I’m extremely bullish on Bazaarvoice, as I have been all along. We have always spent judiciously and balanced between high growth and cashflow neutrality, and our current investments have enabled us to rapidly grow our Client Services team to best serve our more than 280 clients globally. We are 375 people strong and will continue to hire engineers to continue our development of ROI-driving products, features, and programs. You won’t find another company that has consistently developed as many new offerings – we have consistently delivered new features every seven weeks across 6 (soon to be 7) products in 20 international languages, and this will not slow down. Our culture is stronger than ever. It is truly humbling (and exciting, every day) to work at such a special place.

In the midst of the global economic uncertainty, I want you to know that we will continue to thrive as a financially viable, rapidly growing organization by staying focused on our most important job: effectively and passionately servicing our clients to deliver measurable results. You will see many companies with unproven business models fold over the next year, as I witnessed happening around us at Coremetrics during 2001-2002. But our business, and our business model, are very solid:

• In our most recent quarter, we saw a 148% increase in signed clients and a 229% increase in revenue, compared to the same quarter a year ago.
• We now serve more than 280 clients globally.
• Currently, 90% of the Internet Retailer Top 50 and 80% of the National Retail Federation’s Top 100 who outsource reviews choose Bazaarvoice.
• We have served over 17 billion product reviews to date, across 20 international languages.
• We were voted one of Austin’s Best Places to Work this year for the second year running.
• This week, we won the 2008 Marketing Excellence Award from ClickZ for our Ask & Answer solution.

To us, user-generated content must deliver a real impact to our clients. Here are some recent benefits they have seen:

• Ask & Answer drives 72% higher conversion rate for PETCO.
• Customer reviews drive 196% increase in paid search revenue for Office Depot.
• Large French retailer, Mistergoodeal, sees 40% conversion increase.
• Reviews help Cars.com drive “intent to buy”; 16% lead conversion increase.
• Want more? Read 23 case studies here.

Now, more than ever, social commerce can have the greatest impact on the bottom line, including reducing support costs and product returns, and increasing site traffic, conversion, advertising ROI, customer satisfaction, and loyalty. In this economy, consumers will scrutinize their purchases more than ever, driving an increased need for user-generated content. They will reward businesses that help them make more informed and satisfying purchase decisions. Businesses that step up their pace of customer centricity will emerge as even stronger leaders after these challenging times turn.

We will continue to be the leader in social commerce. Our entire company is focused on our clients, and it excites us to see so much innovation and success from the smart people that choose to partner with us. Please let us know how we can help your business.

As always, keep an eye on this blog for more real-world ideas from our clients about how user-generated content works for them.  Here are a few of my favorites from just this month:

• French retailers drive ROI and Loyalty
• Reviews impact Boden's sales and their future product designs
• Ratings & Reviews boost sales for Europe's top retailers
• Scott Cook (co-founder of Intuit) on the Contribution Revolution

Two years ago, we were honored to win ClickZ's Marketing Excellence award for Ratings & Reviews, and last year we were recognized by Austin Business Journal for most innovative software award for Ask & Answer. And this morning I was greeted with a pleasant Google alert that Ask &  Answer just won ClickZ's 2008 Marketing Excellence Award for Social Media Marketing!

We pride ourselves on building innovative social software and services that drive measureable results, and are honored to receive recognition like this. The judge's comment reads: "User-generated content is the killer app for all Web sites, and Bazaarvoice is the hands-down leader in driving innovation in this space. Social networking is only viable for the few. Rating, reviews, and comments are there for all to capitalize on, and Bazaarvoice has made it easy for all to get in the game."

We've wrapped ourselves under the term "Social Commerce" because social media marketing programs should impact the P&L (now, more than ever). Whether through measurable client case studies or awards, we're thrilled to see Ask & Answer recognized for making a difference.

I was happy to see Andy leverage the valuable community we assembled at our first-ever and sold-out Summit in May by recording five video interviews. It was truly an amazing group of individuals, charged with word of mouth marketing at many of the largest companies in the world, from Bank of America to Wal-Mart. It was humbling to be in the presence of so many smart industry leaders, sharing best practices with each other in our rapidly emerging field. Because of them (as well as the hard work by our team), we have set a very high bar for our Summit next year.

Andy recently published his interview of me. We discussed how user-generated content is changing the merchandising culture at companies, helping them become more customer-centric and successful as a result.

Click here to view the embedded video.

Read on to see more interviews by Andy.

