Counting on Coupons
by Ray Romano
 

   JeffreyWeinberg might not inspire a lot of confidence in any buttoned-down bankers with his business plan.
   "I'd love to tell you that I did my research when I started this business," Weinberg confesses at a conference table in Kinko's in Monroeville.
   The remark becomes less surprising after talking to this 38 year-old entrepreneur for a while. Someone who has held a bevy of jobs as diverse as audio equipment salesman and short-order cook, Weinberg isn't-if there is such a thing-your typical entrepreneur.
   On the hand, his creativity and resourcefulness smack of the kind of spirit that a few storied garage tinkerers have parlayed into million-dollar enterprises. He has launched and operates his advertising concept essentially on his own with little more than pocket money. He works a part-time job selling appliances to help meet his living expenses.
   In many ways, Weinberg is running against the herd. He is using a traditional marketing vehicle in a high-tech medium, adopting a tight local focus in a market where others are adopting a global view, and wagering that consumers will jump at the chance to patronize small local businesses instead of huge chains.  While he isn't well capitalized (and he is open to queries by investors interested in buying into the concept), his willingness to launch and operate his business on a shoestring budget and sheer hustle might be enough to make it successful.
   The business, FingerTips, entails selling advertising to appear on flopping disks in the form of coupons. The disks are distributed free by the companies whose advertisements appear on the disks. The disks can be loaded on a PC, and the coupons can be duplicated as many times as the consumer wishes. Advertisers also get their ads on the FingerTips Website, www.fingertips.com. For this, Weinberg asks advertisers to fork out $400. The plan is to publish a new set of disks every six months.
   The North Huntingdon native got the idea for FingerTips in 1995 while he and his wife were living in California. Weinberg was working at one of his less conventional jobs at the time-booking rock bands-when his wife got tired of his habit of scrawling names, booking dates and telephone numbers on scraps of paper that ended up in a muddled heaps around their two-bedroom apartment. Her solution was to buy Weinberg a computer to help organize his work.
   The computer helped him streamline the work with his entertainment clients. but it also provided the spark of an idea for a new business.
   Describing himself as an avid coupon user, Weinberg figured that consumers with some computer savvy would be eager to acquire coupons stored on computer disks, ready for retrieval when they were to be used rather than clamped under a refrigerator magnet, stuffed in a drawer or squirreled away in a purse. Weinberg pondered the idea of making coupons available on floppy disk and distributing the disks to consumers, allowing them to choose which coupons they want to use.
   With the help of some old college chums from his days at Penn State University, Weinberg developed the software he could use to package the ads on disk. He tested the idea in California's Conejo Valley, where he sold a three-disk set for about 40 businesses. Later he turned out a second edition in Camarillo.
   The ventures were modestly successful-in the most modest of terms, grossing about $40,000 in two years- but Weinberg says he and his wife tired of the unchanging Southern California weather and high living costs and longed to return to Pittsburgh. They did, in February of last year, and Weinberg began mapping out his plans to launch FingerTips in Pittsburgh.

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FingerTips at a glance

Operations

FingerTips is a home-based business run out of Weinberg's rented West Deer Township home. His office for a good part of the day is his tiny Ford Aspire. He lugs his laptop computer from prospect to prospect, keeping in touch with rest of the world by cellular phone.
   Weinberg does all of the cold calls and handles his own administrative functions. He does the ad designs and prints the packaging for his disks on his PC. With the help of a few old computers he has purchased, he duplicates the disks in his apartment.
   Because of a shortage of resources, Weinberg left the FingerTips operations in California to wither and has no plans to restart them. Once he's established in the Monroeville and eastern suburbs area, he plans to move into the North Hills and eastern neighborhoods of the city.

Financing

Weinberg has financed FingerTips out of pocket and at this point doesn't need a lot of cash to move from one issue of FingerTips to another. He doesn't publish until he's gotten sales from 30 advertisers, the number of coupons that will fit on two disks. He collects half of the fee when a business commits to advertise, the rest when the artwork is approved, giving him the capital he need to pay for the disks, printing and other costs. Weinberg delivers the disks to the clients and sets up a small point of sale display in a visible area of the business.

Sales and marketing strategy

   Although Weinberg is convinced that there is a high rate of computer use in Pittsburgh, he concedes that he hasn't done any controlled research to predict the success of his concept. He figures that coupons offered by a fast-food restaurant for 50 cents off a cheeseburger won't bring much value to such advertisers, so he steers clear of retailers and service businesses that feature low-ticket items because of the large number of sales they would have to generate to recover their advertising costs.  Instead, he goes after businesses such as travel agents or appliance dealers that have higher-priced products or services to offer to potential customers, allowing them to recoup their advertising costs with just a few sales.  He has also found that cutting through the red tape to get to large, national companies wastes valuable time, so he tends to set his sights on small, locally owned businesses.
   Since the disks will be distributed via the advertisers, Weinberg says the consumers who pick them up will tend to be higher-income individuals more likely to be computer users and interested in the other advertisers who appear on the disks.
   Gayle Marco, associate professor of marketing at Robert Morris College, says it is essential that FingerTips knows the demographics of its target audience and chooses advertisers that offer a product or service which the audience is likely to want to try.
   She says that many small businesses rely on building a reputation with a clientele that grows fiercely loyal to the business.  Those customers are resistant to change once they have located a reliable mechanic or hairstylist, for instance.
   "That group is often very focused on which brands or services it wants," says Marco.
   For his first region in Pittsburgh, Weinberg has chosen to focus on the eastern suburbs and the eastern sector of the city.  He hopes to franchise the concept eventually, but in the near term he's considering establishing sales representatives in Atlanta and San Francisco to launch the idea in those cities.

Market outlook

   Weinberg views his approach to marketing as a way to marshal small, locally owned businesses into a force that will go against big corporations which have massive advertising clout.
   "We're working together against the Wal*Marts of the world," he says.
   Marco points out that, for a variety of reasons, coupon use has declined.  She attributes it to a number of factors, including the wider use of cards that give shoppers a discount for certain products at the supermarket checkout, and which allow store operators to funnel manufacturers' allowances into the price of the product rather than to offer a coupon.
   Some companies are finding other ways to make their products attractive.  Procter & Gamble, for instance, has moved away from coupons in favor of chopping prices.  The thinking is tat a smaller price differential will make a product of perceived higher quality a more attractive purchase.  Busier lifestyles, too, have cut into the time that shoppers have to clip and sort coupons.

Biggest challenge

   Because of the novelty of the medium, Weinberg finds that it is absolutely necessary to make his presentation to potential advertisers in person.  "I've never been able to sell one of these ads over the telephone," he notes.  With no local track record and himself as the only salesman, Weinberg concedes that he will have to wear out a lot of shoe leather to sell at least the first round of ads.
   And, as a one-person operation with limited resources to call on potential advertisers, he's keenly aware that the ongoing success of FingerTips relies on his ability to get the ads into the hands of people who will use them.
   Says Weinberg:  "I've got to make it work, because if it doesn't, I'll have to go out and get 30 more advertisers."