The gurus at Vivaldi Partners recently released a revealing report, Social Currency: Why Brands Need To Build And Nurture Social Currency. (Full disclosure: I partnered with Vivaldi Partners on a project years ago.) The piece sheds important light on social currency, which they define as: "the extent to which people share the brand or information about the brand as part of their everyday social lives at work or at home."
The report breaks new ground as it quantifies the effect of social currency on key brand performance indicators, including that across categories and brands, 53% of consumers' brand loyalty can be explained by social currency, and users of brands with high social currency show a significantly higher willingness to pay a price premium.
Hard findings like these, along with the delineation of the specific levers of social currency, such as affiliation (defined as the share of a brand's users which have a sense of community) and advocacy (the percent of users who act as disciples and stand up for your brand), are helpful to the understanding of how social currency works and how it can be increased.
But it got me thinking about the importance of social currency itself. The report states, "Brands need social currency….It creates value through differentiation and increased relevance and it adds value beyond the product, namely the context of the daily life of people." Also "all companies need to learn how to make their brands more social."
At first blush, these conclusions seem spot on. For most brands, they certainly apply. In today's digitally-developed world, social media conversation is a tremendous brand awareness builder. And there's a large and growing body of research which indicates that people are much more likely to believe and respond to messaging which comes from a brand's users than the brand itself.
Further, the Vivaldi report takes care to point out that social currency "is a means not the end and neither is it just about buzz or conversation, rather it is about creating meaningful experiences around the brand." On this point I completely agree.
But I'm not convinced that social currency is always desirable – for brands or for consumers. Here's what I'm thinking:
Brands which seek to increase awareness and perceived relevance among a broad base of consumers certainly benefit from more people talking about and engaging with them more often. But what about brands which thrive on exclusivity and limited access?
In some categories, the perceived value of some brands is inversely correlated to the number of people who know about or use them – very high-end fashion designers, night clubs, getaway locations, and providers of personal services, for example. The users of these brands often want to limit the number of other users either because a greater number detracts from the cachet of the experience or makes it more difficult for them to enjoy it (e.g., there's more competition for appointment times or limited availability of stock.) Therefore social currency may actually be a negative for these brands.
Even for more mainstream brands, the number of people talking about a brand and the number of conversations being held about it can have drawbacks. Anyone who has tried to wade through hundreds of user reviews in order to get the low-down on a product or service understands what I mean. When there's a multitude of conversations going on, distinguishing between the ones among people whose opinions would be valuable to you and those which wouldn't can be difficult.
Another reason I'm skeptical about social currency is the growing questions about the integrity of social media. Although organizations like WOMMA have taken steps to encourage transparency in blogging and other word of mouth avenues when they're sponsored or otherwise influenced by companies, the reality is that the incidence of such manipulations is currently outpacing the disclosure of it. As more people become aware of this, I believe the value of social currency decreases.
So social currency isn't a slam dunk. Just as with real money, its real value is not always its face value.
Don't get me wrong. I am not advocating against social currency, nor am I criticizing the Vivaldi report. I believe so much progress has been made and a lot of good has come out of the new way we're experiencing brands – and I expect, and hope, this will continue.
I'm simply wondering if we should give more thought to what social currency can and should do. Please let me know your reactions – I'm eager to have a conversation about conversation!