2 Nik Blosser’s coupon-book company needed a new business model.
Can an iPhone app save the company?

Phone: Courtesy Apple; Screen: Courtesy Celilo Group; Scissors: Veer

Put away the scissors: Celilo Group's iPhone app gives consumers virtual coupons that can be redeemed without bothering with pesky slips of paper.

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You would be hard-pressed to find many adults who leave the house without a phone. For Nik Blosser, that's at once promising and frightening. Blosser is the president of Portland, Oregon–based Celilo Group Media, which produces Chinook Books, print coupon books that contain discounts for hundreds of eco-friendly businesses in six cities. Sales of Chinook Books have steadily grown over the years, but Blosser is not blind to the fact that coupons available on smartphones are a lot more convenient than the print versions.

In 2009, Blosser decided to address this looming threat to his business. After surveying customers to confirm the assumption that many owned an iPhone or iPod Touch, Blosser determined that Chinook Book needed an app if it was to remain relevant.

Blosser turned to Small Society, a Portland-based firm that develops apps and helps clients create mobile strategies. Small Society's president, Raven Zachary, ran Blosser and his team through a two-month-long, $15,000 process in which Zachary interviewed them about the intricacies of their business and then crafted a plan to address the two main challenges Blosser foresaw.

First, the app needed to include technology that marked a coupon as used after it was redeemed. Second, the company had to find a way to avoid cutting out the schools and community organizations that sell the print Chinook Books.

With Small Society's assistance, Celilo settled on placing a Redeemed stamp over a coupon once the Redeem button is pressed. The team also agreed that the app would be free to download and browse, but customers would need to purchase a code to redeem coupons. A coupon code can be purchased through the app for $16; it comes free with the $20 print Chinook Book. (In the future, Chinook Book distributors will sell the print book and mobile coupon code separately. Celilo will also eventually charge merchants an additional fee if they want to be both in the print book and on the app.)

Though Blosser was impressed with Small Society's strategic consulting, he hired an experienced and well-regarded Russian team to develop the app. The company charged Celilo $20 an hour, which came to about $70,000. The entire app project cost about $200,000, including the expense of hiring a mobile design company, a freelance CTO to oversee the development, and Small Society's consulting tab. "It's a big number," Blosser says, "but this is pretty core to our business."

The app launched in late September with coupons from 500 businesses in Seattle and Portland. So far, partnering businesses have been excited to experiment with the new technology. "We were interested right away," says Michele Mather, marketing manager for Burgerville, a restaurant chain with coupons in the Chinook Book app. "Mobile coupons are becoming more and more popular, and they're a convenience for our guests."

Coupons are displayed on the app in three ways: via a map that marks the location of the business offering the deal; in list form, organized by proximity to the user's location; and by category, in alphabetical order. Each coupon appears with a white background and the company name at the top with a description of the deal. When the Redeem button is pressed, an alert appears to ask the user whether the merchant is ready to view the activation of the coupon. When the user presses Yes, an animation is displayed, signaling redemption of the coupon. In its first three weeks in Apple's App Store, the app was downloaded more than 2,200 times; about 550 coupons were redeemed. "Print coupons will be rare in 10 years," Blosser says. "And mobile could be our whole business in as soon as five."

Last updated: Dec 1, 2010




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