Andy previously published an interview of Ze Frank, another one of our keynotes and one of the funniest but smartest online personalities you will ever meet. Ze's interview at our Summit by Kelly Mooney (a Summit keynote speaker, author of The Open Brand, and President of Resource Interactive) was a personal mental highlight for me, probing into some very deep issues. Andy covers topics like viral marketing with Ze. By the way, that gong behind Ze in the interview is a very important part of Bazaarvoice's culture, and has been since the beginning. You can thank my co-founder, Brant Barton, for that, and you can find multiple gongs in our Austin office and one in our London office (so far).

Click here to view the embedded video.

Andy also previously published an interview of Steve Leveen, the founder and CEO of Levenger. Steve is a very smart leader, and brought his son to our event. Steve gave me some great tips on raising our daughter, Rachel, and is a very kind person (as is his son, by the way).  In Andy's interview of Steve, they talk about the use of video reviews and Flickr as a natural medium for Levenger's sophisticated customers.

Click here to view the embedded video.

If you have not subscribed to Andy's blog yet, do it today. Incredibly useful tips are published on an almost daily basis. I found myself recently evangelizing on why to follow it to the founder of Hey Cupcake, a local joint in Austin. I connected with the founder, Wes Hurt, recently after reading about him in Tribeza because we may be related (it is a long story). You must try these cupcakes the next time you are in Austin – they are unreal. But I'm off topic – I was telling Wes to read Andy's book and subscribe to his blog because he will quickly learn how to build his business as a result. I also found myself telling Wes the story of how Krispy Kreme lost its "specialness", parroting Andy telling me the same story.

On Andy's blog, he will soon be publishing the remaining two interviews he did at our Summit: Bryan Eisenberg (highly respected industry consultant, co-founder of the Web Analytics Association, keynote speaker at our Summit and several other conferences, prominent author [ClickZ, Call To Action, and Waiting for Your Cat to Bark?], and Bazaarvoice Advisory Board member) and Seth Greenberg (former CEO of eHobbies.com – one of the online pioneers, former Shop.org Board peer, and leader at Intuit).

* Note: we are proud members of WOMMA and our own Sam Decker serves on the Board of Directors while WOMMA's President is my fellow Board Director at Bazaarvoice, Ed Keller (keynote speaker at our Summit, author of The Influentials, former CEO of Roper, and co-founder and CEO of The Keller Fay Group).

We are exhibiting at the Omniture Summit in Utah this week, and I'm amazed at how significant this event has become for the online industry.  There are over 2,000 people here making this event almost as large as Shop.org's Annual Summit in Las Vegas (disclosure: I serve on the Board of Directors at Shop.org), and Seth Godin just spoke.  Lance Armstrong spoke last night, and I had tears in my eyes after hearing his story (and not just because I am an Austinite).  I also heard that the Coremetrics Summit last week was strong (we were an exhibitor) but, unfortunately, could not attend.  Being a founder of the Web analytics space (as the founder of Coremetrics), I'm really impressed to see how much that industry has grown.  I hope to grow Bazaarvoice into just as large of a company, and we are well on our way to meeting that (current) goal.

There are many buzzwords to describe customer participation. "Community" is a word that has made a comeback from the late '90s, when a best-selling book was "Net Gain: Expanding Markets Through Virtual Communities". In 1997 this was our 'bible' at Thirdage.com. Content, community and commerce was the mantra. Unfortunately content was too expensive and commerce was too early. Hence, I'm still working

Now "community" is back. More people are online, more eyeballs to feed ads, and more participation from the next generation of online consumers is feeding this trend. However, as Dave Evans points out in his recent ClickZ article, "community" often gets confused with the broad category of "social media". 

When I visit Fortune 500 clients I see one or more of the buzzwords above used. One word may become prominent within the organization, perhaps because the CEO or CMO went to a conference or read an article. Sometimes that buzzword is "community". I hear, "We need to build community into our site". However, what they ultimately mean is they want customer participation and customer engagement, which CAN lead to customer retention, word of mouth, and increased persuasion / conversion.

Community is perhaps the most overused term of them all, perhaps because it infers a higher level of customer engagement than user generated content or social media. Some of our clients (or more accurately, their customers) have a community on their site. Others have the opportunity to build a community with our functionality.

I've had my experience with community, as Director of Community for ThirdAge.com  and as manager of Dell.com's support forum technology for a period of time. If I learned anything it was this: Community is about customer passion, relationships and/or a sense of belonging. On Dell support forums, it was very utilitarian. However, techies ansnswer questions because they are proud of their knowledge and passionate about helping others. They had relationships with each other and Dell moderators, and liked to be part of Dell's Brand. At ThirdAge.com, a web site for baby boomers, we tried to seed topics on forums and chats, and most of the time we were way off! Customers created their own topics, and the ones that flourished are those that had drama, emotion and passionate utility. Love, sex, hobbies, local discussions, medical topics, relationships, etc. were top topics. For context, read this history of Thirdage.com community from a member (warning: midi music) and this story I wrote of a love and marriage originating on ThirdAge.com forums and chat. I also saw and participated in saving a life through ThirdAge.com chat! That's community.

