Two related, but equally-important concepts related to word of mouth are "social capital" and "social currency."
Social capital can be best defined as an "investment in social relations with expected returns in marketplace." It deals with the value of an individual's social network/connections.
For example, let's say you have a great new product that you'd love to have Oprah talk about on her show (who wouldn't!). It's safe to say that Oprah's social capital is much more valuable than yours or mine - she has a worldwide audience of millions and is one of the wealthiest people in the US with connections to a who's who of celebrities, business leaders and politicians - so it would be extremely difficult to gain access to her connections/spheres of influence.
Social currency is a term used to describe the value of exchange of information. In a nutshell, social currency acts as an "icebreaker" and is ammunition for conversation. It can come in many forms such as a funny joke, a stock tip, a funny viral video, or juicy gossip, i.e., "I know something you don't know" - it makes someone look good in a social context and buys respect and admiration. Oprah would happily mention your great new product on her show if she felt the social currency it provided would be of value to her audience and make her look "in the know." "Water cooler" TV shows work because those who watch them are "in the know" while others feel left out.
Remember the first time someone sent you a link to Subservient Chicken? You probably felt special, like you were privy to something no one else knew about. You quickly emailed the link out to your friends, family and co-workers. Then the mainstream media picked up on it, and soon your inbox was flooded with "check this out" emails! The value of the social currency dropped significantly since it had become old news.
So, how does this all relate to word of mouth and your company, product or service? When developing a word of mouth strategy you need to factor in the social capital of those you are trying to engage/reach (are you trying to reach hip, cool Gen Y-ers, or simply trying to reach people looking for free stuff to try out?) as well as the value of the social currency you can offer them (is your brand/product/service itself remarkable?), or can you provide some level of inside access/content/information which would be of value to your most passionate, outspoken customers and/or potential ones?
View Comments so far ↓
1 laurent // Oct 29, 2008 at 10:26 am
mmm 'factor in the social capital of those you are trying to engage/reach' – true, but as far as I know, there isn't such an measure per say. Aren't your referring here as the influencers? The trick is to find/rank/measure their social capital in a specific niche (say 'computer security' or 'social media marketing'). They're hundreds of folks in niches like that and, not all with the same 'social capital'.
2 AffinitiveBob // Oct 29, 2008 at 12:04 pm
What I mean is measure social capitial in a “qualitative” sense versus an individual metric. For a large group of consumers, you need to make a more general evaluation regarding the value of your “social currency” to them as it relates to it's value to the people they will in turn share it with. So, let's say you are engaging a number “computer security” experts and you provide them with information/access that is extremely valuable to them and to their industry peers. These experts will have varying degrees of “social capital” – some are revered in industry circles, while others may not be vocal but have a small number of clients. The “social capital” may be of great value when they share it with industry peers or clients, but of little value to, say, an attractive person they are chatting up at a cocktail party
3 laurent // Oct 30, 2008 at 11:19 am
Ok, got it. You do have to take into account relevance (the 'security' social capital has no value for the attractive person unless she (I assume that's what you means
is a security fan 
.
I see here 3 concepts that I'm very familiar with because of my company: Relevance, Influence, Engagement…combining those 3 to best distribute your social currency is the way to go!
4 Michael Cayley // Nov 3, 2008 at 2:47 pm
I have tried to tie this all together into a new approach to value based management that is designed for the networked age.
Social Capital Value Add links the pioneering intellectual studies of social capital and social network analysis to social media and the priorities of marketers.
Perhaps worth of a follow up post? I would be grateful to add your review to these:
http://twurl.nl/wz686b
5 CFD Trading // Apr 7, 2009 at 6:13 am
The value of exchange of information. In a nutshell, social currency acts as an “icebreaker” and is ammunition for conversation.
6 Isis // May 24, 2009 at 6:39 am
It was always alien thing for me until last year, since now I know about social capital and the currency, I could say this article is really very good!
Rina
7 Websites tagged "introduction" on Postsaver // Jun 5, 2009 at 5:47 pm
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8 Medelafreestyle // Jun 19, 2009 at 12:19 am
Thanks for taking us through these terms!
Amber
9 webaddlink // Jan 20, 2010 at 2:30 pm
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10 Leta utbildning // Mar 22, 2010 at 12:54 am
Looks like the social capital is very important to have an investment to grow my social relation to other.
11 qabrjeli // Sep 1, 2010 at 6:27 am
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