Social Currency. Where Brands meet Dynamic Context.

Mai 2nd, 2010 • Brands, Social, Social Business, Strategy

One of the really good studies about brands and their social environments has just been published jointly by NYC think tank Vivaldi Partners and Professor Johann Füller (University Innsbruck) in cooperation with Lightspeed Research.

The report ‘Social Currency’ asks what a brand’s social currency is, and what it takes to build and nurture it. And, the report indeed brings a couple of crucial things across – it defines the buzzy term Social Currency and attributes success metrics for brands here.

Defining Social Currency

So what is Social Currency and why is it important? From the report’s perspective it is the contextual sum of experiences users can have in relation and interaction with a brand. And a brand’s social currency is bound to a dynamic process that we call reality.

Social Currency is the extent to which people share the brand or information about the brand as part of their everyday social life at home or at work. (…) It is neither a product feature, nor a communications or PR campaign that is completely managed by any one company. From this perspective, social currency is a far more delicate asset to build, nurture and maintain than is brand equity.

Social currency represents a shared asset of consumers and company-owned brands. It originates from interaction between customers and consumers. And it is the material a brand’s success will be fundamentally influenced by…

1. Across categories and brands, 53% of consumers’ brand loyalty can be explained by social currency
2. Users of brands with high social currency show a significantly higher willingness to pay a price premium (correlation=0.73)

The study’s explanatory strength does not only lie in these results – it is remarkable as it tries to define what social currency is made of. Since the research assumes that social currency is crucial for brands to create customer loyalty it consequently also reveals its components. No, a brand does not necessarily have to access all levers – this varies in regard to which industry and brand is involved…

• Affiliation: What share of your users has a sense of community?
  
• Identity: How many of your users can identify with other users?
• Conversation: What share of your brand’s users stirs and recognizes buzz?
• Information: How many feel they exchange fruitful information with other?
• Utility: How many derive value from interacting with other users?
• Advocacy: How many act as disciples and stand up for your brand?

Applying the model

So how does it work and how may brands really work with this model? Thanks to a couple of brilliant case studies the report is well comprehensible for anyone working in marketing. For a great summary about how brands can alter the value of their social currency do check out these great articles by Fast Company, ‘Five steps for brands to Earn Social Currency‘ and on Hardknoxlife. Both sum up five steps that the report highlights for brands to work with social currency.

Advocates trump followers: Dunkin’ Donuts definitely has fewer followers than Starbuck’s. But it has triggered its customers with a more advocacy-driven approach. The fewer fans of Dunkin’ Donuts are much more likely to recommend the brand through a variety of brand activities which are easy, fun and lightweight.

Context matters: It’s not about the new hot packaging thingie what beer drinkers are interested in. It’s about the world surrounding the social product beer. That’s what Budweiser drives as a social brand and what poweres its marketing recipe. Not the beer is important but its social context.

Social isn’t for everyone: Well, maybe starting a conversation simply isn’t for your brand. Take Gilette – a market leader in low interest FMCG products. There is not much talkability connected with the products nor is there a necessity to initate it. Market leaders in FMCG with a simple functional product superiority should really ask themselves why they want to go social.

No ‘l’art pour l’art’: Advertising all too often does not translate well into social. The challenge is obvious. While a very artificial brand story may be fun to watch, it is not necessarily the thing to participate in. While AXE doubtless is a leader in ad campaigns it has a hard time to drive conversation. Clinique, as a competitor, comes with a much more instructive approach, giving users a helping hand and showing them how to apply their products.

Gimmicks marginalize trust: Let the product be the hero. While Burger King came up with high profile marketing stunts such as the notorious Whopper Sacrifice app it could not increase trust among customers. Wendy’s, in comparison, made its marketing campaigns revolve around its products. Integrating and asking influencers to improve its products made customers trust the brand’s products and pay more for it.

Of course, all these case studies must not be understood as role models for doing it right. They are just examples of the conceptual model used in this study. Anyway, my personal feedback to Vivaldi Partners – this is a very well written study with a great analytical model and a deep understanding for what is happening outside. Or to say it differently – Cool!

If you haven’t read the study by now. You can download it for free here.

As usual I am looking forward to your feedback. Is social currency a term which is applicable for you as a marketer? Or is it still too blurry for you to make use of it? Leave a comment or start the conversation on twitter.

Tags: Adaptation Marketing, Brands, Business, Report, Reports, Research, Social, Social Business Design, Social Currency, Strategy, Study, Trends, Vivaldi, World

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