For a company, the strategic 'community opportunity' is to identify the emotion in their brandtheir products and their customers. It could be something related to the prdoucts (ex: Harley Davidson), or the problem the product solves, or their advertising (ex: Geico), or their customers (celebrity customer?). On PETCO we see 700 reviews for Greenies, a $1 dog treat! Greenies has their own community within the product pages of PETCO! But that doesnt' work on Epinions, for example, which has been live for 8 years. Why would the 700th person write that review on PETCO? The combination of Greenies on PETCO (a site for pet lovers) makes it a community of passion for a product for pets they love.

As for Social Media (and I'll put user generated content, including reviews, in this category) vs. Community, Dave Evans suggests another difference between social media and community, in his article:

At its core, social media both encompasses and provides a set of tools that enable members to share and share in the information around them. It is a precursor, but not a guarantee of community. The social web, a facilitator, enables me to ask you or anyone else in my distributed network about something and facilitates you telling me and anyone else in your distributed network about it. This has implications for marketing and advertising. Primary among them: the explicit condition that participants in your community be able to freely talk and share information. Right there, most so-called communities fail. By controlling rather facilitating, the conversations become predictable, one-way monologues. It's like the CMO who went to a marketing retreat and came back enlightened about social dynamics in our age of democratization: Maoist chants of "Let a thousand flowers bloom" sound great, and look even better in contemporary mission statements. But then, just as predictably, the other shoe drops: "And if those flowers turn out to be dissidents, we can lop their heads off later." That isn't, community.

This is not to say that social media and community-inspired marketing needs to be totally open, free, and unconstrained. This is the '00s, not the '60s, as much as I wish I were back there. A bit of structure actually seems to be a good thing. As marketers, we've got jobs to do and results to which we're held accountable.

Basically his point is that we do have control on driving customers to buy from us, it's just a different lens. There are different levers and controls. Marketing has to move more upstream. The best part of the article is this Consumer / Marketer Control Framework:

Quoting Pete…

At the end of the day, we still control the message and the business processes that shape it, but we may need an alterative path to get there. Product quality, customer service, accurate claims, and employee empowerment are all within our control. And these are the input types that really matter, and always have.Our problem is we viewed our world of control through a narrow, increasingly dubious, lens: traditional advertising and paid media. 

I spoke at a Forrester Conference a few months ago and the audience asked what companies weren't doing as it related to User Generated Content. My co-panelsts suggested that more companies need to listen. My follow on to that was more companies need to ACT based on that listening. Notice the control levers below "Listening" in the right column above. All of them imply that action must be taken based on what consumers control.

The fundamental difference in Customer-to-Customer (C2C) marketing is that

1) Our marketing lens and sphere of control needs to be widened

2)  Our strategies, actions, initiatives, programs, tactics and measures (things we control) need to be centered on how the customers are controlling their experience and sources for product decisions ('marketing').

 

I think Pete's title, "We're Still in Control", was interesting and ironic. We hear that "customers are in control". His point is the way we have traditionally thought about control (media, advertising, company-to-customer marketing) is too narrow. I think the phrase has struck a chord because of this narrow view. If we listen, act, and build our strategy based on this fundamental truth (customers are in control), then ultimately, we have more control.

The song's producer Bruce Dickinson (played by Walken) encourages Farrel's character to play more cowbell. The rest of the band members object — it's distracting and doesn't seem to fit. But the famous producer knows his stuff. In the end, the band concedes that what that song does indeed need more cowbell.

Last year our clients brought ratings and reviews into their site — the perverbial cowbell for their ebusiness strategy. This was the first time they brought authentic customer voice right next to their brand. Many of our clients told us this was the most transformational change for the year. PETCO awarded us Vendor of the Year, and we were awarded ClickZ's Marketing Innovation of the year. Get ready for more this year!

In fact, this year I'd encourage everyone reading this to add more cowbell — to your work, your life, and your site. Be unique, be authentic, and "explore the space"! Just tell your boss, your spouse, or your peers, "I've got a fever, and the only prescription is more cowbell!"

