I recently had a chance to meet with Rob Fuggetta of Zuberance, a fascinating startup that has managed to raise a $4M round even in the depths of this economy. I’d been hearing good things through the grapevine about Zuberance, so the news of their round together with those good things led me to reach out for an interview.
Rob, give me the basic profile of Zuberance
We were founded in February, 2007, we raised a $4M round on November 14, 2008 from Emergence. We’re located in San Carlos in the former Obama campaign headquarters…
<Interrupting> Wow, that’s some good karma, eh?
Yes, absolutely. A lot of what we do and how we operate is very similar to how Obama approaches things.
We have 12 employees, and 10 large Enterprise customers including Symantec, Polycom, and TomTom. Our customers tend to be large enterprises with 1000’s to millions of end user customers. We have a couple of mid-sized organizations like Vertical Response, but we fit best with medium to large enterprises.
What does Zuberance do?
We enable customers who are genuinely and authentically enthusiastic to share that enthusiasm with others. As I mentioned, we see a parallel with what Obama has done with his followers.
How much does the service cost?
It starts at $5000/month. There is typically a one time $10,000 configuration fee. So, that’s about $70,000 a year. You can unleash an army of advocates for less than the cost of a single sales person.
Tell us more about how Zuberance works
We call ourselves a customer salesforce software company. It’s a very pragmatic positioning. Many CEO’s have said to me, “Our highly satisfied customers are our most effective salespeople.”
That’s truer today than ever before because customers have never been more distrustful of paid media. 69% of consumers do not believe advertising according to the big advertising firms. In general, most leads from lead generation programs result in less than 1% qualified leads. Sales and marketing productivity has been plummeting because of mistrust.
In place of paid media, we turn to networks of trusted friends. Word of mouth has always been the most powerful convincer, but now it has moved online through services like TripAdvisor for hotels or Yelp for restaurants. People will at least search Google, or go to LinkedIn for a reference on a candidate. Consumers are tuning out paid media and tuning in these networks of trusted peers and colleagues.
What Zuberance does is we give sales tools to your customer salesforce. We give marketers management and tracking tools to manage this salesforce. If you buy our system, you could increase leads and sales in the same quarter using your best customers as a volunteer salesforce.
How does all this fit with social media?
I didn’t mention any of the faddish things people are talking about. We believe social tools, online communities, and tools like Facebook are just tools to get something done. We leverage those technologies to arm and empower customers.
<At my day job, Helpstream, we’re big on the idea that communities need a reason for being. Generic communities can be hard to harness effectively for business results. I think what Rob is saying is that Zuberance is a way to give Generic communities a purpose so that they can be empowered.>
Make it real. What do I see when I use Zuberance?
The Enterprise subscribes to Zuberance just like they would Salesforce.com or WbeEx. We’re SaaS, and our SaaS apps enable 3 things:
– Manage and Track
The first step is to Identify the advocates. We enable brief online surveys via emails or web banners. We ask the ultimate loyalty question:
How likely are you to recommend us to a colleague?
Zuberance launches those 1 question surveys. Customers who answer 9 or 10 are considered advocates. Advocates are then given an invitation to join an online community of advocates. They register, upload a profile, and then they are given access to sales and advocacy tools. This is the Mobilization phase.
Here are 3 examples of our sales and advocacy tools:
– Advocates can create a review. They fill out forms, and then, with their consent, we publish the reviews to places like Amazon and CNet.
– Advocates can share a promotional offer with a friend or colleague. Exclusive promotional offers for friends and family are a powerful tool. They get to send a coupon to someone in their personal community.
– Advocates can answer a prospect’s questions. For example, with Symantec, you can talk to a Norton customer now. To ask a question, the prospect provides their email, so that results in a lead.
The advocates get poins. We have an application called ZPoints. You can redeem points for discounts, or to make donations to non-profit organizations.
Can they get cash for points?
No. It’s bad business practice to give cash, but it is good business practice to recognize advocates. We prefer to give them special or preferential treatments.
<The recent debacle with Belkin, where people were being paid to post reviews and positive comments, is a good example of why paying cash is a bad idea!>
And what about managing and tracking your advocates?
We provide a management portal for marketing to manage their advocate community and track their results. They can see the content the advocates are creating and they can create promotion offers. This is another big difference with our service: most social media is not trackable or manageable for a business.
<Amen! Helpstream is all over that manageability and trackability. So much so that our latest release actually gives you a report that shows the ROI of community for your Customer Service web portal.>
Is this service like Facebook Beacon?
There are big differences between Zuberance and Beacon. I said Beacon is doomed to fail because Beacon didn’t respect the users. It was a service that was meant to benefit brands only. Our belief is that you have to deliver equal value to brand, advocates, and in-market buyers. If you don’t maintain the balance, it won’t work.
How is Zuberance going to market?
Our advocates are doing our marketing for us. We started with Symantec. They have 22 million active subscribers to Norton. So they launched Norton Advocates in beta in June of last year. They started by surveying 100,000 customers. They got several thousand advocates almost immediately.
How did you get your first customers, before you had any advocates?
We used Direct Sales, and augmented that almost immediately with advocate leverage. Look for our Zuberance Zealots program soon.
What has been the impact of the Economy?
This is the worst environment I’ve seen in 2 decades of Enterprise marketing. 100% of CMO attendees at a function I attended last night are losing budget. It’s a tough environment. Products and services without provable ROI will go by the wayside in 2009. In our case, we can deliver results this quarter. Customers get 10x ROI on their investment in our solution. Plus, it makes so much sense. CMO’s get what we do because they already have the religion.
Zuberance is a fascinating company. Their story certainly made sense to me, and resonated with a lot of what I’m hearing from others. In this economy, it is extremely hard to get new customers. You need to focus on keeping your existing customers happy, driving repeat business from those customers, and I would say, leveraging those customers to find your new customers. Zuberance helps with all of that.