We Put the Buzz in Business!

Over the past several months, we’ve surveyed almost 5,000 consumers in 26 major markets to learn more about how word-of-mouth affects consumer decisions.  It turns out that word-of-mouth is three times more important than any other factor we measured (and 15 times more influential than advertising). In fact, 74% of consumers say a friends recommendation is the most important factor when deciding whether to try a new business.

Interestingly, we found that customers recommend their favorite local businesses as many as 27 times per year and these recommendations are acted upon 64% of the time resulting in 17 new customers.

Stay tuned as I’m going through all the data now and will be posting more results soon.

Buzfactor is my third startup which I guess officially makes me a serial entrepreneur.  I founded my first company PFN, Inc. in Cambridge, MA in 1994.  While at PFN, I pioneered the development of policy-based networking and distributed directory services which became the building blocks for many of today’s peer-to-peer communication networks.  These technologies represented a new way for businesses to share and distribute information and, as a result, I received seven U.S. Patents, which have been incorporated in more than 80 applications from a diverse group of companies including AOL, Cisco, IBM, Microsoft, and Yahoo.  The company was acquired in 2001.

Since that time, my work has focused on the development of large-scale, decentralized, peer-to peer networks.  I believe that ad-hoc, collaborative networks have the potential to create significant new businesses.  In May 2008, I founded Buzfactor to take advantage of what I perceive as one of the biggest opportunities - the formation of consumer marketing networks that leverage the social relationships between customers to increase sales far more effectively than traditional advertising. 

Ron Butman

Despite billions of dollars being spent on advertising, direct mail, promotions, and countless other marketing techniques, 78 percent of Americans say word-of-mouth recommendations — especially from family and friends — most influences where they shop and dine.

Recognizing the impact word-of-mouth has on their business,  more than half of small business owners feel customer recommendations are more effective than paid advertising. In fact, 45% of businesses rely exclusively on word-of-mouth as their only form of marketing. But businesses face a great challenge in leveraging word-of-mouth into measurable results.

That’s why Buzfactor is developing new technologies that let businesses create word-of-mouth marketing campaigns, track their effectiveness, and measure the impact on sales right down to the customer and transaction level.  In effect, we are creating social networks that map businesses to their best cutomers.