Zuberance Raises $8M to Support Word-of-Mouth Marketing

Eyeballs are nice, but eyeballs don’t pay your bills when you’re a retailer with an online presence.

I thought about that yesterday when I was interviewing Rob Fuggetta, founder & CEO of Zuberance, and his newest venture backer, Deepak Kamra, general partner of Canaan Partners.

San Carlos, Calif.-based Zuberance, which provides a word-of-mouth marketing platform, is announcing today that it has raised an $8 million Series B round, led by Canaan, and including Emergence Capital Partners and Correlation Ventures. Emergence was the company’s sole investor in the company’s $4 million Series A round in late 2008.

The company is part of a growing number of next-gen marketing-related startups that I’m seeing lately that are focused on social media.

In the case of Zuberance, the software-as-a-service provider works currently with about 30 clients to reach out to a company’s existing customers and turns those customers into what the industry calls “advocates” by getting them to recommend the brand to their friends on social media sites, like Facebook and Twitter. As an example, for its client Chili’s (which is a Zuberance client along with ClubOne, Norton, Ooma and Symantec, among others), Zuberance helped to identify, mobilize and track 400,000 advocates in eight months who recommended the restaurant chain, according to Fuggetta.

Similarly, for ClubOne, the fitness center invested $20,000 in a three-month project to boost its word-of-mouth marketing campaign. The Zuberance-powered effort resulted in $180,000 worth of new club memberships, Fuggetta said.

“Universally, people say word-of-mouth advertising is the most influential form of marketing in any kind of business, whether its retail or B2B, but companies aren’t harnessing that,” he said. “They’re still spending their money on traditional ads, or direct mail, which don’t work. When at home, I feel like I’m a recycler the way I put all the ads directly into the recycling bin.”

Kamra, who joined the board of Zuberance, made a point to say that the company is not paying the customers to become advocates. Through an automated process, customers are located and asked if they’d like to recommend a business. If they agree, Zuberance guides them through the simple process, he said.

“We’ve been looking at the sector for a long time, and this is one of the best companies we found that helps to measure the ROI on social media,” Kamra said.

Fuggetta, who founded the company in 2007, was previously a marketing consultant at Apple for 10 years. Through his work for the marketing agency the Regis McKenna Group, he said he saw firsthand at Apple how passionate consumers can be about brands.

“Apple is famous for its brand loyalty, but every company has its advocates,” he said. “That was the idea for starting Zuberance—helping companies find their advocates and increasing business through word-of-mouth.”