Building Brand Value with Social Capital

There’s a saying that “It takes a village to raise a child,” and much the same can be said for a business. From stakeholders to fellow business owners in your community, it pays to build strong connections, or social capital. Without it, you are going to find it almost impossible to remain successful in your business. 

The Business Value of Social Capital

Similar to quality of life, this concept deals with the way that your community and your peers view you. Like all assets that a company has, social capital must be earned, bargained for, and reciprocated. It’s the glue that bonds together the people and entities your business has relationships with. It allows us to accomplish feats that we would not be able to otherwise. 

As Market Business News explains it:

“Humans create connections with other humans, and those connections are used in several ways. They can generate friendships and a great deal of happiness. However, the focus of social capital is on how social relations help us accomplish and produce things. They are a pathway to valuable asset.”

Taking the time to cement relationships with your community, both locally and online, is an investment in your sustained success. When the time for your transition comes, buyers are looking for support from customers and peers. Otherwise, buying and maintaining business is not worth the effort or the cost. 

A study by the Organization for Economic Cooperation and Development conducted a study measuring the value of social capital in business. Through this study, they identified four key ways that we can measure and pursue this concept:

1. Personal relationships
2. Social network support
3. Civic engagement
4. Trust and cooperative norms

Let’s dive into these four key relationships that you can use to build your business’s social capital, and down the line, business value.

Personal Relationships

Personal relationships are perhaps the easiest form of social capital to create and maintain. These are the people your business and the people within your business know and how you keep in touch with them. Whether through phone call, email, or in-person interactions, you can build social capital with your customers and peers by simply reminding them that you have them in your thoughts. 

That being said, the value of face-to-face relationships cannot be downplayed. Despite the fact that 83% of people work remotely at least part-time, nearly 100% of people (customers included) feel that in-person meetings are absolutely essential to maintaining healthy business partnerships. 

What does that mean for you and your business?

Take the time to travel, host events, attend networking and community activities, and maintain a genuine joy in meeting with the people who help you thrive. Shake hands, laugh together, share your knowledge, and allow others to share theirs. 

In between the times when you are able to meet face-to-face, send quick emails just to check in (the more personal, the better). If these people and businesses take the time to listen to your product pitches, contribute to your profit by purchasing your product, or you simply enjoy having them involved in your company, they deserve to receive reciprocity of connection. 

Social Network Support

Once you’ve established who you have personal relationships with or who you want to build them with, you can start to measure the level of social network support that you have. This form of social capital is of innumerable valuable to your company. It shows you where you can turn when you need something, as well as the people who feel comfortable turning to you for the same support. 

In the aforementioned study, the OECD identifies five social network assets, both professional and personal, we can gain through these relationships,:

• Information and advice, such as business opportunities, job searches, and life advice
• Emotional support, such as employees supporting their leaders in times of distress, and leaders doing the same in return
• Financial support, such as by lending or receiving loans in emergency situations. This would also apply to falling behind on billing and being given a grace period to work it out. 
• Practical help, such as the community coming together to help you rebuild and remodel following a flood, or your business volunteering once a week at a local charity
• Material support, such as providing your employees with transportation for their commute or peer businesses donating unneeded assets to a newly opened business

All of these categories of social network support help businesses give back to their communities, and receive that same support in return. Business value increases dramatically if your buyer knows that there is a web of people who are willing to pitch in when things get tough.

Civic Engagement

Civic engagement is most closely related to quality of life. It refers to the actions you take that contribute in a positive way to society. This could be on a local level, such as hosting a back-to-school drive every year to provide free school supplies to needy children, or at a national level, such as giving a cut of your sales to a renowned charity. 

Civic engagement can also come in the form of taking part events such as blood drives or jury duty. Anything that shows the people around you that you are making an investment in the well-being of people outside of your immediate circle of personal relationships creates invaluable social capital. 

It also shows that your business has heart. It’s easy for companies to lose their “face,” or the idea that it is run by real human beings with real human emotions. Reminding your community and peers that you care about something other than “making money” makes them feel better about buying your product. 

Trust and Cooperative Norms

Trust and cooperative norms refers to the way that you make the people around you feel. What can your customers, stakeholders, and peers expect from you when they have a conversation with someone from your business? Are you going to hold to the promises that you make, even when it’s harder than it initially appeared to be? Can your community trust you to make choices that don’t undermine the basics of good morals? 

Your contribution to the trust and cooperative norms of your society helps determine how your customers treat others and how they expect to be treated, especially if your business is a major part of their everyday life. 

Further, you have to maintain high standards for your company because your business is a “stranger” to many of the customers you will eventually have. If 90% of people trust what their friends and families have to say about your business, you need to ensure that they’re only saying good things. 

Creating a positive reputation in your community is an absolutely necessary business resource. Otherwise, you have a negative effect on the cooperative norms of your community, leading to a decrease in trust and in business value. 

All of these factors come together to create social capital. Without it, you will have a difficult time selling the value of your business when you are ready to transition. Doing the work now to create and maintain relationships is going to pay dividends down the road.