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A guest post by Bob Knorpp of The Cool Beans Group.

I was among the skeptics. Why would I want a Starbucks Card? After all, it was an extra, meaningless step in the coffee-purchasing process. Why would I use my credit card to put money on a card to buy my coffee, when I could have just as easily used my credit card right from the beginning?

But oh, how wrong I was!

Today, the Starbucks Card has become a social phenomenon. Advocates willingly fill them up with credit for the status it brings at the POS. Good-natured friends readily recharge the cards of friends through Facebook to spread goodwill. Starbucks proactively rewards cardholders with perks and special treatment in stores, online, and elsewhere. And all of this has me wondering whether businesses are aware of how much of a threat this is to existing card-based transactional models.

Two ideas have been circulating around the financial services industry for some time now---social currency and alternative currency. They represent intriguing possibilities about the future of banking. And yet none of the theories or studies I’ve seen so elegantly express both of these ideas as well as the Starbucks Card.

For many financial institutions and the business community as a whole, social currency is nothing more than the social connectedness of the business to its customers. For others, it’s become another name for a rewards programs. But social currency is something much deeper. Social currency is the connectedness between customers as much as with a business. It’s about the community being created as much as the transactions.

Which is why the Starbucks Card shines. The card is facilitating and enhancing existing social interactions, rather than forcing the customer into some preconceived mold. It turns the card into a means of buying a friend a cup of coffee or being known by the employees of their favorite store. It creates connections, not just transactions.

And out of this community naturally springs an adherence to this alternative currency it represents. These cards are not just being charged with “credit.” The money being used to fund these cards is literally being “converted”---as surely as you convert dollars to euros when you travel---into a currency that creates a better value exchange for the customer. This “Starbuck” represents not just a purchase, but trust in a monetary system that more closely aligns with the customer’s point of view and desires.

Starbucks is not the only one creating alternative, socially based currencies either. Zynga has been doing it for their social game properties for some time now. World of Warcraft has created an entire, in-game economy. And with near-field communication (NFC) coming to smart phones, there is the potential for services like iTunes to become the real power players in brokered transactions and monetary exchange, with the banks merely playing a secondary, commodity role to the more vibrant relationships being created within these mobile-based communities.

Many of the banks are trying to get ahead of this curve by brokering deals to position themselves as the financial institutions funding these efforts. But like the British crown who funded the American colonies, there’s a tendency for the old economic system to eventually be eclipsed by the newer one. And then what?

Whether you are in banking or are simply a retail-based business looking for new ways to entice customers, it may be time to re-imagine what financial transactions look like. Now we must consider:

  • How can I make every transaction an instant social connection?

  • How can I turn transactions into communal events among customers?

  • How can I create enhanced value exchanges for customers at POS?

  • How can I even turn my B2B transactions into social relevant events?

It’s not entirely ludicrous to think that, one day, monetary markets may be based on the much more complex valuation of socially based, electronic currencies, rather than just the dollar, euro or yen. And without communities of our own to build this type of connected value, we run the risk of being left behind.

Bob Knorpp is the host of The BeanCast Marketing Podcast at and is president of The Cool Beans Group, a marketing strategy consultancy based in New York City. He likes laughing even more than breathing. You can follow the madness on Twitter at

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