Biz Tips: 8 Hidden Benefits of Social Currency that Grow Businesses

Biz Tips: 8 Hidden Benefits of Social Currency that Grow Businesses

Biz Tip:

8 Hidden Benefits of Social Currency that Grow Businesses

Why do some customers choose your business over others? How is it that some companies get shared on social media while yours gets no love? Why do some customers refer friends while others don’t?

A new model of approaching our customer relationships may have the answers. Social currency is a way to understand the value businesses add to customers. Understanding how to develop social currency allows brands to drive higher customer loyalty. This leads to more referrals and sales.

In this post, we’ll discuss how social currency plays a role in your customer relationships. As well as how that can benefit your business. We’ll also share how you can earn more “social currency” and use this to grow your business.

What is Social Currency?

Here’s how a traditional sales funnel works:

  1. Encourage potential customers to consider your product or service
  2. Lead them to a purchase decision
  3. Give customers a way to show loyalty by referring family and friends

In many ways, moving customers from the ‘consider-to-purchase’ phases is straightforward. But turning your customers into advocates requires adding something extra.

social currency is a great addition to your strategy

That “something extra” is social currency.

Social currency explains your business’s social relationship with its customers. A study published by strategy consulting firm Vivaldi Partners defined it like this: “Social currency measures the ability of brands to fit into how consumers manage their social lives in today’s digital and mobile age.”

As the Vivaldi Partners study showed, social currency helps drive brand loyalty. Brands that have earned high social currency also command premium prices.

Think about Apple, the world’s biggest company. Through building its social currency, they don’t only lead smartphone sales by volume. It also charges premium some of the highest prices for its products.

Like word-of-mouth marketing, social currency is a means to an end. You don’t just want customers to talk about your brand; you want them (and their friends) to buy.

The dimensions

Building social currency requires providing one of the following “dimensions” or levers to an audience member:

  • Affiliation – Offering a sense of community among your customers.
  • Conversation – Meaningfully engage in the customer conversation around your brand.
  • Utility – Creating utility and value for customers while helping them become more socially relevant.
  • Advocacy – Developing strong feelings of loyalty to a brand where customers recommend and even defend it.
  • Information – Giving valuable and shareable information.
  • Identity – Providing customers with their own identity in a group.

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These dimensions have always played a role in your social strategies. Yet, their influence may not be seen to focusing on other parts of the customer relationship.

Each of your social tactics should consider one or more of these dimensions. When planning your social strategy, you may ask, “How can I add provide greater utility?” Or, “How can I give customers a sense of affiliation?”

Let’s return to the Apple example. Apple’s devices offer similar functionality as its competitors. Why can Apple charge more? They’ve invested in developing the following social currency dimensions:

  • Utility: Apple doesn’t just deliver the functionality consumers want, it does so in a way that “just works” (well, most of the time).
  • Conversation: Apple’s legendary product launches help build a conversation around its products.
  • Identity: Apple fans rallied around it’s “Think Different” cry. Now, Apple products represent status or having what’s perceived as the best.

Each of these helps Apple customers decide to stick with that brand.

Your business may not have access to a massive ad budget like Apple. However, you can still apply the same principles to grow your word-of-mouth marketing and generate more referrals.

The Social Currency Bank Account

Understanding how to build this type of currency makes your referral marketing strategies more effective.

Imagine it as a bank account. If you want to “spend” your social currency – that is, if you want to ask something from your customers – you’ll need to have earned something first. As you know, customers who don’t have a meaningful relationship with a brand are unlikely to advocate it with others.

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Each time you provide one of the six dimensions of social currency listed above, it’s like you’re making a “deposit” into your social bank account. Then you have something to use when it’s time to ask for a referral or sale.

Each customer responds to the dimensions differently. One customer follows the crowd and responds well to affiliation. Another customer is simply seeking utility and trying to find the most useful, effective product to solve a problem.

It doesn’t matter which tactics you use to drive potential customers through the consider, purchase, and loyalty phases of the sales cycle. You can always add these dimensions to further deepen the customer relationship.

How Earning Social Currency Benefits Your Business

When you’ve taken the time to earn social currency with your customers, your business benefits in several ways:

1. Greater Insight Into Your Customers

It deepens the relationship between your business and your customers. You’ll have a clearer view of what your customers want, what they don’t want, and gaps in the market your brand can address.