Chris Anderson's book, "The Long Tail: Why the Future of Business Is Selling Less of More", is finally out.  Anderson, the editor-in-chief of Wired (my favorite magazine), maintains a popular blog about the journey of researching the book.  The article cited above is based on it, and it's brilliant.  As I like to think about emerging trends in a historical context, here is my favorite excerpt:

• "Before you shed too many tears for the declining hit, remember that the era of the blockbuster was an anomaly. Before the Industrial Revolution, culture was mostly local – niches were geographic. The economy was agrarian, which distributed populations as broadly as the land. Distance divided people, giving rise to such diversity as regional accents and folk music, and the lack of rapid transportation and communications limited the mixing of cultures and the propagation of ideas and trends."

When I came up with our company name, Bazaarvoice, I was inspired by The Cluetrain Manifesto and thinking about how word of mouth has always been the most powerful form of marketing.  Human nature hasn't changed; it isn't like we all woke up last year thinking, "We need to communicate with each other more".  What has changed is the ease of communicating in a globally-connected sense.  This has profound implications for word of mouth and is driving an explosion in consumer-generated content.  As Anderson writes, "the Internet's peer-to-peer architecture is optimized for a symmetrical traffic load, with as many senders as receivers and data transmissions spread out over geography and time".  For all of the wonder of the Internet, it may be the most wondrous medium of all due to its power to connect people like we used to be connected locally (before the advent of the one-way, controlled broadcast medium).

I would recommend that you read Anderson's article (I can't recommend his book yet as I haven't read it) and think about how it will change your business.  Here is how I think "the long tail" changes the world of retail and eCommerce:

• More personalized products
• NikeID is just the beginning
• Community-driven commerce is a window to the future
• More niche eCommerce opportunities with established and start-up businesses capitalizing on them
• Stay tuned for The Home Depot, Gap, and many other giants launching more direct-channel-only brands
• Talk about a niche – check out Black Socks, which offers sockscriptions and won the Customer Experience Council's prestigious Copernican award last year
• The "green" or "eco-friendly" niche is going to be huge and almost all large retailers will capitalize on this, especially after An Inconvenient Truth comes out, which is sure to be remembered as the most impactful documentary to date 
• Faster product cycle times due to better and more accessible information from customers about what they like and don't like about the product
• Product reviews will play a big role here; we are already seeing our clients make some pretty profound merchandising decisions based on our word of mouth analytics
• Better customer service
• Store reviews and customer reviews will also play a big role here
• With more choice, tighter community, and a greater demand for niches, personalized service will become an even more important differentiator
• Better multichannel integration
• Buy online and pick up in store initiatives are just the beginning; REI is a good example (30% of all online purchases are picked up in their stores)
• Retailers will have to leverage their use of channels to provide a better overall customer experience or risk losing them to niche businesses
• Customer-centric, multichannel database and analytics opportunities will be a huge area of opportunity and frustration; RFID will only make this more complex
• More private-label brands
• JCPenney's ana line is a good recent example but there are many, many others
• This bullet may be redundant with the second bullet as the reason these private labels are being launched is a combination of profit margin motives as well as focusing on attractive niches for revenue growth and differentiation
• An entire discipline will evolve on creating products that drive word of mouth
• I enjoyed Bryan Eisenberg's article on ClickZ this week and think that he and Roy Williams are on the right track here; Bryan cites three triggers – architectural, kinetic, and generous – and provides examples from our client's product reviews of these triggers driving five-star product satisfaction and word of mouth
• This will lead to much tighter communication between retailers and their suppliers with product reviews being one of the most important sources of data for these conversations (obviously returns and sales being the two longest-adopted sources)
• Members of the rapidly growing Word of Mouth Marketing Association will play a big role in this evolution

What am I missing from this list?  And how do you think it will change your business?

Two other important notes that are relevant to this post:

1. In this same issue of Wired, I was happy to see "The Power of Peer Production" named as one of the six trends driving the global economy, by Chris Anderson no less.
2. Speaking of hits, Bryan and Jeffrey Eisenberg's new book, "Waiting For Your Cat to Bark?", is out and has already been named to the New York Times, Wall Street Journal, and USA Today bestsellers list.  Here is the praise I wrote for the book when Bryan was nice enough to give me a preview copy:

   "The Web is a democratizing force as the world's largest global brain.  It educates everyone on the pros and cons of every product, service, and even person.  An educated person doesn't react well to the traditional art of manipulation that some marketers attempt to employ in their campaigns.  As a matter of fact, it makes them angry and defensive … like a cat backed into a corner.  No one understands this new world of marketing better than the Eisenbergs.  Waiting For Your Cat to Bark? is the marketing manifesto of our generation.  Read it, weep, and then go do something about it."