1. What is social currency?
The rise of social media allowed individuals to capitalize on all the ways that they can influence the behaviour of just about everyone. The influence of behaviour, when monetized, turns into social currency.
Social currency is the degree of influence that you, as an individual, have on your peers, friends, families, and even the wider community of people who don’t know you.
It was first coined by the marketing executive Erich Joachimsthaler to explain the influence that brands and businesses have on the behaviour of their customers. If you have a wide social media following, you could say that you have a great amount of “social currency.” This is because the number of followers you have can translate into a lot of value in the form of opportunities, partnerships, and sponsorships.
You can have a far greater reach if you expand your sphere of influence through building your following and community of people who know and listen to you.
That’s what makes you a valuable consumer to businesses and brands, because social currency translates into sales. You can find evidence for this in just about any billion dollar industry, where the average consumer acts like a brand ambassador without even knowing it.
Akin to “social proof“, you gain social currency when you make a purchase that heightens your status in society. When your friends see you with the latest tech gadget, your reputation is heightened in their opinion, and they have the desire to emulate you. You “spend” your social currency by making recommendations that further influence how your followers act, think, consume, and purchase.
2. How social currency can make you rich
Social media has multiplied the value of how much influence you can have.
Before social media, it would’ve been difficult or next to impossible for any one individual to have any great influence beyond their immediate circle of friends, families, and casual acquaintances. If you were a small business owner, you could buy ads in newspapers, magazines, TV, and radio.
But now social media allows a massive reach with a small percentage of the budget. Currently, with social media channels, you can influence millions of strangers who consume your content without meeting you face to face. They invite you into their home, their lives, and listen to your opinions and recommendations. The more people you know and follow you, the more chances you have to open doors to opportunities.
Your follower count can translate to money gained through brand partnerships and deals.
3. Safeguard your social currency
Like individuals, businesses need social currency to thrive. A business spends its social currency through branding and marketing, using these tools to influence the behaviour of its current and potential consumers. Brands and influencers wield power through the extent of their influence.
One of the pitfalls is that trust is that it is easy to lose their confidence in you. Social currency is built upon reputation because a good reputation leads to loyalty and returning engagement. People will find ways to strengthen that bond and build that trust.
Trust is not won easily. That’s why you can lose trust rapidly if a brand or influencer is caught up in a scandal that damages their reputation, losing sponsorships and followers. You’ve seen this happen a lot in the media, so that’s why trust is given with a degree of cynicism.
You can risk damaging that reputation, so choose wisely. This is one of the pitfalls of social currency.
4. Why is social currency valuable?
For social currency to have any value, the people must first believe that it is valuable in the first place. Social currency is also attained through the number of combined followers from your social media accounts, number of people who subscribe to your email lists, and the number of connections. The more authority that you build, the more social currency that you have to spend.
The influence of social media permeates just about everything that we do, shaping our decisions, behaviour, and everyday actions.
Individuals are incentivized to promote a particular brand and be their brand ambassador because it confers advantages such as raising their public persona. Companies love it when their products grant their users social currency.
5. What can you buy with social currency?
How much social currency do you have? Social currency can propel your rank and status into greater heights.
The idea of exclusivity, which some brands have successfully utilized in their marketing campaigns, is also a great factor in increasing your social currency.
But can social currency make you rich?
Yes, social currency can make you rich. Tools like affiliate marketing incentivize people to recommend products and services. If enough people buy a business’s products because of your recommendation, you can earn a commission.
But just like money, spend your social currency wisely. Personal or business branding is an extension of your reputation. Trust is not given blindly.
No one wants to be hoodwinked into buying a product that doesn’t work well just because you recommended it.
In summary, social media permits brands and individuals to influence buyer behaviour. The action of influencing behaviour is social currency. You, too, can use social currency to your own advantage. But use it cautiously, because you can easily forfeit social currency if your audience discovers that they’ve misplaced their trust in you.