What Is Social Currency? Definition, Benefits, and Examples

Why do customers choose a business over others? How come one company goes viral on social media, and others get just a few likes? Why do some people readily refer brands, while others don’t?

A new approach to customer relationships may have the answers. Social currency is one way of seeing the value businesses add to customers. Knowing how to build social currency allows brands to drive higher customer loyalty and add to social proof. This leads to more sales and referrals.

In this post, we discuss how social currency plays a role in your customer relationships. We’ll also share tips on how you can earn more social currency, and use it to benefit and grow your business.

What is social currency?

Social currency is your influence on social networks, online and offline communities, and the degree by which your business is shared by others.

Are you doing anything that stands out from the competition? Do people look to you for a specific product or service? If so, you have social currency.

A customer’s journey, from browsing to purchasing a product, is fairly straightforward. If you want to turn customers into advocates, you need something extra – that something extra is social currency.

A study by Vivaldi Partners describes social currency as “the ability of brands to fit into how consumers manage their social lives in today’s digital and mobile age.” Social currency (or social capital) applies to the relationship between your business and consumers. If your business provides information and value to consumers, it is building social capital and solidifying its position in the market.

Here’s an overview of what social currency means to individuals and brands:

Social currency of individuals

People share what they think makes them look good. In other words, they’ll only share what they believe will maintain or boost their reputation in the eyes of their peers.

Whenever a person chooses to share information, they place their reputation on the line and “spend” social currency. They don’t want to share boring, irrelevant, or misleading information because they risk losing status among their peers.

Social currency of brands

All brands need social currency. It makes connecting with customers easier. And when you share interesting content with your audience, having social currency means that message will more likely be shared with others.

When someone shares your brand, they spend their social currency on you. And if others like what they see, then the social currency of both the sharer and your brand increases.

Of course, your brand should already be trusted and relatable. But with positive social capital, it will be easier to grow your brand awareness and a stronger relationship with your customers.

Social currency and brand loyalty

In the Vivaldi Partners study, social currency was shown to help drive brand loyalty. Brands with high social currency are also able to command premium prices.

Think about Apple. By building its social currency, the company doesn’t just lead smartphone sales by volume. It also commands a premium. Apple is able to charge some of the highest prices for its products, without any dip in its brand loyalty. The majority of Apple customers are loyal to the brand, and are always awaiting the company’s next release.

Similar to 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.

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The dimensions of social currency

How can you build social currency in a way that also drives revenue? Building social currency entails providing at least one of the following dimensions (or benefits) to your audience:

• Affiliation: Offering a sense of community among your customers
• Conversation: Engaging in the conversation around your brand
• Utility: Creating value for customers, while helping them become more socially relevant
• Advocacy: Developing strong brand loyalty, to the point where customers will recommend (and even defend) a brand
• Information: Giving valuable and shareable information
• Identity: Providing customers with their own identity in a group

When planning your social strategy, keep these six dimensions in mind. How can you provide greater utility? What’s a better way to engage with your audience?

If you can add a dimension of social currency to every interaction with your customers, it will help you deepen your customer relationship.

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Let’s go back to the Apple example. Apple’s devices offer similar functionality to its competitor’s devices. Why can Apple charge more? Because they invested in their social currency:

• Utility: Apple doesn’t only deliver the functionality consumers want. It does so in a way that is easy and seamless for consumers. It focuses on providing the most friction-free user experience possible.
• Conversation: Apple is known for its legendary product launches and events. At any time of the year, there’s a lot of conversation generated around its products.
• Identity: Apple fans rallied around its “Think Different” cry. These days, Apple products represent a certain status or premium.

Each of these dimensions encourages Apple customers to stay loyal to the brand. Even if your business doesn’t have access to a massive ad budget like Apple, you can still apply the same principles to build your social capital.

The social currency bank account

Building your social currency can also make your referral marketing strategies more effective. Think of social currency as a bank account. If you want to spend your social currency – that is, if you want customers to do something – you have to earn it first. If a customer doesn’t see a brand as having social capital (or doesn’t have an existing relationship with them), they are unlikely to advocate it to others.

