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Join Our Research Team at DMA 2014
May 02, 2007
Case Study

How a Restaurant Chain's Simple Email Test Raised Conversions 10.3%

SUMMARY: Using the Internet to fill seats in restaurants and other venues has always been a challenge -- especially since these types of businesses don’t have the luxury of impulse-buy gratification that drives so many ecommerce transactions.

See how one restaurant chain got a sexy 10.3% coupon conversion rate with a simple but crafty email test, not to mention spiking conversions across the menu.
CHALLENGE
“In the restaurant business, we don’t get to take advantage of the impulse-buy aspect that comes with a lot of online retail,” says Clay Dover, Chief Concept Officer, Bennigan’s Grill & Tavern. “You have to package a craving with images and copy in the call to action that sustains their interest -- so at a later time, they get in their cars and go out of their way to the restaurant. It’s not as easy as, ‘Here, click on the airline tickets and save 50%.’ ”

Simply put, Dover and his team knew the Internet could bring foot traffic into their 260 domestic locations, but they were anything but confident on how to nail the process. For instance, they were running an online game that they hoped would spread virally, but it wasn’t set up to drive orders that could be proven to corporate officers in sales reports. Indeed, the higher-ups wanted to see tangible results.

Plus, they wondered if email and the Internet could inspire local ROI in an abbreviated time window that would beat typical television, radio, newspaper advertising and postal mail efforts.


CAMPAIGN
First, Dover needed to upgrade their program in the ROI-friendly medium of email (which had been more peripheral up to that point). They scoured the emarketing services community for a vendor who understood their niche (see hotlink below).

-> Step #1. Build email list

To build their list of email names, restaurant servers around the country were instructed to carry a booklet with 4-inch-by-9-inch tear-away sheets and encourage all seated patrons to provide their addresses so they could get emails about upcoming special offers.

Dover also instructed their secret shopper agency to take note of whether their secret shoppers were asked to join the database. “We directly tied the store managers' bonuses to whether the server mentioned our special email offers and allowed them a chance to fill out the sign-up slip.”

-> Step #2. Segment the list

After that, they set up a system that would house the names nationally while keep the names segmented to each individual restaurant. Local, regional and national campaigns were now at their beck and call.

They then orchestrated a pilot campaign in their 37 restaurants in Florida. Those markets -- mostly in Tampa, Orlando and Miami areas -- were chosen because of declining sales, and Dover wanted to avoid the potentially skewed results that might be mined from busier locations.

Once the Florida names were extracted, Dover scheduled meetings with that area’s district manager and store managers to discuss the campaign goals.

-> Step #3. Clean, simple creative

For the email test, they used a photo of their turkey-and-Swiss sandwich to create the craving Dover mentioned and to attract eaters who might not want to completely blow their diets. They also made it easy to find the restaurant’s street address and telephone number near the bottom.

“We previously had tested some Flash and some other [multimedia] in emails, but we decided that we didn’t want to bog down people’s computers,” Dover says.

-> Step #4. Hot offer, short deadline

Next, they took a risk on their profit margins and pitched two entrees for the price of one in a four-day-only offer. They also mentioned appetizers and desserts in the copy. The straightforward billboard look was designed to resemble a coupon, which had to be printed and brought to the restaurants for redemption.

The coupons were coded and input at the cash registers at the time of redemption. While the offer was good for Friday through Monday, Dover dropped the emails on Wednesday afternoon. “We’ve seen through studies that that’s the point when people normally begin planning their weekends.”

-> Step #5. Forwardable emails

To be viral friendly, Dover included messaging in large type near the middle informing readers how to forward the email to a friend. The system automatically added the recipient’s first name to the top of the email, which was addressed by each location’s store manager.

The forwards were also personalized. “We aimed to avoid the blanket-letter scenario.”


RESULTS

A great offer can make all the difference. Still, what Dover and his team saw blew the doors off their expectations. The open rate for the email was 31.5%, and the conversion rate was a whopping 10.3% -- far above the average Internet coupon redemption rate of 1.31%, according to 2006 CMS data.

Although Bennigan’s higher-ups were skittish about the margins in giving away a meal for every paid one, their fears were definitely quelled by the sheer volume of customers and cross-menu activity. Overall sales were up 12%. More particularly, beverage sales increased 12.7%, appetizers 7% and desserts 10.8%. In fact, some restaurants ran out of certain menu items.

The average per-person amount came to $12.78, which is only 72 cents less than their average. Taking into consideration the higher order volume, the test was a huge win.

“The ROI was off the charts -- the best we’ve had,” Dover says. “The financial officers who were worried about the margins were very pleased with the response. If people printed out multiple copies and came in two days in a row or gave copies to their friends, I think that’s excellent. We wanted that. Most importantly, we saw some pretty radical sales spikes in those markets for the weekend.”

Since implementing the formal email sign-up procedure, they've grown their email list 66.9%. Each of the 260 Bennigan’s restaurants now have around 3,000 email addresses apiece for other marketing efforts, and Dover has found an online medium that has the entire company believing in -- as well as saving money.

“From what I have seen, email is more cost effective than it is to buy television spots, newspaper ads or do direct mail campaigns -- in the latter, where you buy a list, print, send it out and hope you get 2% redemptions.”


Useful links related to this article

Creative samples from Bennigan's email campaign:
http://www.marketingsherpa.com/cs/bennigans/study.html


Fishbowl Marketing - Bennigan’s email services provider:
http://fishbowl.com/


Bennigan’s Grill & Tavern:
http://bennigans.com


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