In recent weeks, we looked at reputation, brand and brand value as variables that impact a company’s worth in the global marketplace. We reviewed the various brand ranking reports that determine and monetize the value of the biggest brands in the world annually, including Interbrand’s 100 Best, Brandz’s Top 100 and Credit Suisse’s Great Brands. Those annual lists use a myriad of criteria to assess each brand’s value.
However, there is now a new report that examines ‘Brand Social Currency’, rather than brand value. Is there a difference between brand value and brand social currency? Apparently so. Brand value is about determining the worth of a brand based on internal factors such as clarity, commitment, protection and responsiveness, and external factors such as authenticity, relevance, differentiation, consistency, presence, and understanding. It looks at a company’s financials, sales, marketing, operations and reputation to monetize a brand’s worth.
Brand social currency, on the other hand, focuses on the point at which a brand intersects with, speaks to and integrates with customers within their daily life. Due to the increasing social nature of the Internet and mobile technologies, consumers and customers adopt these technologies and platforms and integrate them into daily life routines and contexts, such as using a phone to identify the closest store that carries a desired product at the best possible price. In order to survive and thrive, companies are finding new ways to allow their brands to interact with customers. Those efforts, in short, are what build brand social currency.
What Brand Social Currency Is and Isn’t
According to Vivaldi Partners, social currency is the new dashboard for diagnosing, building and monitoring the long-term heath and value of “brand assets” in an ever shifting marketplace. The key phrase there is long-term. However, it is not about social media, buzz, or tactics. The focus is on how customers relate to one another in the context of brands and how those brands, companies, products and people relate to customers. It is meant to take an experiential, holistic approach.
If that sounds like a lot of complicated, marketing double-talk, it may be in part because the entire concept was developed by Vivaldi Partners – a marketing firm — in conjunction with MIT Sloan statisticians and Lightspeed Research. They defined social currency as “the extent to which people share the brand and/or information about the brand as part of their everyday social lives at work or at home.” What variables are considered when analyzing brand social currency? How was the study done? And how important is ‘social currency’ to average companies?
Social Currency Methodology
Here are the six key levers that affect social currency.
Questions for each lever were posed to brand users. But they also factored financials as part of the assessment. Results were then compiled into a composite Social Currency score.
Here is how brand currency works. Brand currency creates a sense of community and a strong affiliation between customers, consumers and users of a brand. Having social currency increases a brand’s engagement with consumers and interaction with customers, and thereby adds to the customer conversation around the brand which, in turn, grants them access to information and knowledge which is being shared within the customer base. Belonging to the group also helps users of a brand grow personally by accessing new utility and also developing their own identity in the respective peer group. A strong attachment to a brand will also be a core driver for an active advocacy recommending or even defending the brand.
The Rise and Fall of Social Currency
Based on the description above, consider the Harley Davidson brand with respect to social currency. People who own a Harley Davidson motorcycle have a strong sense of community and a strong affiliation with the brand as well as with other Harley riders. Harley riders have clubs, go on rides together and support charities together. They proudly wear Harley clothing including t-shirt, leather jackets, boots and helmets. The high social currency of the Harley brand helps the company increase its engagement with their customers, adding to the conversation around the brand. Harley provides customers with information and knowledge about the company, new products, upcoming rides and available services in their dealerships. Belonging to the Harley group helps customers shape their identity in relation to their peer group. The strong attachment to the brand causes Harley owners to advocate for the brand to the point of adulation and they vehemently defend the brand as symbolic of American culture versus other brands of motorcycles. Thus the Harley brand should rank very high for social currency, particularly with its current audience. That, in and of itself, is the problem. The average age of a Harley buyer is now about 47, an average that has been creeping higher by about six months per year for the past 20 years. Meanwhile, the number of potential U.S. customers reaching this age has begun to drop, a drop that will accelerate to as much as one million per year by 2019, as the last of the Baby Boomers, and first 10 years of Generation X, reach this age. That means that although Harley may have strong social currency today, that social currency is expected to decline long-term unless the company is able to evolve and renew itself in order to engage and connect with younger customers.
Valid or Slanted?
Just how valid is this new study? There certainly seems to be a direct correlation between social currency and sales performance. In the airline category, for instance, Virgin Atlantic, JetBlue and Southwest ranked the top three brands in social currency, also led studies in equity, performance and loyalty. Apple’s stellar social currency number synced with financial results and other scores.
While the study has some value, it seems to also have some distinct limitations, at least in its current iteration. First, the study only surveyed 1000 respondents on 60+ brands across a dozen categories. The number of brands included in the survey was deficient. For example, in the automobile category, glaring omissions included Audi, Volkswagen, Nissan and Hyundai. The number of respondent brands and categories were all insufficient to provide a true assessment of the top global brands.
Also, social currency evaluations may tend to favor niche and premium brands. Premium brands are more likely to score higher on some components of social currency, such as affiliation and identity. For example, Hermes and Harley Davidson tend to score higher than supermarket brands such as Colgate toothpaste or Reynolds aluminum foil wrap. This begs the question of whether respondents were justifying expensive purchases by giving premium brands higher ratings. If this is true, then certain brands would gain a good return from investing in social currency while others would be wasting their time and money.
Regardless of the study’s approach, the concept of brand social currency is important. A business must consider how to leverage its brand’s social currency to create efficiencies within the value chain and build new revenue models. It will need to think about how the business interacts with its customers not only to engage the customer, but to create new ways to interact with that customer within that customer’s world. A company’s success will, in part, be based on how well it can anticipate the structural changes that will re-define how its own industry interacts with customers. That is the challenge to building social currency.
Quote of the Week
“In the digital space, attention is a currency. We earn it. We spend it. But, we don’t think about it as a precious or earned commodity. We in many ways either take it for granted or assume we’re deserving of it based on what we do or what we offer.” Brian Solis
© 2012, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.