I am torn over what I think about this article from PSFK. It talks about companies that are using
social media activity as a form of payment and responding with tangible
rewards. In fact, PSFK recommends this
as an innovative business model for companies. A positive mention from an
influential user can bring in a lot of business. So it is worth rewarding.
They cite some statistics that I question (each retweet of a
brand communication is worth $20.37 in revenue), but it is the strategy that I
am questioning today. If an apparel
company offers cash back discounts to users who recommend purchases to their
friends, what happens? In the very short
term, it could be a good thing. If I
like something I buy from the company, I naturally recommend it to friends that
I think might also like it. And since I
know my friends pretty well, I can do this relatively accurately. Then I get a reward from the company and feel
good. And since the reward requires
another purchase, the cycle continues.
At first, I might not be too tempted to start making dozens
of recommendations to build up store credits.
That would be an easy way to lose my friends. Or even just a few really imprecise
recommendations would make my friends stop trusting them and I lose my status
among my friends. But over time, the
small but steady temptation increases.
All of a sudden, I become the curator of the stores products. Whenever I see an item from the company, my
thoughts go to which of my friends might buy it and how can I pitch it to
them?
Now, what is the long term effect if we all start doing
this? Not all of us all the time, but a
little bit more here and a little bit more there – times 300 million people just
in the U.S. If it replaces some of the growth of traditional advertising, I can
see this tempting many of you. But how
would it erode the trust among friends?
Why are you telling me to eat more sardines? Are they healthful or did you get a free case
from Costco? Why did you tell me how
gorgeous the Toyota you saw on the street was?
Are you on the market for one? I
have a feeling this would create many insidious side effects we don’t realize
now and are very hard to predict.
