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Catching The Buzz

BOSTON MA - According to a recent Jupiter Media Metrix survey, 45% of online shoppers choose e-commerce sites based on word-of-mouth recommendations, yet only 7% of companies are implementing tools that allow them to identify "viral influencers" through e-mail pass-along rates.

If word-of-mouth is so effective, why is viral marketing rarely used? Perhaps it's the name. Viral marketing sounds negative. But there's a more important reason why viral marketing is not more widely adopted: Most marketing executives define customer loyalty too narrowly.

Jupiter Media Metrix says 63% of businesses base loyalty on spending habits and order sizes, but only 13% of companies measure customer satisfaction. That shortsighted approach alienates valuable, lower spending consumers who may make recommendations to others.

"Businesses need to identify what influences their customers purchasing decisions and they should start by building a broader view of consumers' behavior," says Jupiter Media Metrix Analyst David Daniels.

While no single CRM application currently offers a comprehensive view of a company's customers, Daniels says improved e-mail tracking capabilities and clickstream analysis tools can reduce customer acquisition costs by 27% and increase average order sizes by up to 60%.

While viral marketing isn't mainstream yet, there are successful case studies:

• Referrals -- Referral Blast is one of a host of tools that lets marketers mine visitor contacts to generate traffic. "We're very pleased with the Referral Blast's ROI and would strongly recommend it for other businesses that rely on word of mouth," says Angie Chan-Geiger of Shoes2Die4.com.
  
  
• Games -- Another creative application was Intrapromote's IT security game for Verado, a Web services firm.
  
  
• Desktop apps -- A perfect example of "desktop branding" is WeatherBug.com, a site that uses passalong of viral applets to fuel its rapid growth.

Emanuel Rosen's book, The Anatomy of Buzz, explains how products such as the Palm Pilot, the BMW Z3 Roadster and PowerBar boosted success through word-of-mouth. The book's title also suggests an alternative term for viral marketing, one that judging by Business Week's July 30 Buzz Marketing cover story may well be light years ahead of what we've got now.