Angela Hausman, PhD — January 11, 2017 Follow @MarketingLetter
Image courtesy of Socialize Yourself
Cheers had the right idea to harness social capital to drive business performance. Those regulars, Norm, Lilith, Frazier, and the rest, counted on the Cheers staff to now only “know their name”, but to care about them as people (individuals) and provide value far in excess of the alcohol liberally distributed for a fee.
What is social capital?
The term “social capital” is used in many different disciplines and has slightly different definitions across business, government, and international relations, but they all share common features. Here’s a great definition from the Kennedy School at Harvard:
The central premise of social capital is that social networks have value. Social capital refers to the collective value of all “social networks” [who people know] and the inclinations that arise from these networks to do things for each other [“norms of reciprocity”].
The term social capital emphasizes not just warm and cuddly feelings, but a wide variety of quite specific benefits that flow from the trust, reciprocity, information, and cooperation associated with social networks. Social capital creates value for the people who are connected and, at least sometimes, for bystanders as well.
Thus, social capital aligns the goals of businesses and consumers to mutual benefits.
Harness social capital
Somehow, that notion got mangled and perverted in many of our corporate boardrooms where directors and C-suite managers failed to understand that creating value for consumers builds social capital that provides tangible, financial benefits to the organization — and it’s stockholders. Such short-sighted management damaged both the organization and its customers.
Here’s a quote from a Forbes article by Bonnie Marcus:
A strong network is like money in the bank. Your network can help you build visibility, connect you with influencers, and open up doors for new opportunities. Building and nurturing a network is one of the most powerful things you can do to support your career advancement.
While Bonnie is talking specifically about careers, the same principle holds true when you talk about generating profits for your business.
In a business setting, social capital promotes higher market performance through stronger internal and external relationships, but, today, I’ll focus on social capital in external relationships with customers and society in general.
Building Social Capital is 100% congruent and in alignment with growing a thriving business. A businesses success or failure depends on its ability to create a “valuable” experience in the customers mind and Social Capital is the result. [source]
Harness social capital to:
- true customer loyalty, which involves more than simply repeat purchase
- advocacy, which amplifies and decommoditizes your messaging
- and, creates evangelists who not only advocate for your brand, but defend it from criticism and help ensure users have the best possible experience with your brand
Building social capital
Let’s assume for the rest of this post that we agree social capital is worth something to the organization and its stakeholders.
How do we go about building social capital?
Some brands think it’s spending time on social media chatting up your customers. And, that MIGHT be part of it, depending on your interactions and customer needs, but, building social capital is more than just shouting into the vacuum of digital space.
So, what’s the plan to create social capital?
Simple.
Create value.
Image courtesy of MSL Group
Well, maybe not so simple because creating value is hard. And, it’s a moving target because the more value you create, the more value folks expect. Also, if competitors match your value creation, then you have to up the ante again so you create more value than competitors.
In researching this post, I found a number of reputable blogs sharing ideas of what creates value, including Inc, Forbes, and Entrepreneur. And, I won’t disagree with their recommendations, but, as a marketer, I don’t think they’ve captured the true essence of value creation.
Here’s my template for creating customer value:
Know your customer and give them what they need (not just what they asked for)
Apple did this time and time again, first with compact listening devices (ipods), then phones that reduced the number of devices you carried by being, in effect, a computer in your pocket (iphones), and miniature computers/ large phones (ipads). Each product gave customers something they didn’t even know they needed and did it in a way that was intuitive and didn’t require a degree in electrical engineering to figure out how to use.
But, you don’t need to be the next big thing to create customer value — not if you truly know your customers. Lowly, Dove, created customer value by recognizing the image problem among women, especially young girls. Their use of realistic models that celebrated the diversity of shapes and sizes that reflect real women won them a place in the hearts of millions of consumers who were disillusioned by a beauty industry that held them to a standard few could meet.
Treat customers like individuals, not a herd
We all like to think we’re special, and, in some way, we all are. So, why do companies insist on treating us like members of a massive herd to be lead to slaughter. Maybe in the bad old days of traditional media, there was no choice, but, with new media, you can customize your entire campaign (all 4P’s) to meet my unique needs. That means respecting my unique needs for products and information based on my demographic, geographic, and psychographic needs, my usage occasion, my current device (respect that on mobile, I need different information presented in different ways than on a desktop device), my prior relationship with your company, the products and services I buy from you. Maybe I left out a few things you should consider in crafting your one-on-one approach, but recognize my needs to be an individual go WAY beyond just personalizing a message with my name.
For instance, I love Chico’s and it truly reflects my style as an over 40 fashion-conscious professional. I recently ordered an item from my local store because they didn’t carry my size. The item came in a few days accompanied by a handwritten note from the saleswomen at a store in the midwest. That note meant so much to me, it increased my desire to continue purchasing their clothing and even allowed me to overlook some performance issues with a few items I purchased from them.
Be authentic
Don’t pretend to care about me because you make money from my purchases. Truly care about me.
Maybe this is really what’s at the heart of creating value because, if you care about me, you want to learn more about me, give me what I need, and treat me well. And, that caring can’t be faked. It has to be baked into the brand’s DNA from the top down and from the bottom up.
Be ethical
And, not just when someone’s looking or when it’s convenient. A company without ethics loses any chance to build social capital and will, ultimately, fail.
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