Majority of businesses get more than half their customers from word of mouth
May 21st, 2009 (Excerpted from www.buzfactor.com)
92% of the companies surveyed said customer word of mouth was very important to their businesses’ success. Survey of over 200 retail and restaurant owners and managers - almost two-thirds of these businesses said word of mouth was responsible for generating over half their new customers and, among smaller businesses, the impact was even more pronounced with 75% acquiring the majority of their customers through word of mouth.
Compared to other forms of marketing, 70% of businesses said word of mouth had the most impact on the success of their business (3 times more than online and email marketing and 10 times more than print).
However, 40% of these companies do not currently allocate ANY of their marketing budget to word of mouth and, of those that do, the vast majority (71%) dedicate less than 10% of their marketing budget on word of mouth. Interestingly, less than 10% of companies said budgetary concerns were the primary reason for the lack of investment in word of mouth marketing initiatives.
Powerful data. This reminds me of slide #22 from this presentation on "Building Sales With Social Media".
'Raises the question - what is the actual value of word-of-mouth for the millions of small, local US businesses?
Businesses need a simple way to use the Web to connect with this river of WOM advertising.
Buzfactor of Blacksburg, VA was founded by Ron Butman in May of 2009. Butman holds seven technology patents and has founded two other technology companies.
Butman says he began Buzfactor, "to take advantage of what I perceive as one of the more significant opportunities - the formation of consumer marketing networks that leverage the social relationships between customers to increase sales far more effectively than traditional advertising. "
Read more about Buzfactor.