A good example of social currency is gossip, people will share rumours with their friends, who in turn will share with their friends, which is why rumours can spread like wildfire. But the key to understanding social currency is to understand the psychology behind sharing, why do people want to share? Ultimately people share when it benefits them, when they get some personal value out of sharing. The single most important component of social currency is personal value.

Basic human needs

Personal value itself is typified by fulfilling two basic human needs, the need to belong and the need to feel significant.

Humans are social beings; we are compelled to identify ourselves as belonging to groups of similar people. This need to belong is the most important element of personal value – people share content to show that they belong to a certain group of people. People will join groups on Facebook to show that they belong, quite literally, to that group of people. Just as people will tend to dress themselves according to quite specific social groups, the things we share and advocate are just another way of identifying ourselves with a group.

Within these groups individuals want to feel valued in that group; they want a feeling of significance. People who share content do so to get recognition from others in that group and in doing so give themselves significance. An offline analogy is an individual in a group of friends who always wants to be the one telling jokes; they gain significance by sharing jokes with their friends.

Social currency therefore not only provides value to the end users, but also provide additional personal value as a form of currency when shared.

Four further types of Value

Personal value can be broken down into four further types of value: Utility, Knowledge, Entertainment and Monetary.

Utility

This is literally something useful, be it a piece of useful content such as a “how to” guide or a fully fledged branded utility. Branded utilities are where brands create something that provides a tangible, useful benefit to users, such as banks providing applications that allow users to compare the various interest rates

Knowledge

A different kind of value can be gained when people share knowledge within their group. This can start from people who remind their friends that a mutual friend’s birthday is approaching right through to thought leaders in industry, who produce white papers and innovative new methods of working. The personal value is a reward for individuals who share their knowledge; they are valuable members of that community.

Entertainment

Probably the oldest and certainly one of the most common, types of social currency that provides personal value from entertainment is the joke. People tell each other jokes to make members of their group laugh, just as they share funny videos with their social networks and email each other funny pictures. Providing entertaining social currency to your peers gives you significance within your peer group.

Monetary

The final type of value a user can receive from social currency is monetary or financial value. A good example is the online coupons that brands encourage their customers to share with their friends, entitling them to a discount. It is of value not only to the end user, but also to the sharer, as their community gives them kudos for sharing the discount.

Multiplying the effect

These values are not delivered in isolation however, the types of value can be combined to provide stronger social currency, with common examples including useful financial knowledge in the form of “How to live on a budget” guides or entertaining information, which explains why infographics are so widely popular.

At the end of the day, if your brand doesn’t have social currency, if the content it produces isn’t entertaining or useful, if it doesn’t share knowledge or provide a monetary benefit to users then people won’t share it. So what social currency does your brand have?

The information allowed companies and brands to build relationships with their customers, no longer just pushing out one message to all with huge mass marketing campaigns, but rather target their core customers with messages directed to their habits, wants and desires. A new field of marketing was born, Customer Relationship Management, or CRM for short.

However, marketing is undergoing another shift and it is again driven by technology. In recent years improvements in availability of broadband communications has allowed Internet access to become ubiquitous and improvements in technology have provided customers with access to more information about companies and brands than ever before. Knowledge of the information being sought by customers can also provide essential data to the companies in terms of honing their messages.

It used to be that information flowed one way, from the company to the consumer. Companies were very careful about the message they sent out, they spent huge amounts of money on slogans, jingles and advertising campaigns, all to provide the company mantra to the consumer. The conversation with the consumer was one way.

Professor Urban of MIT’s School of Management argues that “marketing is changing from the push strategies so well suited to the last 50 years of mass media to trust based strategies that are essential in a time of information empowerment.” (Urban 2004)

The Internet has allowed people to share their experiences and opinions of brands online. The role of consumers online has definitely changed. The Internet is not just a tool for finding information; it is also a tool for communication.

Jake Hird, (2009) referencing a recent study by Netpop Research argues that that with the increase in popularity of sites such as Digg, Twitter and Facebook, users are discussing their brand experiences online with their friends and other contacts. This kind of communication obviously happened offline before the Internet, but talking about a brand with 2 or 3 people around the water cooler or with the family over dinner is a vastly different scale to posting a message that is then available to several hundred contacts.

The power of the individual has never been greater, with almost immediate access to their entire network “consumers can openly challenge brands in an environment where there is scope to make a massive amount of noise.” Hird (2009) argues that brands cannot simply ignore these users, nor can they gag them. The users have taken a large chunk of power, and they aren’t likely to want to give it up any time soon.

It is this shift in power that is driving the revolution in branding and marketing. Companies are no longer able to control fully the message of their brands; the breakdown of the traditional broadcast paradigm (Moore 2005) is forcing companies to change tactics.

We see brands doing this with varying degrees of success, with Dell famously responding to a slew of customer complaints, most notably blogger Jeff Jarvis, by creating a dedicated a dedicated corporate blogger to engage directly with customers. They were pioneering engagement in a new era of socially networked communications. And they learnt a lot in the process, speaking at a Lionel Menchaca described how the game has changed:

• Customers are in control. Work with them and learn from them.
• Real conversations are two-way.
• Think before you talk—but always be yourself.
• Address any form of dissatisfaction head on.
• Be aware that any conversation can become global at any time.
• Size doesn’t matter—relevance does. Just as one journalist can trigger a newscycle, one blogger can do the same.
• Don’t be afraid to apologize.
• Develop direct links to customer community (IdeaStorm for Dell), listen for how we can improve.
• One customer is part of many communities.
• Teamwork, transparency and frequent consistent communication are key in this new world.
• No shortcuts are possible. Implementing business change requires much effort across departments.

David Armano describes the process of moving towards a Social Business Strategy as “the intentional creation of dynamic and socially calibrated systems, process, and culture.” In other words, companies now must learn to engage with their customers and enter into the conversations they are having. By doing this, they eliminate the middleman of advertising and can enhance their business by actually listening to, and engaging with their customers’ conversations in the social sphere.