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Small Firms Turn To Buzz Agents

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                   SoHo NEWS & TIPS
Helping You Make the Most of Your Small Office/Home Office
        SoHoTIPS.com
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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 
  stores during Spring 2006...

- 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 
  capabilities with the acquisition of search 
  technology startup Truveo...


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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."

--------------------------------------------------
TARA SIEGEL BERNARD is a Staff Reporter of The 
Wall Street Journal. 
--------------------------------------------------

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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