Iowan's online network, Influenster, harnesses the power of word of mouth

 


It's your typical small-town-girl-goes-to-the-big-city story:

Girl plays basketball and acts in plays at her southwest Iowa high school, graduates with 24 classmates, goes to a big college, moves to New York City with her sister (the ballet dancer), finds and then quits a job at an ad agency and, with a Turk who loves Omaha's indie music scene, starts a social media company that has 410,000 members, $3.5 million in revenue this year and a satellite office in Istanbul.

Sample product reviews by Influensters

Palmolive Soft Touch dish soap: I feel like it is a little thin, but other than that I do love the scent and it does clean my dishes good.

Goldfish crackers: I became addicted to these when my godson stayed weekends with me and I'd buy them to have on the go. They are a perfect snack for between meals. The flavor is cheesy, but not so much so that it's sour. They're perfectly sized for little fingers, and are an excellent alternative to saltines in soups and salads. The only downside to these crackers is the fact there is quite a bit of grease and salt in them. ... However, that doesn't stop me from devouring an entire bag!

Body Clear body scrub: Works fantastic, but the smell is absolutely disgusting!!!!!

Sephora Collection precision pore cleansing pad: I have one of these and a cheaper one from a Japanese “dollar” store. I find that they are no different. These do help your cleanser get into your pores and clean it. Ever since I've used one of these, my skin has felt healthier.

Under Armour Coldgear: Great stuff! Used this when in the military and it was a lifesaver and the best stuff around. Definitely came in handy when we were deployed in Iraq because the nights can get pretty chilly out there.

“The Real Housewives of Atlanta”: Why would anyone want to suffer watching this and other shows like this? It's called envy and jealousy and trying to live vicariously through watching these rich (women) spend money and talk behind each other's back. What does that teach us?

South African Airlines: Planes are often small but crew is SOooo nice! And they give you awesome snacks and drinks!!

Chicago White Sox: I consider myself a Chicago fan and thus root for the Sox equally with the Cubs. (You don't find many like me in town! haha.) It's really disappointing the lack of support this city shows to the team when they are actually a pretty good team. I hope to see more fan involvement this season with the White Sox.

OK, so maybe the parts about Istanbul, $3.5 million and 410,000 social media members are a bit unusual.

But that's Elizabeth Scherle, daughter of Henderson, Iowa, farmer John Scherle and the late Janet Scherle and granddaughter of the late U.S. Rep. Bill Scherle, R-Iowa.

She and Aydin Acar, from Istanbul, co-founded Influenster Inc. in 2010 to combine his market research skills with her background of working with brand-name goods. The result is an Internet-savvy network of consumers who give fast, low-cost feedback to a wide range of brand-name manufacturers, with Influenster as the middle man.

Now with a staff of 12 on Manhattan's lower east side and eight in Turkey, Influenster's clients include big companies such as Procter & Gamble, Unilever, Sony and Coty.

Starting with beauty products and other female-oriented packaged goods, Influenster is branching into entertainment, sports, travel and other fields, possibly including finance, projecting $11.5 million in 2014 revenue, all without raising outside capital or advertising for clients.

“Brands want conversation out there, feedback,” Scherle said. “They want real people talking about their products. More money is going into digital, and now money is going into engagement, and that's what we do, word of mouth.”

It's electronic word of mouth through Twitter, Facebook, Instagram, LinkedIn and other social media sites that connect Influenster's members, about 2,000 of them in the Omaha area, to some 14 million people. They also have written more than 1.5 million reviews written about 250,000 products, generating valuable Internet buzz.

That buzz adds to the value of social media companies like Influenster, said Dale Eesley, director of the Center for Innovation, Entrepreneurship & Franchising at the University of Nebraska at Omaha.

“Big data and the ability to collect information and sell it is one of the biggest movements we're seeing on the Web now,” Eesley said. Brand makers love unbiased information about their products, he said, and Influenster apparently is good at finding people willing to test products, share their thoughts with friends and give valuable feedback.

“Their early success in getting that large is really impressive,” Eesley said. “You're kind of rooting for them.”

Such a venture was nowhere on Scherle's mind as she grew up on a farm about 20 miles east of Omaha. She graduated from Nishna Valley High School and earned a business degree at Arizona State University.

“I wanted to go somewhere big after being at a such a small school,” she said.

