Social | so·cial [soh-shuhl] adjective
Pertaining to, devoted to, or characterized by friendly companionship or relations: a social club. *
Trust | trust [truhst] noun
Reliance on the integrity, strength, ability, surety, etc., of a person or thing; confidence.*
Economy | e·con·o·my [ih-kon-uh-mee] noun
Related Resource from B2CWebcast: PR Hacking: How Ideas Spread And What Marketers Need to Know
The management of the resources of a community, country, area, etc., especially with a view to its productivity.*
*Definitions are adapted from Dictionary.com
When attempting to manage something, it is always best to understand what it is we’re trying to manage. For example, if one were to attempt to manage confusion, it may come as a shock when presented with a large group of guinea fowl (yes, it is one of those weird animal group names). With the excitement surrounding the business potential in social media, wouldn’t it be nice to start with a great definition?
In our economy, the transaction of goods and services is based on an agreed-upon standard unit of measure known as currency. Economists constantly evalulate and traders constantly trade to determine the value of one currency against another such that when a transaction takes place anywhere in the world, a common, “fair” value is placed on the transaction. In our society, we intrinsically understand the “value of a dollar,” as my parents used to say. I don’t know if there is an apropos translation for Rupee, Ruble or Real, but you get the point. A buck will get you a small Frosty at Wendy’s just about anywhere except the airport, but that’s another value discussion altogether.
So it follows that if businesses intend to truly monetize their value proposition via social media networking in a meaningful way, we should establish the ground rules for the social economy. I propose the primary social currency is trust.
What is it?
It appears the social trust economy is a confluence of social and technological trends uniting to form the foundation of a new value system. In fact, some interesting work by Hans-Werner Bierhoff and Bernd Vornefeld in 2004, suggests such a basis. In their paper, The Social Psychology of Trust with Applications in the Internet, they assert “Three levels of trust as a social psychological construct are delineated: trust in a specific person (relational trust), trust in people in general (generalised trust) and trust in abstract systems. Whereas much research is available on relational trust and generalized trust, much less is known about trust in systems.”[i] Trust in systems was a new concept with regards to the Internet in 2004, but it seems far less so today, as seen in an Orbital Alliance Blog , “Adults Ages 50-64 had the biggest spike in daily usage growth of social networking sites. In 2008, they were at only 2%, and now in 2011, roughly 1/3 of all boomers use social media on daily basis. They increased over the past year from 20% to 32%.”[ii]
That’s right, even gray-haired baby boomers like me have now adopted social media at a level that indicates an inherent trust in the medium. Growth in trust-based referrals, like those found on LinkedIn, Angie’s List and agnostic evaluation sites like Software Advice seem to indicate that a dominant portion of our social fabric is transacting business via the social trust economy.
While no individual, by definition, can dictate or create an economy, I have a theory on the forces at work in this new economy. I hope this article serves only as a catalyst to begin the debate, but I’ve always found it easier to begin the discussion with something other than a blank screen.
I believe three major trends form the cornerstones of the social trust economy:
1. Proven trust authorities
2. Big Data
3. Social networking with local permissions
We have collectively conducted trillions of successful transactions over the Internet without an infrastructure implosion based on fraudulent transactions. Not to say they don’t exist, but they are rarely a technical infrastructure issue. Hacks of any consequence can usually be attributed to insider information or low-tech invasion techniques like reading passwords off sticky notes. (Frankly, if someone has the smarts to break 128-bit encryption, he or she is going to be sorely disappointed after breaking into my checking account.) The first cornerstone is proven trust authorities like Verisign and Trust-e, who have created a branded acceptability in secure, online transactions. These organizations live and breathe trust, and have created a sustainable brand promise by never breaking that trust.
The second cornerstone is Big Data, providing us with broad, anonymous consensus. Anyone who knows me understands I am a big fan of Cialdini’s Principles of Ethical Influence, and consensus is one of his six principles. Big Data provides us with consensus on a previously unattainable scale. Although in the abstract the possibility exists, it seems nearly impossible that 30 million people could be wrong, doesn’t it?
Big Data provides us with the ability to establish a real currency valuation of trust with a value proposition based on Big Data rating systems. As an everyday example, if you were to read in the App Store that a game has received a 4.5-star rating from over 30,000 people, doesn’t it seem worth ninety-nine cents?
The third, and final, cornerstone is the concept of broad social interaction with local permissions. FaceBook pegged this concept, and it completely explains the broad-market appeal to older demographics. The underdeveloped frontal lobes of adolescents can connect well in the “I’ll show you mine if you show me yours” world of social networking, but even twenty-somethings want to control their privacy a bit more than that. Baby Boomers were non-existent on MySpace, but from 2008 to 2009, Boomers (Age Age 44 – 62) who maintained an active profile on FaceBook, increased from 14% to 46%.[iii] We want to maintain our personal privacy, but I’ve many Boomer friends who openly admit to being online voyeurs, interested in the online antics of friends, family and, sometimes, complete strangers.
What is the currency of the Social Trust Economy?
Trust. It seems implicit, doesn’t it? But how do you measure it and how do you monetize it? I had a friend say to me recently, “You’re one of only two [members of a certain executive group] I trust. So, it seems I own some currency in the trust department, but how do I attach scale to it? Do I own more or less trust than that other guy? Let’s go back to confusion (a group of guinea fowl) and determine that we need to place some definition around trust before we attempt to commoditize or measure it.
