The dog chasing its tail may catch it momentarily - but tires itself out in the process.
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.
My Take
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.
About Buzfactor
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.
My Take on Lisa Barone's "A Great Product Needs No Advertising"Not all blogs are broken. Some still get it. They get it hard and consistently. Like Andy Sernovitz. Andy says that advertising is the price of being boring, explaining:
“…There is a direct relationship between being buzzworthy — earning word of mouth — and how much you’ll have to pay to promote yourself through paid marketing.”
If you *get* one thing today, get that. It’s a lot easier to market a great product than a mediocre one. Because great products don’t need to be advertised, they just are...
Instead, save your marketing cash and invest it in the core product. And yes, I just did tell you to save your dollars on marketing and actually use it for product development.
Growth of local search outpacing regular search By comparison, overall U.S. Internet searches grew just 21% to around 137 billion in 2008.
The data shows that more and more Internet users are logging on to find local businesses, potentially driven by the increase in use of mobile Internet and the availability of Google Maps.
Interestingly, when keywords for searches on Yellow Pages were analyzed, it showed that three-quarters of the top 100 keywords were non-branded, indicating that searchers did not have a specific brand in mind at the time of the search.
My Take
This enormous growth rate demonstrates the need consumers feel for improved means of finding local businesses. Older methods (classifieds, print Yellow Pages) aren't cutting it.
The question is, what new, social tools will enable consumers to not only locate businesses, but to connect with those businesses trusted by their network of neighbors, relatives, co-workers and friends.
That'll be the Holy Grail - for consumers as well as businesses.
The Wisdom of Community Excerpts:
The web, with its low barrier to entry and permeable social boundaries, is the ultimate medium through which to explore the finer points of the wisdom of crowds.
You need a few things to enable online crowds to be wise.
One of the reasons discussions do not lead to wise results is that there’s no aggregation—the conversation just happens. But WOC systems are there to produce a result. This requires an aggregator (like you) and an algorithm.
A defining element of any WOC system is that the more participants it has, the better it gets. Discussion systems and chat rooms fall apart when too many voices get involved. If your community feature gets worse the more people use it, it’s not a WOC system.
It’s counter-intuitive, but the wisest crowds are the ones made up of individuals who are thinking about their own needs, not the needs of the group.
Leaderboards create a problem for Wisdom of Crowds systems. How you display the wisdom of your crowd can be as important as how you ask for it in the first place.
In working on your own WOC systems, pay attention to when you can glean implicit feedback without having to ask for it directly.
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