Klout Business Model - Literature review Example

Klout Business Model Introduction The current business environment is becoming very competitive and full of changes and organizations are trying their best to devise ways of surviving in the turbulent environment. The effectiveness of a firm’s marketing strategy will determine the number of customers it attracts and hence its sales volume. A big percentage of firms are turning to social networks to market their products and services. Klout refers to an internet-based tool for measuring personal influence. It uses proprietary algorithms to calculate the rate of a person’s participation in certain social networks such as Facebook, twitter, foursquare and LinkedIn and gives the person a numerical mark depending on his or her activity. Marketers, customer service and public relations experts are currently using Klout as well as other measurement tools of personal influence, to easily and quickly identify individuals who are highly influential (Geron, p.34). This paper will discuss the key concerns of Klout, implications for internet marketing and demerits of Klout. It will also give informed recommendations based on the demerits and concerns of Klout. Key concerns of Klout According to Ha (p.8), Klout is being used by different organizations for different purposes. A number of public relations organizations are using the scores from Klout as part of their plan for crisis management. Human resource functions are starting to take into consideration an individual influence score in their hiring process. Moreover, Klout signs contract with brands to carry out campaigns which target influencers and offers Klout Perks. Perks are free stuff intended to motivate the influencer. In other words, Klout is a good business model but several concerns have been raised in relation to its use and effectiveness. The first concern relates to privacy issues. Klout assumes that everybody is using it. Sometimes, Klout creates profiles for people who have not signed up for a Klout account. For those who have account with Klout, there is opt-out and opt-in options. However, Klout’s opt-out option requires the user to connect to a profile or send a message to them for deleting. The website does not have privacy and even people who do not use twitter and Facebook are in a position to view information on the users. The lack of privacy makes Klout not appropriate for business organizations since competitors can easily access the company’s information from the website. Moreover, access to organizations’ business strategies makes product differentiation very difficult and thus surviving in a competitive industry may not be possible (Ha, p.8). Fichter and Avery (p.59) maintain that, Klout is marketing to people who are under the age of 18 and who are considered as minors. There have been a number of reports about children exploitation through Klout profiles that are formed from data scrapes obtained through Facebook API. This is more common with Facebook profiles which were set for public or private viewing. Therefore, Klout use profiles belonging to minors and list them as influential just because they liked or commented on a post in one of the Klout profiles. Minors should not be included in calculating the score of personal influence. This is because; their thinking and decision-making capacities are limited. It is not legally upright for Klout to include minors in their marketing. Another concern relates to how easily their system can be gamed. The Klout system can easily be hacked. Once unauthorized access occurs, hackers are in a position to change information in one’s profile which is very dangerous for business organizations. There is very sensitive business information which if it leaks to other organizations it may lead to collapse of a company. For example, a hacker may access the production methods of a given company and decide to sell the idea to another company. Besides, the scores on personal influence may be altered to display wrong and misleading results. Therefore, to some extend the scores on personal influence become unreliable. Furthermore, Klout creates fake profiles for people who do not exist. This means that, some of the scores on personal influence are based on non-existing activity in social networks. Thus, the influence scores become questionable and undependable (Fichter and Avery, p.60). Implications for Internet Marketing Drawing from Zhang, Song and Qu (p.41), internet marketing especially through social networks is becoming common among business organizations. This is because; through it, a company is able to reach a large number of the target population and it is also less expensive. It is also convenient to both the customer and the organization. There are several implications for internet marketing. To start with, information, communication and products that are digital can be sent, received and stored almost instantaneously. Video, audio, graphics, photos and text can be digitized. This makes doing business easier and more convenient. This is because; customers are in a position to order for goods and services and receive them on time. They are able to see the products online. Additionally, peer-to-peer relationships like sharing of music files, auctions as well as business partnerships between individuals and firms can be created regardless of the geographical locations of the firms and individuals. Technology facilitates timely data sharing and communication like with business organizations that are within a firm’s supply chain. Moreover, internet marketing aids in spotting and opening up of new markets which promotes business expansion. It enables a company to have global partnerships and employee collaboration. It also allows salesperson telecommuting and thus a company is able to always get timely feedback from the salespeople about the market (Zhang, Song and Qu, p.43). Sindhav (p.16) asserts that, firms are able to reach a big percentage of the markets in which they operate through automated communication. As a result, they are able to identify any changes in the market and respond to those changes on time. They are also in a position to spot any unexploited business opportunities before other businesses spot them. More so, through the internet, consumers can circulate their perceptions in relation to a certain brand globally right away. Word of mouth advertising takes place through internet marketing because