Ever heard the term “social capital”? That’s not surprising unless you studied sociology, but we all know and use social capital every day. Earning social capital then “spending” that social capital is what makes groups function effectively, whether they’re workgroups, a community, or a nation. And, importantly for our discussion today, social capital is what makes social media work effectively as a channel for communication, change, and group cohesion.
So, if you never heard the term social capital, let’s start with a definition. Here’s a great one that reflects what businesses mean by social capital from the University of Michigan School of Business:
“Social capital” refers to the resources available in and through personal and business networks. These resources include information, ideas, leads, business opportunities, financial capital, power and influence, emotional support, even goodwill, trust, and cooperation.
For instance, when a neighbor asks you to watch their home while on vacation, you’re earning social capital that you later spend by asking your neighbor to feed your cat when you’re delayed at work. That’s a tit-for-tat agreement that works as part of our social contract.
Generally, when we talk about social capital, we think more broadly than these tit-for-tat arrangements to include what’s called “generalized reciprocity” meaning we help folks without the expectation of getting something from them but because we recognize that we might need help someday.
In an organization, we provide mentorship to new employees not because we expect anything in return but we recognize that their success impacts the entire organization to improve the workplace and increase profits. According to Forbes, it’s social capital that ensures success in organizations; giving you a 33% bump in sales.
That’s probably true. Social capital is most often used in sociology, not marketing, to reflect the currency that helps groups get things done. Just like other groups, businesses rely on earning social capital and spending it to advance the goals of the organization. You need social capital to grease the wheels of cooperation so business functions as a well-oiled machine.
Maybe an example related to earning social capital will help.
A colleague asks you to look over a report prepared for upper management, which earns social capital from your colleague. Such actions also improve organizational performance when you fix a mistake made in the report and the cooperation engendered when you help a colleague smoothes relationships to improve the quality of relationships as well.
But, social capital is more than doing things for others, whether at work or in society. Other elements include:
- a shared language
- shared identity
- norms shared by a group
- a community where members feel welcome and supported
- information exchange
- cooperation for mutual benefit
- empathy for instance when a group suffers a setback
It establishes you as a leader
Firms earning social capital also earn the trust of the community as well as from other businesses. For instance, Toms donates a pair of shoes for each pair purchased. Not only does their donation resonate with society to deliver positive public relations, but it translates into improved performance from consumers who support their cause and trust their brand.
It fosters reciprocity
The norm of reciprocity is strong in most cultures as they recognize we all need help from time to time. Social capital is like a bank holding your positive actions until you need something yourself.
In individualistic cultures, like the US, reciprocity also provides a level of ease in accepting help when needed.
A community can’t survive without these cooperative actions among its members. Otherwise social relationships weaken and individuals face hardship alone.
It creates stronger teams
When individuals work together, tensions are bound to occur. However, when teams are tied with the gossamer strings of social capital, tempers don’t flair so readily as the teams work through their problems. Diversity and inclusion within the team further enhance social capital and improves the effectiveness of the team.
Social capital in marketing
In marketing, we often ignore social capital because we have better tools to get what we want from consumers. It’s a financial exchange where we exchange goods and services for money. To gain sales we offer:
- special offers
- brands loved by our consumers
- promotions via paid content, such as TV, radio, and print programming that consumers enjoy
Marketers didn’t need cooperation from consumers in the age of traditional media. They paid for your attention, didn’t need you to amplify their messaging, and motivating purchase through discounts and offers.
All that changed with digital media. Now, there isn’t paid content. Instead, everyone in the community contributes content. In fact, users often resent your content turning up in their communities, thus increasing the use of native advertising.
Now, earning social capital helps spread your message in a kind of word-of-mouth on steroids when users on social platforms engage with your content or create user-generated content favorable to your brand. You can see the results of such engagement in the graphic below showing only 3 rounds of sharing on social media.
Sure, you can still offer discounts and special offers, but those tools won’t earn you as much attention or encourage the kind of amplification of brand messaging you see above.
So, what does earning social capital look like?
