Case Study: The Difficulty of Turning Coupon Buyers Into Customers

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Brooke Randazzo Eggert, the owner of r3mg, a creative boutique that specializes in photography and invitation design in Oak Park, Ill., has experienced the highs and lows of hyperlocal marketing. She tells Street Fight that she’s had more success gaining loyal, local customers by advertising on community news sites and blogs than by running group coupons on sites like Mamapedia and Gleeday.

Who are your target customers and how do you reach them?
Our clients usually fall into three categories — families, weddings and other businesses. For families, we have found that getting out into neighborhood events is the best way to introduce our company. We exhibit at a lot of festivals during the summer and bring our photo booth, charging attendees for a picture while displaying all our other work. Otherwise, it’s running specials and letting them know via local community listservs, advertising on local Web sites, or by joining online communities — which are local.

How did you decide to start advertising on Live Here Oak Park [an online community for people living in Oak Park, Illinois]?
I’ve been a member of Live Here Oak Park for a while and kept thinking we should do it. We don’t advertise anywhere else except on hyperlocal sites and magazines. One day, when the owner was running an ad special, I decided to jump on it. I knew that the target demographics were exactly what I wanted: Oak Park/River Forest residents, mostly families. A lot of members are other business owners, and most are interested in their community and supporting local small businesses.

Have your ads on Live Here Oak Park led to any new business?
We get a good amount of hits from our ad on there. It’s nice because we also are part of the advertising page on Live Here Oak Park. We offer our graphic design services for those wanting to advertise on Live Here Oak Park who need their ad designed. That has lead to more new business than the ads. But the ad has only been on the homepage for about a month or so now. I’m not necessarily looking for new business immediately; I know that it takes a while to get your name out there. We’re a newer company and I’m mainly using this advertising for recognition around the community.

What are the biggest advertising challenges you’ve experienced?
The pricing. It is so hard, as a small company, to advertise on community newspaper Web sites. It’s just a lot of money without knowing if you’re going to get a good return. Also, it’s hard to know if print ads will give a good return.

What are your thoughts on daily deal sites? Have you tried them?
We have used two sites – Mamapedia and Gleeday. [The coupons] brought good recognition to our company and we got a good amount of new clients out of it. We ran them both as holiday portrait specials in 2010. So far, none [of the customers] have returned, but we’ll see what happens closer to holiday time.

I think [group coupons] are a good idea, but I wish it wasn’t such a reduced price. When the business is only getting 50 percent of the sale, and the sale is already 50 percent or more discounted off [of the] regular price, that is not going to turn a profit or probably even cover the cost of the interaction. But again, it’s more like an advertising thing than a profit-turner. I think the daily deal sites are making a lot of money from small businesses and the deal buyers. I don’t think the small businesses are always getting a good deal for themselves.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.