What are ways you can add to your social capital? Be present on social media, share relevant content, and highlight your best features.

You don’t have to do everything at once – you can gradually build your customer relationships. Start by being a friend to your customers. Post helpful information about your brand and answer any concerns. And if someone shares a tweet about your product or tags you in a photo, be sure to respond with thanks.

Every time you provide one of the six dimensions of social capital, you’re making a deposit into your social bank account. This account is what you’ll draw from when it’s time to ask for a referral or promotion.

Every customer responds to the dimensions differently. For example, if a customer usually follows the crowd, they’ll most likely respond well to affiliation. If another customer values utility, they’re more interested in a product to solve their problem.

6 benefits of social currency for your business

In time, you’ll start to notice several benefits that come with earning social currency:

1. Greater insight into your customers

Positive social capital 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 any gaps in the market you can address. You’ll also see how customers perceive your brand, which allows you to manage your brand reputation.

2. Increased impact

Social currency helps increase the market value of your brand. When a consumer sees others also enjoying your products and services, they’ll be likely to trust and try what you have to offer.

3. Larger circle of influence

When a brand earns enough social currency, it becomes an influencer in its industry. It solidifies its position and gains even more leverage with other influencers.

4. Organic growth

When your social capital reaches a certain level, you experience a snowball effect – all the work you’ve done in the past will compound. Customers are already motivated to share the product or service with others. And if this happens through time at scale, you can expect a boom in customers and advocates for your brand.

5. Higher customer retention

Social currency drives the kind of loyalty that catapults you over other brands. For example, Target and Walmart offer many of the same products. But because Target has earned social capital through its social 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 is a big help. Social currency changes the way customers perceive the value of a product, by adding something money can’t buy.

7. Better word of mouth

Building a brand your customers are proud to support not only increases social currency, it will also boost your word-of-mouth marketing. Brands with high social capital are more likely to be promoted and recommended by your existing customers.

8. Larger amounts of higher-quality leads

All the above benefits add up to this final point – more leads. By now, your customers are primed to refer their friends and family to your business. This drives a steady stream of highly qualified leads, which results in exponential business growth.

10 ways to increase referrals with social currency

Want to increase the social currency of your business? We put together some top actionable strategies you can start using today. Below are several ideas to gain social capital with your customers.

1. Find influencers and brand ambassadors

When an influencer or brand ambassador promotes your company, you’re borrowing their social currency. After all, these individuals will only promote a brand they love and think offers value to their followers. Focus on finding representatives who resonate with your audience, and whose fans respect and trust them.

Influencer marketing and brand ambassador programs are one of the most effective ways to generate more social currency. Brand ambassador programs have also proven to help you grow your brand 10 times faster.

Social currency dimensions used: Affiliation, conversation, advocacy

2. Form a community

One of the most successful social currency strategies is to create communities. This is especially true for your target 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’re offering affiliation and identity to your members. You’re also attracting others with a growing interest in organic cleaners.

Social currency dimensions used: Affiliation, advocacy, identity

3. Show what’s unique about you

What sets you apart from your competitors? Do you have a unique selling point? Find what makes you stand out and highlight those features in all of your marketing efforts. This is not only a great selling tactic for your brand, it also helps to drive social capital and sharing.

Social currency dimensions used: Utility, affiliation, advocacy

4. Create explainer videos

It’s every brand’s dream to have 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. A simple explainer or how-to video is always helpful for consumers. As long as you focus on valuable insights or tips, you can be sure your customers will be watching.

Social currency dimensions used: Utility, information, advocacy

5. Incentivize your advocates

The majority of people trust recommendations from their peers, which makes referral programs one of the most effective ways to grow your business. However, referral programs need the right incentives to work. Consider offering coupons, vouchers, gift cards, or other proven referral rewards for your advocates. You can also give a shout out to your top referrers within your community.

Social currency dimensions used: Utility, advocacy, conversation, affiliation, identity

6. Launch an informational campaign

It’s always helpful to share key information with your customers. Developing knowledge bases, online learning portals, guidebooks, and other informational resources is a strong way to build your social capital.