The influence of Influence on your bottomline

That new algorithm that Klout has just launched has routed the Klout scores of many users (including mine), creating a furore among many people. My naive reading is that people are declaring Klout is useless to them, not because its utility or lack thereof, but because the lowered score bruised their egos. If the change had created an inflation of scores instead, my guess is that opinion would have been much more divided.

The effectiveness of Klout aside, I think a large part of this anger is rooted in a persistent misunderstanding of the difference between public relations, influence, marketing, and sales.

Influence in social media is primarily a measure of relationships between peers. Specifically, it's a measure of the flow of ideas, an indication of whom is spreading ideas to whom. It's nothing to do with sales performance.

Social media influence will only affect your business directly if you're in the business of idea commerce: for example, if you're a consultant. If you're pushing products, social media influence is at best a rough proxy of brand awareness, right there at the rim of the the so-called sales funnel. And then, it's only if your market has a very narrow sales funnel--both buyer and seller are within the same tight circle, so that sales driven strongly by your reputation in the community.

On the other hand, if you're in a commoditised business (say, you run a small cafe) and new business relies entirely on awareness and people finding you, Klout is pretty much meaningless.As Marshall Kirkpatrick recently observed, Klout can be a great tool for finding people. But that's exactly it: yes, it's useful for finding people--not products.

Use the right tools for the right purpose. And stop waving that e-peen around.