Nuts & Bolts - Case Study : El Gallo Giro Champions TranspromoOctober 2011 By Heather Fletcher
Challenge: Increase coupon redemption rates.
Solution: Implement software that adds promotions to receipts.
Someone who's a huge fan of tortas might just want an agua fresca to wash it down. Or she might think pan dulce is a perfect breakfast treat. But maybe she really hasn't thought about buying either until she pays for her torta and receives coupons for the other food options available at El Gallo Giro.
This could be part of the reason coupon-laden receipts—made by using marketing software from Santa Barbara, Calif.-based SmartReceipt—are performing so well for El Gallo Giro, a Downey, Calif.-based chain of traditional Mexican restaurants. Alex Bernal, the chain's marketing director, says this cross-selling approach with quick expiration dates—two to three days after purchase—is part of the reason redemption rates have quadrupled since El Gallo Giro implemented transpromo in February 2011.
Another reason is testing. Bernal says the receipt software allows El Gallo Giro to determine the effectiveness of the four to five promotions the chain introduces each month and adjust them based on effectiveness, in real-time. If a promotion isn't performing well, it's clearly not relevant to customers and Bernal gets rid of it.
Finally, employees alert customers to the coupons. As of presstime, Bernal says the tested script coming from a friendly cashier is: "Here's a coupon. We expect to see you back tomorrow."
These tactics have been adding up to an increase in traffic.
"We have been, month after month, seeing an increase in the redemption rate of coupons by customers," Bernal says. "So what that's telling us is that customers are becoming, day after day, more aware of the promotion that we are printing in the receipt and they are responding to that."
As of mid-August, redemption rates have been keeping steady at 2 percent.
This approach is working far better for the restaurant chain than its previous coupon strategy—direct mail and insert media. "Our redemption rate was 0.3 percent," Bernal says. Plus, the direct mail and insert media program cost the restaurant chain 10 times more than the trackable receipt coupons.
So El Gallo Giro plans to build on the success of the current approach. Next, its restaurants will use the receipts to conduct a customer survey, which will collect emails. A separate email campaign may follow.
- 2% redemption rate within six months, up from 0.5%
- 90% cost savings over previous direct mail/insert media effort
- Increase in foot traffic