clevertim - Profile

First thing to do is understand why they've left. Call them and ask nicely.
Ask them what would it take for them to come back.
Be nice to them, maybe give them a discount, show that you care.
Use their feedback to improve.

This type of business is something where social media can pay off nicely.
Here's an idea:
How about you take some pictures of yourself with the celebrities, post them online and hope they go viral. That and a link back to a website that tells everyone what you do.
If you build such a portfolio, that's very useful when you sell to businesses, because that's something they can see.
Alternatively or additionally, you can approach small local newspapers ... mention celebrities and I'm sure they'll be happy to include your story.

Defining your target customer is key, as others have said.
Another very important aspects of starting a marketing campaigns:

Define metrics for success & failure (or KPIs: key performance indicators). In a few months time, having burnt some precious cash, you'll ask yourself: is this marketing campaign a success or a failure?

The simplest metric is: I have paid X, I've got customers with a lifetime value of Y. If X > Y: success, else failure.
This metric is simple, but marketing and advertising most of the time don't pay off instantly. A lot of the time, you just build awareness and a brand that people recognize. The payoff comes later.

That's one problem. The other problem is that this metric doesn't look at your sales funnel, from lead generation to completion. Some leads will end up customers, but most of them will drop off along the way somewhere.
Does that indicate a problem with the marketing campaign, with your selling techniques, with the website or with your product or services?
Define your funnel and set metrics at each level in the sales funnel of how many leads you want to have continuing to the next level.
I'm sure you can think of other KPIs...

Metrics will mean you will have to measure various activities. Something like google analytics should be a good start.

Best of luck

One interesting idea I've seen implemented somewhere was these "Break rank meetings" where a senior manager would regularly (maybe monthly) meet up with junior or mid-level employees from different departments for breakfast/coffee etc. and just discuss freely various topics. It was informal, some social conversation so everyone can feel comfortable, round the table introductions and then open discussions about what can be done better - all with a positive, constructive attitude.
I found them to work really well, but they do require commitment from senior management for that to happen regularly, as they're the ones driving it. But the feedback can be really good and it has also the benefit of acting like a team building exercise, breaking down barriers between departments, and so on.

I agree that increasing the PR is a slow process, but that's how natural processes are ... slow. Getting rich quick schemes are unnatural and we all know that ... by now ... I hope.
I think that is consistent with everything that comes out of Google. They want less SEO and more natural growth, with content that is not put out there for the sake of SEO, but because it matters. Content for people, not for search engines.
Personally I think this is a great thing, otherwise we'll end up with the whole of the Internet being one big rubbish dump of cheap content that adds no value whatsoever.
SEO in my view should be more about optimizing existing content, exposure, brand awareness in the context of the natural marketing that companies do. It should not be something done in isolation, content for SEO and so one. PR should be a lagging indicator of how well you've done so far, and in that context ... it's fine to use it.
I hope Google have penguins, pandas, tigers and plenty more other animals to keep our Internet sane and safe.

I think you should tread carefully with SMS marketing. SMS is more disruptive than email - people tend to drop what they're doing and check their phones when they get one.
Therefore, it can be perceived more easily as spam - even when they signed up for it. Imagine getting a text about the wonders of "service X" when your car broke down and really you're waiting for a call back from the AA. You are not in control of the "context".
The other problem is that it is limited to a very short message, so you're limited in what you can do.
I think SMS works best when the customer gets some value out of the SMS - so not just marketing, ads, but notifications about free deals or discounts, or notifications about services they care about.

That's what twitter is for, isn't it? :-)
For virtual banter, of course under a pseudonym so it doesn't affect your brand and reputation. We know how banter can be like ...

It's a good idea but it will require a lot of time to prepare the presentations, give them, organise the event and so on.
How will you get the word out about the event? How many people do you expect to show up to the event?
Also, you have to think about how much your services and products cost - you need to make sure that the customer acquisition cost is ideally less than the cost of your services.
Nevertheless, it's a great way to build some awareness, brand, start the word of mouth and so on.
You might have to give regular presentations, one presentation is unlikely to make you an expert or to pay off. Think of maybe a monthly seminar...

I think they pay out a fair chunk of their revenues out to the small businesses and they spend the rest growing.
There is no point making profit when you're in the growth phase, you have to spend everything and more on growing, ads, marketing, acquiring new businesses and customers.

The problem is that this "intermediary" business model is going to inevitably alienate some customers as some of the small businesses Groupon recruits will scam people, treat customers not as nicely as Groupon might like it or run out of business before they handle all the customers from Groupon.

This will affect Groupon's brand by association and it's already happening ... a lot of customers have stopped using Groupon because they can't really know the quality of the services they're getting.

On the other side, small businesses must realise that they get mostly price sensitive customers with 0 loyalty that are really hard to convert into regulars.

I do agree that the Google offer must seem very appealing now.