customers get to tell other people about their experience with certain products or services through social networks. In other words, advertising is made easier as well as less costly. According to Just and Just (p.882), consumers have high expectations regarding their communication with companies. As such, they expect immediate response to their orders and complaints. Therefore, consumers mostly prefer dealing with a company using internet marketing because; there is an assurance of timely response and delivery of goods. The work procedures within firms are also faster. This is made possible through faster and effective communication between business functions which promotes teamwork. Besides, in internet marketing, firms use communication customization for their customers. By doing so, consumers get more access to information on pricing as well as products. Therefore, by the time they are purchasing a product, they are already acquainted with the products. It also helps consumers to be able to make comparisons between products in terms of their prices as well as quality. In other words, internet marketing helps consumers in their purchase decision of products. Just and Just (p.884) further claim that, companies pay for just the server space or data storage as they need and through such storage, they are able to store large amounts of data. There are no storage costs that are incurred in internet marketing because no physical space is required which leads to low operational costs hence high profitability levels for companies. In addition, companies are able to view the databases of each other which facilitate smooth management of customer relationship and supply chain as well. This brings about equality between small and large firms. Demerits of Klout Fichter and Avery (p.60) say that, the use of Klout as a measurement tool has some drawbacks. In the first place, popularity does not imply influence. Influence should be measured across situations, channels and locations. For instance, if a person has a thousand followers in Twitter, that is not a guarantee that he or she has the capacity to make other people act in a certain manner, which is the real gauge of influence. Achieving a high score in Klout, a person ought to be popular by the amount of followers, tweets or comments as well as the users’ activity and their first-degree connections. A person is also popular by having many metrics which do not track the actions which were sparked through content sharing. In addition, popularity tracking in Klout is selective. The popularity is tracked only on a small number of social networks. For most business organizations, a big percentage of valuable data and activities in the social field take place more via communities and blogs than on social networks. Liking or commenting on a post in Facebook or Twitter does not possess the same degree of influence and value like a blog post giving details of a given product, or a community post giving an answer to a given problem. Such an activity, along with non monitored and offline activity is not taken into account in calculation of Klout scores, which limits the score value to selected actions and channels (Ha, p.8). Moreover, Klout does not consider lifetime value. A big number of firms are including Klout scores in the screens used to show customer information. To worsen the matter, firms are using those scores in making decisions on whom and when to serve. This practice infringes almost all rule of multichannel practice management, because not everyone has Klout profiles and even the people who have, are just more famous online not good customers (Fichter and Avery, p.60). Recommendations From the concerns and demerits associated with Klout alongside internet marketing implications, a number of recommendations are suggested. First, Klout should improve its privacy in relation to viewing of users’ information. According to Johnson-Renvall (p.111), companies do not like disclosure of sensitive information especially which relates to its competitive advantages like its production methods and business strategies. Klout can boost its privacy by providing users with options for adjusting their profile privacy settings. Such settings should limit viewing of information relating to a certain user’s profile only to friends of that particular user rather than the general public. In addition, Klout should stop marketing to minors and instead put age limit in signing up for its accounts. More so, when tracking popularity, they should use information from Facebook or Twitter profiles whose owners are above 18 years old. Klout is a measurement tool which mainly targets companies and thus it should focus on the accuracy and reliability of the information they display. Only information from users aged above 18 years should be used in the calculation of personal influence score (Johnson-Renvall, p.112). Moreover, Klout should work on their systems by putting access passwords to avoid hacking. Such passwords should only be known by Klout’s staff and sharing of such information with the members of public should be prohibited. In addition, Klout should stop using popularity in calculating personal influence score since popularity does not mean that a customer is good. It should use rate of sharing information in social networks to calculate the score because it has more influence on people’s actions. Lastly, in order to improve the effectiveness of Klout as a business tool, popularity tracking should be done on several social networks with a shift of focus from Facebook and Twitter to more focus on communities and blogs. This is because; posts on communities and blogs are more related to organizational activities (Sheldrake, p.49). Conclusion Klout is a tool for measuring personal influence. The key concerns relating to the use of Klout are privacy issues, marketing to people who are under age and ease of changing its system. The implications for internet marketing are instant exchange of digitalized information, communication and products and creation of peer-to-peer relationships. Other implications include, opening up of new markets, circulation of customers’ perceptions in relation to a certain brand, customization of communication and viewing of other companies’ databases. The demerits of Klout are, use of popularity to measure personal influence, selective popularity tracking and failure to consider lifetime value. Work Cited Read More