. And one of the things I like to tell people is you have to spend money, you have to invest in your business based upon the income you want, not based upon the income you have.

Speaker B: Exactly.

Speaker A: And so, um, and, and unfortunately one of the things that we see in franchising is we see either people are not properly capitalized from the start because everyone wants to believe when they look at an FDD that they're going to be on the low side of the range of expenses to get started and they're going to be on the high side of the range of results. Right. Especially as entrepreneurs we have a lot of optimists, right. Dreamers. So that, so it's always this kind of very best case scenario approach in evaluating the franchise opportunity. And so many times people don't come in quite capitalized the right way because they don't know, they haven't gotten to peek behind the curtain yet and they don't really understand how they're going to spend the capital that they have in order to get the results that they want. As franchisors we give people very limited information.

Speaker B: Yes.

Speaker A: Before signing the franchise agreement, they don't get to see the operations manual. So they don't necessarily understand the day to day decisions they're going to have to make in regard to those investments until they get into the brand. But another thing we see is that when they start making those day to day decisions, they are operating using their capital the same way that they would on um, in their personal expenses. Meaning they have this subconscious belief that once they spend money, that money gets deducted from their pool of capital and it's gone. Just like when you get a paycheck and you pay your mortgage, that money's gone. Right. It's not there to spend again.

Speaker B: Right.

Speaker A: And in business we have to help people understand if you understand how to calculate lifetime value, then you can start to understand that when you spend that $300 in marketing today to get that customer, you're creating $3,600. Um, right. And so your, your investments in your business are actually creating revenue, not stealing from your bottom line like it's feels when all you have to draw from is your experience with personal finance. So that's a big hurdle that we have to help franchisees get over.

Speaker B: So one of the things we did at One River School that I'm so proud of is we built a pay per click model that works unbelievably well. Of our 15 locations right now, 13 are uh, company owned. We built the platform as an operator and that makes me proud because I could sit side by side with any franchisee and say what I'm telling you to do is medicine that I take every day like a statin to make sure I don't get heart disease. Right. Advertising investment is medicine. It doesn't always pay off in month one, but it's a sustaining thing where your arteries will be good over time if you stay on that statin. And you're so said differently if you have a consistent approach to advertising and you know how to do it. So part two of that is we do it for them. We uh, we did two things in our fdd. We mandated that there's a certain percent of revenue that's spent on advertising every month. It's a requirement because our gross margins is so good. This is part of the cost of doing business and we build it right in there. Number two, we will provide our toolkit and services by introducing you to, to our team of externals who do it for us. And they will treat you just like they treat us the same way. Build best in class pay per click. I think one of the problems, April is that a lot of franchisors don't get in the trenches and help their franchisees build demand. They teach them how to operate the store, but they don't necessarily give them all the best in class tools to build demand. They, they may give them advertising imagery and materials, but that's different than the actual tactical procedure and process to go online on Google, Facebook, meta, et cetera, et cetera, and start driving inquiries. And we do it for our customer, our franchisees as a service.

Speaker A: Well, and I love what you just said. We do it for our franchisees as a service. And here's why I love that. Because when you're providing a service, you're providing it to customers, which means that you see that your franchisees are your customer of the franchisor. Very difficult switch to flip in many franchisors brains when they go from, you know, running the ice cream shop to making an ice cream franchise. So often we just keep thinking about our product as the ice cream and our customer as the end consumer with the ice cream cone, and we forget that, you know, you're running a whole different business. Your customer's now the franchisee, and your product or service is training and support, including marketing, exactly how to do it. How do they get that customer to buy the ice cream cone?