You’ll also know how customers perceive your brand, allowing you to actively manage your brand reputation.

2. Increased Impact

Having social currency helps your customers find more value in your product or service. This provides additional utility from your brand, which in turn increases their likelihood of becoming a brand advocate.

It’s an upward spiral of customer loyalty, value, and advocacy.

3. Larger Circle of Influence

When you’ve earned enough social currency, your brand gains the ability to take the role of influencer. This gives you greater leverage with other influencers.

4. Organic Growth

Eventually, when your social currency reaches a certain level, your business will experience a “snowball” effect. All of the work you’ve done in the past will compound. Suddenly, you might experience Metcalf’s Law – the phenomenon where audiences reach critical mass and suddenly explode in popularity.

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5. Higher Customer Retention

Social currency drives loyalty beyond simply comparing offers between brands. Sure, Target and Walmart offer many of the same products. But because Target has earned social currency through its social media channels, the brand has a higher repurchase or loyalty rate over Wal-Mart.

6. Premium Prices

If you’re trying to position your brand at a premium price point, social currency helps. Deliberately building social currency gives your brand greater control over how your customers receive value. By focusing on non-price related social currency (such as identity), you can charge a premium price.

7. Better Word of Mouth

How will current customers respond to these types of investments? They’ll happily provide better recommendations about your business. They’ll be your front line in word-of-mouth marketing, promoting your business to their friends.

8. More High-Quality Leads

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Ultimately, all of the above benefits add up to this final benefit: more leads. Your customers will be primed to refer their professional network to your business. This will drive a steady stream of highly-qualified leads to your sales team, helping your business grow.

Want these benefits for your business? Let’s dive into some actionable strategies you can start working on today.

Actionable Ways to Generate Social Currency and Increase Referrals

Here are several ideas you can try today to generate social currency with your customers.

Reach Influencers

When an influencer promotes your company, you’re borrowing the influencer’s social currency as well as using your own. This makes an influencer marketing strategy a powerful way to generate additional social currency.

Try to focus on finding influencers who resonate with your audience and are respected by their fans.

Social Currency Dimensions Used:

  • Affiliation
  • Conversation
  • Advocacy

Create a Community

One of the most successful strategies is to create communities for your ideal customers. For example, say your business sells an organic cleaning spray. You might create a Facebook group for people to share natural home cleaning tips. By doing this, you’d offer affiliation and identity to your members. You’d also attract people who might be interested in organic cleaners.

Social Currency Dimensions Used:

  • Affiliation
  • Advocacy
  • Identity

Create Explainer Videos

It’s every brand’s dream to generate the next viral video hit. While it’s hard to predict what will go viral, creating useful video content is a good place to start.

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Simple explainer (or “how-to”) videos related to your audience’s interests are a great place to begin. Valuable insights or tips shared as a video provides utility and information to your customers. Thus taking the next step towards advocacy feels natural.

Social Currency Dimensions Used:

  • Utility
  • Information
  • Advocacy

Incentivize Advocacy

Brand ambassador programs can help you grow your brand 10x faster. However, these programs need the right incentives to be successful.

RedCoach used to offer a two-sided incentive, rewarding both the customer and the referral. This generated social currency with both sides.

Consider offering coupons, vouchers, or even gift cards. Recognize your top referrers to provide an identity within your community.

Social Currency Dimensions Used:

  • Utility
  • Advocacy
  • Conversation

Develop an Information Campaign

Creating a resource to share information with customers builds you up. Develop eLearning portals, knowledge bases, and other informational resources for customers.

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Social Currency Dimensions Used:

  • Information
  • Conversation

Give Your Customers an Identity to Rally Around

Highlight customers within your community to help them stand out and gain a community identity. In a referral program, this may include featuring top-referring individuals and new affiliates.

Social Currency Dimensions Used:

  • Identity
  • Advocacy

Whether you realized it or not, the dimensions are already playing a role in your brand strategy. Actively developing social currency empowers your brand to deepen relationships with your customers.

The result? A more effective referral marketing strategy, giving you additional high-quality leads and referrals. Review your marketing strategy today to consider how you can build additional social currency with your audience.

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