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Why Social Capital is Key to Building Financial Capital

January 22, 2018 Comments Off on Why Social Capital is Key to Building Financial CapitalComments Off on Why Social Capital is Key to Building Financial Capital

Reading Time: 5 minutes

Today’s increasingly savvy consumers expect brands to do more than make quality goods and services. People want to support companies that actively work towards building a better world.

In fact, nearly 90 percent of consumers say they would rather purchase a good or service that gives back to society than a comparable product that doesn’t have a social impact.

What’s more, technology is changing communication pathways between brands and consumers. Because of the internet and social media. What used to be a monologue is now a dialogue.

In other words, companies now actively engage with fans and followers on social media. The increased level of engagement has also lead to an increased level of criticism.  While consumers are increasingly interested in supporting companies that support things they believe in, savvy shoppers are also prepared to boycott brands that rub them the wrong way. Companies are forced to be more transparent and more accountable. In this way, technology is making us human again.

In response, innovative brands like Patagonia, Tesla and Ben & Jerry’s are working to build social capital by taking leading roles in cultural movements.  While growing brand activism is helping improve the planet, it’s also generating consumer goodwill, loyalty and profits for socially conscious companies.

Corporate social responsibility is no longer limited to start ups and social enterprises, it is now an integral component of many of world’s largest companies including IBM, FedEx and Walmart.

Recent changes in Facebook’s algorithm give companies ever more reason to foster social capital.

Founder and CEO Mark Zuckerberg said , “I’m changing the goal I give our product teams from focusing on helping you find relevant content to helping you have more meaningful social interactions.” Consequently, people can expect to see less content from brands and media outlets and more posts from friends, family, groups and influencers.

These changes will alter the way brands connect with consumers on the internet. It will be increasingly important to build an audience and community, rather than seek one off sales and viral video views.

Zuckerberg’s call for meaning also comes in lieu of complaints about fake news and too much advertising on the platform. Facebook also has to maintain consumer and user goodwill to keep their own relationships in order to survive.

Ultimately, the combination of technological innovation, access to information and consumer demand for purposeful companies is making it increasingly important to do good and build social capital.

Here’s why social capital is key to long term financial success:

Millennials and generation Z want to work with brands to shape contentThe beauty of the internet and social media is that people can connect with each other all around the world in new ways and at record speeds. The nature of social media is that information spreads from one to one to many.

The ability to spread communications between personal networks is a powerful tool that brands should tap into to build their reputation.  

Millennials and Gen Z are especially eager to share content that they think is important and feel they have an actively role in influencing brands and culture.

70 percent of millennials say they will participate in activities to have content to share on social media and 86 percent say that, as fans, they have some ownership of what they are fans of.

Companies that are able to inspire consumers to post about brand-related initiatives can scale the organic reach of their marketing initiatives, strengthen connections with consumers, generate word of mouth advertising and benefit from crowdsourced user generated content (UGC); ultimately, saving them money.

REI’s #OptOutside initiative is an excellent example of a successful user generated content campaign.

UGC gets highest engagement and influences purchase decisions: Not only can user generated content get your brand in front of more eyeballs, it’s also a proven way to influence purchasing decisions.

In fact, UGC gets an average of 4 times more engagement at half the cost per click of agency or brand created content. Additionally, millennials say that UGC increases trust, memorability and purchasing habits compared with ad content.

Essentially, companies should strive to strengthen their community of fans and followers, who can then help build their brand for them. UGC is also an excellent way to take advantage of the recent Facebook algorithm changes.

People seek meaningful connections: Fostering a sense of purpose in your customers, fans and followers is not only a proven way to increase engagement and purchases, it’s also a powerful means to build relationships with consumers overtime.

A recent study on how consumers define “The Good Life”, found that meaningful connections were one of the most important characteristics of a “good life.”

Therefore, utilizing your purpose-driven initiatives – whether they focus on helping the homeless or tackling climate change – to connect consumers with causes they care about is a meaningful way to position your brand as a connecting link between consumers and the things they feel strongly about.

TOMS has done an excellent job branding itself as a force for good and resource for contributory consumption.

In other words, people want to buy TOMS shoes because it makes them feel like they are contributing to building a better world. This gives consumers increased incentive to purchase TOMS products.

From a business standpoint, creating meaningful connections increases the likelihood of winning repeat customers and on average repeat customers purchase more.

Here are some ways your brand can build social capital:

Encourage leadership to publicly engage with consumers: It is a more personal experience to purchase a product from a person than a big corporation. Even if you run a big corporation, helping consumers put a face to the name not only humanizes your brand, but can also help you strengthen your online presence, especially with the recent Facebook changes.

Corporate leaders like Elon Musk, Mark Zuckerberg, and Bill Gates actively represent their companies in the public sphere and shape cultural discourse. Leadership today must step out from behind the corporate veil, into the public light to strengthen consumer trust and build social capital.

Make meaningful content: People aren’t likely to celebrate your brand because of an awesome product listing or storefront. On the other hand, if you can help people connect with issues they care about, you can build a reputation as a force for good a strengthen bonds with your core demographics.

Patagonia’s work protecting public lands is an outstanding example of corporate activism that is shaping culture, generating earned media and strengthening consumer goodwill.

Invite consumers to build your brand: As demonstrated, user generated content is a powerful way to connect with consumers on a deeper level than transactions for profits sake. With Millennials and Gen Z ready to participate in social media campaigns and shape the companies they love, UGC can also scale brand communications, increase trust and make your digital marketing strategies more robust

The key takeaway is that social capital is built through meaningful actions that go beyond making quality widgets. To foster a sense of community and advocacy in consumers for your brand you must build your business around a higher purpose. By inspiring consumers to become brand advocates you will gain both word of mouth advertising, earned media and repeat customers. In short, purpose-driven social capital builds both a better world, boosts the organic reach of your marketing initiatives and your bottom line.

 

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Title image via Flickr courtesy of user Alessio Jacona at https://flic.kr/p/Du4fYm

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