Now, with the rise of social networks, comes a new form of capital with similar capabilities.

Social capital is derived not from our intellect and our talent but from our ability to form meaningful relationships with others.  It causes behaviors that arise from these relationships based on your own conduct and interactions.  Common examples would include assisting someone in fulfilling a need, answering a question, providing expert advice, or by simply being thoughtful in a personal way.  These behaviors build trust between individuals, and trust is at the heart of successful human relationships and business transactions.  Trust creates respect, credibility and authority.  In short, social capital is empowering.

Social capital is accumulated offline, of course; it has been since the beginning of mankind.  It manifests itself in taking a client to dinner, playing a round of golf with a prospective customer, or sending a birthday card to your boss’s child.  Now, with the advent of online networking, the power of social capital has been radically amplified.

Instant digital access leads to easy messaging to thousands of people simultaneously.  It allows for touching people in a more personal and friendly way, thus once again engendering trust.  Albeit through a different venue, the proper use of social media can achieve the same desired result as offline methods,  just with greater facility, speed and reach.

Sites such as Facebook and LinkedIn are ideal tools for building up your own social capital.  For example, you can form your own discussion group(s) as a means to present yourself as an authority in a subject that burnishes your professional credentials.  You can become a thought leader, which may lead to a rapport among your relationships that is strong, binding and trusting.

Short burst of wisdom, advice and consideration on Twitter can achieve similar results. It keeps your face before the network, it shows you are serious, and if your message is on target, it will be deemed to be useful and intrinsically valuable.

Social networking is quickly becoming a form of currency, affecting business relationships, interactions, and ultimately, transactions.  Think of it as a savings bank where deposits of social capital generate interest in more ways than one.

The time is now to consider development of a marketing program that hones your message to the new medium and capitalizes on these new social tools.  Besides, your competition is already doing it…

What could potentially be an enormous marketing problem is actually an extraordinary opportunity for those with imagination.

Take Best Buy, for example.  This national retailer of consumer electronics began noticing an increase in online discussions about its vast product line.  This talk was taking place outside of the company’s involvement or control.  To pull things together and provide direction to the discussions, Best Buy consolidated the conversation into an orderly process by reaching out to regular posters to join a “support community.”  The company set up blogs and product forums and provided news and FAQs.  The company recognized those supporting the effort.  The benefits have been multiple and quantifiable:

• Knowledgeable users of Best Buy products provide accurate and timely information to other users, or to those considering a purchase,
• Best Buy develops invaluable trust and good will from shoppers through transparency and engagement,
• The online support community receives that most precious of commodities – recognition and validation – through its earnest participation, and
• The company is rewarded with an annual savings of more than $5 million dollars in customer support expense.  In 2010, Best Buy estimates it participated directly in less than 5% of all customer support issues.

When your business has supporters, you can tap into their networks and engage them.  You can outsource to the crowd.  They’re going to talk anyway, so why not cultivate these relationships through listening, assisting and facilitating their needs.

Sounds like everybody comes out a winner.

Fast forward.  Thanks to the web and the proliferation of social media, you now can ask thousands of people simultaneously for their opinion on virtually anything. And why wouldn’t you? If you start with the premise that more data (opinion) is better than less, then it would follow you have a greater likelihood of making an informed decision if you listen to a lot of people.

Companies have built entire businesses around the value of collective wisdom.  Epinions, a consumer product review web site, has been around since 1999 helping people decide what to buy.  Four years later shopping.com thought enough of Epinions to buy the company, and shopping.com was subsequently purchased by eBay in 2005.

And let’s not forget about Yelp, a six-year old web site that allows its 31 million users to review and recommend retailers nationwide, including local restaurants.  Its owners recognized the value of its service so much that in 2009 they rejected an offer from Google to purchase it for $500 million.

Who are these recommenders?  They are, for the most part, people familiar with the product, most likely satisfied buyers.  They could already be your customer.  And who is in a better position to make product recommendations than users?  Conversely, someone unhappy with your product could have a strong influence in deterring others from making the same purchasing decision.

So, what does this mean for business?  Well, first of all, recommenders are critical influencers over your brand, and they can lead to powerful viral marketing campaigns independent of your own traditional marketing efforts.  Companies might consider developing relationships with key customers over a period of time, refining their social network profiles to draw out the most suitable individuals to target with product information and promotions.  This strategy is not much different than a small retailer treating better customers as “VIPs” in hopes they will recommend the store to others.  The message is the same, but the means of delivery has been updated to reflect 21st century marketing strategy.

To date, social networks appear to be an underutilized aspect of most companys’ marketing efforts, but that does not lessen their increasing importance to business success.  Research from Gartner Group, a well-regarded analyst of technology, indicates 20% of the online population have the personality characteristics to act as salesmen or connectors to others.  These people have the greatest influence in their social networks, so they are the most important groups for targeted marketing.  Find them, treat them well, and you will be rewarded.

While many managers are debating whether Internet marketing is a passing fad, McKinsey research indicates a clear differentiation between conventional marketing strategies and those involving the use of new technology.  The data show that fully “networked enterprises,” as they are being called, are not only more likely to be market leaders, but also use management practices that lead to higher margins than those companies using the Web in more limited ways.

The report indicates that of the 3,249 companies surveyed, 40% employ social networking tools and 38% are blogging, and employee use of these methodologies is increasing.  Two-thirds of these companies say they will increase future investment in these technologies.  It may be inferred, during these difficult economic times, that increased spending in this area suggests a perception of high value with measurable benefits.

Benefits of use of “Web 2.0″ include faster access to knowledge, lower communication costs, reduced travel expense, greater employee satisfaction, faster time to market, lower costs of customer support, greater customer satisfaction and improved revenue streams.

Who runs the show?  For customer-facing initiatives, 74% of the companies surveyed assign management to the marketing department.

The good news in all of this is the cost of entry is relatively low, principally being an investment of time.  Social networking tools are free and setting up a page is not particularly difficult.  However, the payoffs are not immediate.  The intent is to accrue good will for your brand over time through your creativity and perceived value to others.  This translates into an ongoing stream of useful, informative or entertaining input into the likes of Facebook, Twitter, and perhaps a blog.  Someone has to manage it, and someone has to create / write it.  Implementation of social media policies should be considered with oversight and close managerial review of what is published.

Don’t say you don’t have time to do this.  If you are a customer-facing business (and who isn’t?) this is the new reality of marketing and it is moving faster than you realize.  Consult with internal personnel about strategy, bring in outside expertise if appropriate, but take a look at your current marketing practices and consider the unmistakable message of the McKinsey report.