Social Equity: What Is It?

Social equity is a new phenomenon in the world of business, and though it is powerful, few people understand it.

What is social equity? Social equity can be many things. There is social equity in every aspect of your social media program. It can range from the value added from a Facebook campaign, to the overall value added to your business as a result of being social. Effectively, social equity is the yet to be determined value added to your business that an effective and powerful social media strategy brings to your brand over time. It is your long term social media ROI (return on investment).

Each Friday, we will be discussing social equity as it pertains to different aspects of a social media program and outlining exactly how value is added to a company as a result of being social. This week, as an introduction, we aim to simply define social equity in its most basic form, and give some applicable examples that make it easier to understand.

What is Business Equity?

According to the Uniform Standards of Professional Appraisal Practice (USPAP), business equity is defined as follows: “The interests, benefits, and rights inherent in the ownership of a business enterprise or a part thereof in any form (including, but not necessarily limited to, capital stock, partnership interests, cooperatives, sole proprietorships, options, and warrants).” Effectively, business equity is the value of all the individual assets held by a business.

So, taking from this definition, how can we properly define the phenomenon of social equity?

Defining Social Equity

So with an understanding of business equity, we can surmise that social equity pertains to the value added to a business as a result of social activity, success, networks and reputation. Brand awareness on social media can give any company, large or small, a worldwide audience. Whether or not these are direct clients, the fact that your brand loyalty exists beyond your immediate network can mean a tremendous value to your business, and that is where social equity fits into the model. Let’s take a look at an example.

Social Equity Example: The Dentist

Say, for example, you are a dentist with a stable local practice. The goal, when you retire, is to sell that practice to a colleague. Where does the value of a dentistry practice exist? It exists in his or her client list. Essentially, you are selling your clients to another dentist who stands to generate revenues from this new client base.

Now imagine you are a dentist with a stable local practice and an immense social network on everything from Facebook to YouTube. You are an authority figure when it comes to tips on oral health and you generate referrals from your social network when people are visiting town or moving. This extends even further when people recommend you to a friend as a result of following you on social media. Now, when you retire, think of the value added to your business as a result of having that much more of a network to sell. It is not only about the physical client database anymore, it is about the virtual, social client database that comes with it.

Social equity is about the growth of your brand and business as a result of being social, and less about conventional measurements of ROI. With a new form of marketing media, there are going to be new forms of measurement. Social equity is one of those new measurements.

Stay tuned each Friday for more information on the phenomenon of social equity. Have you ever considered the concept of social equity? How would you define it? Tell us in the comments below or on Twitter!