Let’s take a look at another example. I built a community, called Dark Web Reviewers on Facebook to create engagement around my series of mystery/ thrillers on Amazon. Over the last 5 months, I gave away free chapters of the book to anyone interested and gave away the entire book to Beta readers. Earning social capital means you do something of value first. Don’t expect folks to do something for you first — it’s a pay-it-forward world. By giving something away to interested readers, I earned not only sales but a significant number of those receiving free books when on to purchase other books in the series and post reviews.
I offered to review books written by other writers, which earned me reviews of my books (not reciprocal reviews, which Amazon doesn’t allow, but feedback. One reviewer even gave me line-by-line edits I used to improve the finished novel). I also now have an army of writers willing to share my book with their social networks because I spent an effort earning social capital.
We now have a group of about 20 writers (a community) to support each other with advice, shared marketing efforts, and other tangibles to improve sales. For instance, one member owns a limousine service in LA and NY. During awards seasons in each city, she distributes our books by leaving them in the cars where producers and actors pick them up (she never finds a book remains at the end of the night). A mention from one of these influencers can change the trajectory for an indie author, even resulting in sales of the movie rights for some in our group. We sponsor podcasts and magazines to share information about our collective novels. All from working together to support one another.
Even my writing was designed (in part) to build social capital. The book is set in the Rio Grande Valley, where I lived for 6 years. Not too many folks write about the unique and interesting aspects of living in the Valley. So, by setting the book there, I was building some social capital. (BTW, Dan Brown found sales spiked in DC when he set his book there).
Having a large, diverse network
Building a large network is one key to earning social capital that fuels your digital strategy.
You gain benefits from your large network since your content only shows up in your network. Note in the image above regarding the ROI from social capital, when you start with a large network (in the example; 2 million engaged users) your reach the friends of that 2 million. Starting with a smaller network means fewer shares and lower total exposure. If your network overlaps due to low diversity, you reduce your exposure as you’re no longer reaching unique individuals.
Sure, you can buy ads (and I find Facebook ads particularly effective) but they don’t work well if you haven’t earned the social capital needed to enhance distribution through engagement.
Building your network relies on earning social capital. You have to reach out first by liking pages, following, retweeting, and providing service to those you want to join your social networks.
I did a little experiment. I had an old Twitter account that didn’t have many followers (it was a relic from a client who never paid his bill). When I first started marketing my book, I resurrected the account (probably just because I was lazy). It hadn’t had more than a few new followers in about a year.
So, I started following other authors, publishers, agents, publicists, anyone Tweeting about writing. Not only that, I started sharing content from others related to writing (remember, your social strategy should involve an 80/20 split with 80% content unrelated to your sales efforts, and sharing about others is a great part of that). I also recognize when someone Retweets or comments on my content as a little thank you for their support.
I started a handful at a time. It started pretty slowly. But, now, I get 10-15 new followers every day. Not fabulous, but, over time I built a large network. BTW, I unfollow those who don’t reciprocate within a reasonable amount of time. They’re not earning my engagement by paying me back.
Now, imagine you’re a large, recognizable brand with a couple of social media folks who are working to build your network and you’re earning social capital with your employees who share your content on their social networks and you’re probably gaining hundreds of new followers every day using just the same strategy I do. As a startup, which is usually who I work for, this is a FREE source of engagement.
After earning social capital, it’s time to spend it. Now you can reach out to ask for a guest post that provides a valuable backlink to your website (I can’t tell you how many requests I get EVERY DAY for folks who want to post on this site. NONE of them are part of my network so why would I expend the effort needed to post their content? Or, if you have an event, you have a community willing to share your event with their network. Ask your community for information or feedback that helps improve your operations. For instance, I might reach out to my author community to find options for doing book signings.
Social capital pays off
I have hundreds of personal examples where my efforts to earn social capital brought tangible rewards to my business. Probably the most impactful was when Google Analytics retweeted one of my posts with a link to my website content [see below].
I don’t have to tell you how much traffic this retweet brought to my site — you can guess based on the number of retweets and likes Google Analytics got on their tweet.
I hope you gained an understanding of social capital, how to earn social capital, and the benefits of building a community using social capital.
I’d love to get your thoughts and feedback on the issue of social capital or examples from your own communities. Post your comments in the section below. Also, if you have ideas for future posts that might benefit your business, feel free to list them below, as well.
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