Groupon smoupon, ATL firm says

Published by Premium content from Atlanta Business Chronicle

By Lisa R. Schoolcraft , Staff Writer

Date: Friday, July 8, 2011

Brian Mattingly: By targeting newcomers and recent move-ins, businesses can capture loyal customers, he says.

Brian Mattingly is rolling out the welcome mat to new residents and potential franchisees.

Welcomemat Services Inc.  in Atlanta targets the move-in market, sending out coupons to new residents for restaurants and services in the neighborhood, such as car washes and dentists.

Mattingly, CEO of Welcomemat, moved his company from Charlotte, N.C., last fall after raising $2 million in angel investment to begin expanding his company through franchising.

Mattingly believes that by targeting newcomers and recent move-ins, businesses can capture loyal customers “because they don’t have habits established yet.”

And that’s where services like Welcomemat may have an advantage for businesses over discount services like Chicago-based Groupon Inc. or Atlanta-based ScoutMob or similar programs.

With Groupon, for example, customers can buy discounts, such as $50 worth of food for $25, at specific restaurants that agree to offer deals.

“Transplants need to build a new network of local retailers or businesses that they would use,” said Robert Andrews, senior analyst with IBISWorld Inc., a Santa Monica, Calif. consumer research firm. “If I find a dry cleaner that does a good job for what I expect to pay, I’m not going to keep looking for another one in my neighborhood.”

It’s the same with a dentist, car wash or even favorite neighborhood restaurant, he said.

“Trying to get that consumer before they’re comfortable with someone else, that’s the advantage of capturing these transplants,” Andrews said.

Building clientele

Brian Maloof, owner of Manuel’s Tavern in Atlanta, said Welcomemat makes the most sense to him, since he is a neighborhood tavern and depends on repeat business that is often local clientele.

“If we’re going to be a neighborhood bar, we need to reach out to the people who move into the neighborhood,” he said.

Maloof feels other discount programs are not helpful to the business.

“Groupon customers come from all over seeking a deal,” he said. “Welcomemat specifically targets the people living in my ZIP code. They also tell me how many people are moving into the neighborhood every month, and that helps me.”

Maloof spends about $200 a month to be a Welcomemat vendor, and he believes he gets a retention rate of 25 percent “which I think is better than you could hope for.”

Welcomemat is much more niche than other discount companies, such as Groupon, IBISWorld’s Andrews said.

“The big difference with Groupon is it is broad,” he said, and businesses using it may get a big bump in sales initially, but there is less retention of customers.

Discount coupon users may drive across town to get the discount, but they are less likely to drive across town again without the discount, he added.

“They are driving more for the discount than the restaurant,” Andrews said.

Welcomemat does offer a discount, but because the discount is at a nearby businesses there is a greater chance the business can build loyalty, he added.

Atlanta Botanical Garden was an early vendor with Welcomemat, doing businesses with the company for about seven years, said Sabina Carr, marketing director for the Midtown attraction.

Welcomemat doesn’t just reach people moving from out of state, but also those moving within metro Atlanta, Carr said.

“They could be moving from Sandy Springs, or Alpharetta,” she said. “This is a great way to get new people to visit us, and hopefully, they will join us as members.”

Welcomemat annually provides the botanical garden with a database of the redemptions, Carr said.

“It gives us good data on who our customers are, which as a botanical garden, I don’t have the resources to get,” she said.

Welcomemat, which is a technology and direct mail company, uses a bar or quick response, or QR, code to track the redeemed coupons used by new residents, giving information like patron e-mail addresses and demographics to vendors, Mattingly said.

Annually, the garden sees 400 to 500 redemptions from Welcomemat, Carr estimated. “Last year it was 600. It has been growing year-over-year.”

Rolling out the welcome mat

Welcomemat, founded in 2003, is currently in 12 cities and just sold franchises in Savannah/Hilton Head, S.C., Columbus, Ga., and two in Indianapolis.

With eight employees in Atlanta, Welcomemat “decided that we wanted local ownership” of franchises, he said.

Startup costs run from $49,000 to $77,000, he said.

 While some cities, like Atlanta, might not be seeing the huge influx of new residents that occurred during the economic boom, people are still moving, Mattingly said.

“There is still a lot of movement out there,” he said, but now it might be to downsize a home, or move into a rental. “People are still moving, but for other reasons.”