Q&A With Bazaarvoice's CMO

User-generated content is a hot topic. Analytics and ROI (define) remain as critical as ever. Yet very few organizations are linking the two. If Sam Decker, CMO of Bazaarvoice, had his way, there would be no disconnect.

Shane Atchison: Bazaarvoice had a great year in 2007. The market seems to be converging around social commerce and your business model. Can you share highlights?

Sam Decker: It was a great second year.

We didn’t coin the term “social commerce,” but we’ve crystallized the meaning, which is creating interactions between customers in ways that drive measurable sales. This combines the exciting growth of social networking and user-generated content (UGC), balanced with strategy, measurement, and operational rigor to make the CFO happy. We offer a consultative approach to help [clients] accelerate the adoption and impact of social commerce strategies.

Our growth is a reflection of the impact. Today, we serve over 160 clients; most are retailers, but an increasing number [are] manufacturers and service providers. European growth is very strong. U.K. customers find user-generated content just as helpful as U.S. customers do.

Last year, we took the business beyond Ratings and Reviews with the launch of Ask & Answer and Bazaarvoice Stories. We saw only 25 percent overlap of contributors between reviewers and answerers, increasing the participation quotient from our client’s customer list. Clients have seen conversion and satisfaction grow as customer service calls decrease.

SA: Your SyndicateVoice program is unique. How does it work?

SD: We syndicate our clients’ reviews to over 25 major shopping comparison engine portals. The content is free to the portals. We believe UGC can and should reach far beyond our clients’ sites. Syndication helps build our clients’ brands, drives traffic to their sites, and help with SEO [define]. It’s hard to separate the impact of the different techniques we deploy to drive search traffic for our clients, but you and I know in-links are an important part of that strategy. Many of our clients see 60 percent week-over-week growth in search traffic to review-oriented terms.

SA: Bazaarvoice has been a leader in ROI for UGC. Can you share some examples of how ROI is measured?

SD: Our clients have proven that UGC helps increase conversion, average order value, traffic, revenue per e-mail, and time on site, plus it helps reduce returns and decreases customer service calls. Of course, there’s brand impact (80 percent of people are more likely to trust brands that allow reviews on their site, according to a Vizu/Bazaarvoice poll), internal decision-making impact, and an immeasurable impact on culture.

We have more than 20 case studies using tools like Omniture and Coremetrics to measure conversion, average order value, customer satisfaction, traffic, and other metrics. Some clients, like Golfsmith, have done e-mail A/B split tests and seen 42 percent higher revenue per e-mail when they use UGC in the marketing copy. Petco’s top-rated navigation path drove 49 percent higher conversion and 63 percent higher [average order value] compared to other purchase paths. Clients can tag and measure SEO traffic from our SearchVoice landing pages and see the high converting traffic. And we’ve done tests on leveraging UGC in advertising that have shown positive results compared to other ads. We have clients who have removed poor-performing products based on UGC, which improves their brand and overall sales. We have clients who have denoted “Top Rated” merchandise in their offline stores and reported phenomenal results.

The lift is gained from applying the customer voice to various marketing strategies and tactics. The measurement strategy is the same.

SA: What mistakes do online businesses make when considering a community, social networking, and/or UGC strategy?

SD: Funny you should use those three terms. We see companies struggle to replicate the excitement of social networks within their own site. It’s often a mistake.

Very few brands can support a vibrant walled-garden community, which may include forums, polls, and other bells and whistles of a white-label social networking community. Many online managers forget 95 percent of the visitors aren’t there to socialize. They’re there to research and compare products, get questions answered, see examples of how products are used, and make informed decisions. They want to hear from customers rather than marketers, and they don’t have patience. They’re one click and a search away from their next stop along a complex journey to find something authentic, relevant, and credible. Five percent of your most loyal customers may find a haven in a branded social community, but the real commerce is in making these interactions useful to the other 95 percent. This is on the purchase path, outside your site, at the end of a search. The question in considering any of these strategies is, “Where are our customers on their path?” — literally and metaphorically.

SA: Customer voice is center stage. Most online businesses seem to have gotten that message. What’s next?

SD: Businesses got the message, yet they haven’t. You and many of the professionals reading this column understand and appreciate a customer perspective to influence decisions. What about the call center team, retail general managers, merchandisers, CFOs, and other areas of the business? Executing daily customer-centricity functions beyond marketing is the key to moving the voice of customer from first to second base.

Our part in helping evolve the culture is in our strategic consulting, product R&D, data, reports, analytics, alerts, partners, and thought leadership from what we learn with our clients. As more company functions leverage the “voice of customer” as an operational asset, other functions will understand the power of word of mouth. Ironically, internal organizational word of mouth will help them embrace their customers’ word of mouth!

SA: In an economic slowdown, why should an organization move forward with UGC as opposed to other marketing initiatives?

SD: The CFO is looking for marketing investments that scale, either declining in cost over time or increasing revenue with fixed costs over time. UGC is a growing marketing annuity with a high net present value. Over time, as you get more reviews, ROI goes up for the same fixed cost. This scales the expense, and the impact is multiplied as marketing managers use this content to increase effectiveness of other marketing tactics. Just use the terms “annuity,” “NPV,” and “cost scaling.” Your CFO and CMO will love this strategy!

SA: What are the big opportunities for your business, your customers, and the market as a whole in 2008?

SD: Our clients are sitting on a growing mountain of the most valuable content on the Web. Jupiter and Forrester discovered over 70 percent of consumers seek out reviews when shopping. We’re seeing the value and utility of other UGC applied to commerce to be just as exciting for customers, and therefore to our clients. The big opportunities for online businesses center on leveraging this data across marketing strategies, and adding more social commerce applications to their sites.

I can’t share specifics, but we are continuing to invest heavily in product enhancements, services, and programs to achieve a multiplicative social commerce ROI for clients. This includes adding capabilities in syndication, SEO, paid advertising, and multichannel merchandising.