Mad Mex contract underpins Gruden’s strategy of increasing annuity revenues

Published at Jun 20, 2017, in Technology

Market leading technology agency, The Gruden Group (ASX: GGL) has signed casual dining restaurant chain, Mad Mex as a customer for its new mobileDEN “Connect” product, validating the attractiveness of the mobileDEN platform, as well as strengthening the group’s recurring revenues.

Connect is the culmination of five years of research and development undertaken by mobileDEN to identify the key drivers that help brands increase revenue through improved experiences for their most loyal customers.

It is common for 60% -70% of revenue to come from as few as 30% of customers. The mobileDEN platform and the Connect product will help Mad Mex achieve the three most sought-after goals, being increasing frequency of visits, spend per visits and return on investment from marketing initiatives.

General Manager of mobileDen, Gavin Gorazdowski, highlighted the benefits of the platform in saying, “If 70% of your revenue comes from customers who visit twice per month, and you can increase that to 3 times per month through better customer engagement, more targeted offers and a beyond-the-counter digital experience that is valued by customers, then you’ve just increased 70% of your revenue by 50%”.

Under a twelve-month rolling agreement, Mad Mex will leverage the Connect product to provide a fully digital customer loyalty program to forge stronger brand connections with its customers.

The Connect product will be rolled out to more than 50 casual dining restaurants across Australia. Connect will upgrade Mad Mex’s existing loyalty Apps, enabling a fully digital App-based program branded under the Mad Mex banner, providing rich customer insights.

The Connect platform will integrate seamlessly with Mad Mex’s internal operating systems, allowing for complete oversight across all franchises which number in excess of 50.

It should be noted here that this partnership is still in its early stages and GGL remains a speculative stocks. Investors should seek professional financial advice if considering this stock for their portfolio.

Mad Mex follows in Starbucks’ and Red Rooster’s footsteps

The vast majority of quick service restaurants have recognised the potential value of going digital with their loyalty programs, and on this note GGL’s Chief Executive Tim Parker said, “Our mobileDEN platform is already supporting the success stories of Starbucks and Red Rooster (particularly in home delivery), and our new mobileDEN Connect product has been born out of our deep understanding of what multi-location businesses want from a loyalty product”.

From GGL’s perspective, Parker highlighted the benefits of signing up long-term customers such as Mad Mex, stressing that it was a vindication of the hard work and investment the company had made in developing and delivering better ways for businesses to use digital channels.

Agreement strengthens annuity revenues and income visibility

As part of the contract, GGL will earn an upfront deployment fee, along with a per store licensing fee and payments under a service level agreement with Mad Mex.

Of significance is the fact that GGL has been able to develop Connect in such a way that it requires less need for customisation and reduces time to market from six months to 6 to 8 weeks.

Management highlighted that Connect represents a significant milestone in the commercialisation phase of mobileDen, opening up a whole new market for GGL with a full sales and marketing strategy to be launched for fiscal years 2017/2018.

This will drive the group’s corporate strategy of increasing annuity revenue to complement the service fees in other successful digital transformation business units which service the government, enterprise and performance marketing segments.

The attraction of increased recurring income could see GGL’s depressed share price rebound should it be targeted by investors looking for exposure to the high-growth digital marketing industry.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Facebook
Twitter
LinkedIn