Speaker B: I wrote a book recently called Grow or Fold Transform Yourself in Midlife and beyond, and I built a toolkit. I tell a little bit of my backstory in life, and at 50 years old, I had some really catastrophic challenges that I overcame. Went back and wrote this story after I got to a great place, reflected on my career, my personal life, and having found my purpose. But one of the really cool things that I found along the way is that I've always been a lifelong learner. April. It's been a strength of mine. It drives me so hard every day to be the best that I could be, to continue to sanity test what I don't know to improve my quality of life personally, professionally, the skillset that I need to continue to adapt. So one of the things that I think I'd love to talk to your listeners about here is in what ways are they investing their time to learn how to be best in class marketer today. Are they taking classes? Are they really studying? Or do they have someone on their team who's doing it for them that they could supervise and literally that person could own that space for them. Because part of being a great leader also is building a great team around you that complements your skill set. Right. So there's three areas of growth I wrote in my book. Pure growth is built on functional growth, emotional growth, and creative growth. Functional growth is just like what I was just talking about. Do I know how to do the things in life that will make me happy, healthy and successful? Are you eating right? Are you exercising? But those are the things we talk about all day long. Do you understand the role of AI and how it's going to impact marketing in the next three years? Study it a little bit. It's in your best interest. Right? Emotional growth, we know that. And creative growth, I'm a, uh, I'm just the advocate for the importance of that. But I. So taking this full circle, if your people are listening and they own and operate small businesses and communities across the America or the world, what are they doing to improve their marketing toolkit? The knowledge on strategy and tactics to get better at it. Acquiring customers, building customer service and engagement to retain them, and then celebrating the results of their business to build super

Speaker A: fans a hundred percent. Really helping people, uh, understand how important slowing down to speed up is slowing down and thinking through the strategy before we just start, you know, acting and dumping money into tactics because we heard it worked for someone else. That's called experimenting.

Speaker B: Yep. Yes.

Speaker A: Right. So when we, but when we act really strategically, marketing can produce predictable, consistent results for your business and give you the, the roadmap to invest in in order to scale those results.

Speaker B: And I also think that it's on us. You know, there's a great saying that when an early, uh, mentor of mine taught me, if it is to be, it's up to me running my small business. If I'm a franchisee, I've got this license, I've got this toolkit that I've been given. What am I doing every day? How am I showing up not just through hard work, but being a great leader for my team, being great with my customers, and how am I improving my skill sets and knowledge base to do it better over time? That's on me. If I don't invest my time and effort, I'm a peak and creator because the world changes around us every day and it requires new training, different sensibility. I turned 65 this year. I'm still focusing on reading, learning, growing, and optimizing my knowledge base. And I think it's one of the key attributes of my success.

Speaker A: I couldn't agree more. Your business can only grow as much as you grow when you prioritize your personal and professional development. You're pulling your business along right along with you. And it will continue to grow, uh, and grow and grow and grow.

Speaker B: I also have respect though, and I don't want to sound like a know it all. I know how hard it is being an individual operator in a franchise system. I know how people work really hard and we've got the challenges of being busy at home and all sorts of things. You know, my book focus on people in middle age. And I would say the bulk of franchisees are somewhere between 40 and 65 years old. And there's a lot of complications at this moment in our life. In fact, I got a, I got an endorsement from Mel Robbins. I just want to say if anyone's interested in that, go to mattross.com they could learn a little bit about the book. And I, I, my mission in life is to help people grow and learn and get to a better place. The franchise that I have to offer at One River School is part of that because I believe creative growth is the X factor. And if we're building a business that helps people grow creatively and tap into that other part of themselves and they love life more, we're doing something special and making money at it. And I'm doing the greater good by giving people an opportunity to do this.

Speaker A: Thank you so much for joining us here on this show. Thank you. Definitely. Check out Matt's book and of course, learn more about his franchise concepts. It's been such a pleasure and, um, we look forward to seeing all that you continue to do, Matt.

Speaker B: Thank you. And if I could just say, that's oneriverschool.com for my art concept. So thank you so much.

Speaker A: You're welcome. Thanks for tuning in to the Ask April Porter podcast. If you found value in today's episode, subscribe, leave a review and share it with your fellow franchisees and small business owners. To access the resources I mentioned during this episode, check out our show notes.