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Small Firms Turn To Buzz Agents | |
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Comment The Post Below...
Greetings,
Sometimes the best way for a small business to increase
business is by using word-of-mouth marketing. Learn more
about this method of marketing and how it might help you in
today's issue. Hope you find it helpful! :)
Best,
Mandi
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NEWS & TIDBITS
- Toys R Us will cut 3,000 jobs, as it closes 75
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- Seagate buys Maxtor for $1.9B...
- Another round of layoffs at EMC, as 1,000 jobs
will be eliminated in 2006...
- Short lived Indepedence Air has ceased operations
after a brief 18-month run...
- IBM to freeze pension benefits for American
employees starting in 2008...
- Englehard says no to a $4.9B hostile bid by
BASF...
- General Motors is cutting prices on about 80
percent of its cars and trucks...
- America Online beefed up its video search
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Small Firms Turn To Buzz Agents
At a post-wedding brunch, Mary McNealy's friends
were complaining about all of the carb- and fat-
laden foods, like bagels and cream cheese, beckon-
ing from the buffet. So, she took the opportunity
to inform her buddies of her latest healthy
discovery: Hahn's Yogurt & Cream Cheese Spread.
Ms. McNealy, 27 years old, didn't discover the
creamy concoction at her local market. She learned
about it because, though a Yale University grad
student by day, she has another identity: buzz
agent. She has been enlisted by a buzz, or word-
of-mouth, marketing campaign to evangelize about
a product.
In recent years, word-of-mouth marketing has
gained popularity among big companies, which fear
that traditional advertising has lost its punch in
this age of information overload. But now, some
small companies are getting in on the buzz, hoping
to achieve outsize results.
'Good Idea'
"Word of mouth is the lifeblood for most, if not
all, small businesses," says Ben McConnell, a
marketing consultant based in Chicago and co-author
of churchofthecustomer.com, a marketing blog. "It's
something that should be part of the DNA of any
small company."
Some experts say that smaller, lesser-known
companies are particularly well-suited to buzz
campaigns. While at large companies, there is more
pressure from upper management to maintain control
of a marketing message, "the whole point [of a
buzz campaign] is to get consumers talking," says
Max Kalehoff, vice president, marketing at Buzz-
Metrics, a New York word-of-mouth research and
planning firm. "Word of mouth is the ultimate form
of consumer engagement," he says.
For decades, the maker of Hahn's, Franklin Foods
Inc., remained invisible to consumers as it churned
out ingredients that were anonymously poured into
New York-style cheesecakes and used behind the
counter at bagel shops. Then, about six years ago,
Jon Gutknecht, president and chief executive,
joined the 80-employee Enosburg Falls, Vt., company
with a mission of bringing the Hahn's brand to the
mass market.
Under Mr. Gutknecht, Franklin cooked up and patent-
ed a cream-cheese-yogurt blend that had less fat,
cholesterol and sodium than traditional cream
cheese, and offered the health benefits derived
from live and active cultures found in yogurt. An
initial launch in 2003 flopped, however, because,
the company believes, the product was in a contain-
er that consumers didn't recognize as cream cheese.
Franklin changed the packaging and saw a very modest
improvement in results. Soon it realized that more
work was necessary. It needed to get its product
onto more consumer palates, understand what they
thought, and secure more space on highly competitive
supermarket shelves.
To kick-start that effort, earlier this year it
hired BzzAgent, a Boston word-of-mouth marketing
firm, which designed a 12-week campaign using
2,000 volunteers from a roster of about 120,000
people who've registered online to participate in
BzzAgent campaigns. While Franklin declines to say
how much it paid BzzAgent, the marketing firm says
that it generally charges its clients $95,000 for
a full-service campaign with 1,000 agents.
The agents for Hahn's, selected by their willing-
ness to try a new cream cheese, were sent a color-
ful booklet about the product, along with coupons
for free Hahn's yogurt cream cheese, which now
comes in six flavors. Then they were encouraged
to spread the word -- and product -- by hosting
brunches, telling co-workers, or introducing it
to their local supermarkets. The marketing firm's
code of conduct requires them to identify them-
selves as buzz agents working on behalf of the
product. Agents also were urged to file reports
on their impressions and encounters, with a chance
to win prizes -- from bagel slicers to iPod shuff-
les -- the more reports they filed.
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"This kind of thing is very risky," says Mr.
Gutknecht, the Franklin CEO. "If they don't like
your product, you have a problem because they will
tell everyone they don't like it."
Luckily for Hahn's, they liked it. Sales grew, and
thanks to direct consumer feedback, valuable tips
were obtained, leading Hahn's to add a baking-brick
size and a blueberry flavor, and to eliminate food
coloring. While Franklin conducted its own marketing
efforts during the March-through-June campaign as
well, such as in-store tastings, the number of
stores carrying Hahn's more than doubled to about
1,000 by the end of the campaign. Franklin was so
pleased with the results, it initiated a smaller
buzz campaign in October, and says it may use the
strategy again for other products.
Some small companies have invented their own buzz
strategies on the tiniest of budgets. For example,
Green Gear Cycling Inc., a maker of customized
collapsible bicycles that fold up in a suitcase,
has turned its customers into a buzz sales force
by offering them a referral-rewards program.
The bicycles, called Bike Fridays, have produced
some passionate customers, who in turn have
produced a lot of sales. Referrals account for 50%
to 60% of the Eugene, Ore., company's $3.5 million
in revenue. One devotee, septuagenerian Margaret
Day, founder of the Australian Bike Friday Club
along with her husband, has generated 110 referrals,
or $337,170 in sales, from Down Under. Ms. Day just
earned her second Bike Friday, which retails from
$695 to more than $1,000.
"She's our superstar," says marketing manager Hanna
Scholz.
Then there's Jeff Linder, a Bike Friday enthusiast
and investor in the 30-person direct-order
operation. Mr. Linder, a Boeing 777 pilot, has
packed his candy-apple-red Bike Friday into his
suitcase on hundreds of trips and has brought into
the fold 17 new customers whose orders total nearly
$46,000.
Green Gear, founded about 13 years ago by brothers
Hanz and Alan Scholz, initially used traditional
advertising in cycling publications. But after
about five years, "the return on our investment
wasn't making sense anymore," says Ms. Scholz, the
daughter of Alan Scholz. "We were finding that most
of our customers were coming from word of mouth."
At that point, the company began asking customers
to spread the word, and it formalized those efforts
through referral awards. Each Bike Friday buyer
receives a package of prepaid postage cards
imprinted with his or her name. Then, whenever
that customer meets someone who is curious about
their bike, the customer writes that person's name
and contact information on one of the cards and
drops it in the mail to Green Gear. If the contact
results in a sale, the referrer receives $50 in
cash or a $75 credit.
The company still advertises periodically, sends
out catalogs using new mailing lists, and occasion-
ally teams up with bike clubs and bike touring
companies. But it says referrals produce the best
results.
"Existing customers are a built-in word-of-mouth
network," says Mr. McConnell, the Chicago consult-
ant. "They are ready and waiting ... to help. It's
just that they're never asked."
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TARA SIEGEL BERNARD is a Staff Reporter of The
Wall Street Journal.
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DID YOU KNOW?
Trying to avoid hassles by not going electronic
will probably cost you money. Everyone is better
protected with electronic processing because you
lessen the chances of mistakes and omissions, and
you should probably just take the electronic
plunge from the start or expect to pay higher
discount and transaction fees.
So what did you think about this issue? Drop me a
line and let me know at mandi@gophercentral.com
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Copyright 2006 PENN L.L.C. All rights reserved.
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