I propose the first assumption we can wrap around trust currency is that it is, in fact, exchangeable. What good is a currency you cannot trade for something else? That leads to the dimensional question: what composes a unit of trust? And, from that, what is a unit of trust worth?
Back to Hans-Werner Bierhoff and Bernd Vornefeld, who posit, “A perceived risk to suffer a loss is counterbalanced by information which reduces the risk. Such information includes contracts, system trust, and more specific trust.” Can we imply from this that a unit of trust may be equivalent to a unit of risk mitigation? This seems further substantiated in Lynne Soraya’s story of a chance encounter with a con artist with a “Salesman’s Smile” in a discount store.[iv] What would a person be willing to exchange in return for trustworthy information about a person or group of people? It seems businesses and consumers alike are willing to pay for background information on everyone from job seekers to babysitters. They are quite literally purchasing units of trust.
How about the value of time? Is trust worth time in a fair-value currency exchange? According to Dr. Bill Knaus, “You are vulnerable to lies and deceptions when you don’t know the facts, the situation is fuzzy, or you want to believe.”[v] Would a unit of trust offset the research required to fill in the facts, clarify the situation or discover whether consensus supports or refutes your belief?
Time and risk mitigation seem to be two valuable currency equivalents to trust in our economy. So how do we assign value for businesses not trading directly in trust, such as background checking, Internet transaction security or property & casualty insurance?
How about Klout? Fernandez, Tran and company seem to have created a viable set of SMART metrics for measuring social influence – doesn’t this qualify as a monetizing trust currency? All three cornerstones of the social trust economy are present. They have combined Big Data with local social permissions to become a trust authority.
Let’s look at another example – an old-school example – of the social trust economy in action: broadcast television. It works and it works well. The big 3 (ABC, CBS and NBC) continue to compete favorably with new networks, pay cable networks and pay-per-view programming, even though they are free to the viewer. (OK, free to those who still receive SDTV over the air received by an antenna.) These networks continue to survive because they are trust authorities (viewers trust the production value of their programming), they embrace local permission (viewers can change the channel if they don’t like what’s being broadcast) and they take advantage of Big Data (anybody remember those set-top rating system boxes?) to determine user preferences.
While we, in the USA, are generationally inculcated to understand the viability of network TV, apply that financial model to your industry. Would your organization remain viable if you were the only competitor offering your product or service free to end users while all your competitors charged for the very same product or service? It is counter-intuitive, but in a social trust economy, it works.
How do we trade in the Social Trust Economy?
Unless I’ve missed something drastic, there exists no 100-unit certificate of trust redeemable at your local Apple Genius Bar. Or any other kind of bar, for that matter. So begins the discussion on exchange, or the process of trading in the currency of trust. Referring back to Dr. Knaus, he believes:
You can add to your confident composure through enlightened skepticism. Ask yourself ten enlightened skepticism questions to gain clarity:
1. What do I know about the speaker’s truthfulness?
2. Is the statement consistent with reality?
3. Can I verify the statement?
4. What do I gain by accepting and acting on the statement?
5. What do I lose by accepting and acting on the statement?
6. What does the speaker gain if I bought into the statement?
7. What is exaggerated or downplayed in the statement?
8. Does the idea seem too good to be true?
9. Would I advise my best friend to accept the statement without a question of doubt?
10. What doesn’t compute? (Is something being said too emphatically or in some strange way?)
How much time and effort would it consume to gather, compile and evaluate a statistically significant sampling of answers to these ten questions? Social media provides access to relevant Big Data sampling through proven trust authorities get us to those answers quickly and reliably. That certainly provides the basis for a valid currency in our social trust economy.
I think it’s up to you. I hope this article will serve as a catalyst to get bright marketers everywhere contributing to construction of this micro economy of social trust. What are your thoughts on time-to-trust currency equivalents? How about risk-to-trust? How would an entity create a trust bank? Does trust currency accumulate or is it depleted as it is used in transactions?
Because you are here, you are a de-facto member of the social trust economy. I’d love to hear your comments and feedback as we collectively explore new avenues for creating value in the social trust economy. Don’t just “think out of the box,” think outside any universe that requires packaging at all.
[i] The Social Psychology of Trust with Applications in the Internet, Hans-Werner Bierhoff/Bernd Vornefeld, Analyse & Kritik 26/2004 (c Lucius & Lucius, Stuttgart) p. 48–62
[ii] Orbital Alliance Blog, Baby Boomers have largest growth in daily Social Media Usage, Posted on Aug 30, 2011, http://www.orbitalalliance.com/blog/2011/aug/baby-boomers-have-largest-growth-in-daily-social-media-usage.html
[iii] Deloitte, “State of the Media Democracy, Fourth Edition:Select US Highlights,” provided ot eMarketer, December 15, 2009
[iv] An Encounter With “The Salesman Smile” If you can’t read facial expressions, how can you judge sincerity? Published on December 23, 2010 by Lynne Soraya in Asperger’s Diary
[v] Protect Yourself from Liars and Deceivers; Expose those who try to deceive you. Published on April 25, 2011 by Dr. Bill Knaus, Ed.D. in Science and Sensibility