Her grandfather had finished his four terms in Congress 14 years before she was born, but conversation around her family dinner table still centered on current events and politics. She was a college intern for U.S. Sen. Chuck Grassley, R-Iowa.

“I thought I was going to go into politics as well,” she said. “But once I was on the Hill, you realize that nothing gets done. It was a little bit frustrating.”

Her sister, Rebecca, danced in Ballet Omaha productions and had moved to New York, later becoming a nurse. Scherle followed her in 2003 and landed a spot as an assistant account executive at Zenith Media.

“I just thought it was really boring, sitting in a cubicle, pushing mail back and forth as an entry-level person.”

She left to join a startup fashion marketing company, helping organize fashion events for women. Her duties included putting together “goody bags” for attendees, mostly sponsors' beauty products.

“They wanted more data on the people they were reaching in the events,” Scherle said. “What happened after they sampled the products? I kept hearing that.”

Through friends she met Acar, connecting partly because he noticed that her “402” cellphone area code was the same as Omaha's Saddle Creek Records. He's a fan of Saddle Creek-style bands.

The two, both 33, realized their interests were related and eventually decided to connect the world of social media with brand-name manufacturers.

Traditional market research is expensive and slow, often taking months to test a product and getting a 10 percent response rate. An online group is the opposite.

“The brands listen directly to what they're saying, which I think is important.”

Elizabeth Scherle

“To create online, modernized research panels, we made it more fun for people to be a part of them,” Scherle said. “It needed to be something special.”

In 2010 they began small-scale test programs to see if product makers would be interested, calling on her brand-name contacts, many of them Fortune 500 companies.

“I just knew how to sell, I guess,” she said.

Starting with personal contacts, Influenster began creating its network of members who join for free, with a chance of getting free samples and other rewards and focusing on “trendsetters” who are active in social media and the commercial world.

The more online networking a member does, the more likely she (90 percent of Influensters are women) will be chosen for market tests and free products.

Influensters fill out surveys, relaying 650 data points on themselves, such as age, education, occupation, family members, shopping habits, brand preferences. Clients “have the ability to hyper-target to the highest level,” Scherle said.

“Focus groups are pretty limited, usually eight or 10 people in a room in New Jersey reviewing a product,” Struthers said. Influenster's results “are huge and data-driven,” offering unbiased reactions.

People like taking part in a fun online activity that marks them as trendsetters and rewards them for sharing information, she said.

“Social media is so huge right now. This kind of thing is going to eat somebody's lunch. If you're ignoring this, you should not call yourself a professional communications person.”

Influensters take things a leap beyond mere testing, tweeting their friends, posting photos and videos, reviewing products for quality and price, giving advice that brand managers pay thousands of dollars to hear.

In a campaign, Influenster's participation rate is about 85 percent, Scherle said, and manufacturers get bursts of online marketing alongside the members' direct opinions.

Influenster sent one manufacturer's hair accessories to 2,500 of its members. With no other advertising, sales went up 40 percent because of the members advocating for the new products.

The company conducted a weight-loss survey for a client and within a few hours had 3,000 responses.

Aydin Acar

Want Hispanic mothers with two or more children who wash dishes by hand at least four times a week? Scherle can have hundreds try out your dish soap.

Need 10,000 college students to try out your makeup? She's got them.

Want 200 people to go to a store with a discount coupon and buy a new Bluetooth speaker? She can do that, too.

Amy Struthers, associate professor of advertising and public relations at the University of Nebraska-Lincoln, said Influenster's model could replace the focus groups and traditional consumer surveys by advertising agencies.

On their own, members have written thousands of reviews of Pepperidge Farms' Goldfish crackers, even though Influenster has never done market research on Goldfish.

“They just want to write a review about it,” Scherle said.

Brand managers within a large company talk with one another, and if Influenster supplies great information on one brand, dozens more may sign up. Clients today include about 150 brands, and the company has conducted about 250 campaigns during its brief history.

“What the brands are really paying for is our relationship with the community,” she said.

The brands want to match their products with people who want them.

A shoe manufacturer wanted to get consumer feedback on a new model and sent $25-off coupons to Influenster members, who bought thousands of pairs and wrote back their opinions.

“People like it because they like getting free stuff,” Scherle said. “It's tailored to match what they like. And they want to share their opinions with people they know and with the brands.

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