November 22, 2014

Can Lithium Give Klout New Purpose?

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Lithium is buying Klout, the social influence measurement service, for a reported $100 million.

Questions have long been raised from a user’s standpoint about the value of Klout scoring. It’s not hard to find blog posts where people question or criticize the over-reliance on Klout scores.

In fact, other than checking your scores regularly and trying to earn small freebies from Klout Perks, there hasn’t always been a lot of reason for business people to repeatedly participate at Klout.com. Worse, some started gaming it.

Brent Leary, partner with CRM Essentials and CRM industry analyst, told us:

“Klout, when it first came out, was interesting as everyone was trying to figure out what online influence really meant. Interest in this area helped Klout to be seen by many as the de facto social influence score. But what soon happened was the gaming of the system. So instead of looking at how an individual’s natural online activity translated into and measured impact and influence, people focused on what they needed to do to drive up their Klout scores.”

Less than a week ago, Klout rolled out a new site that focuses on “content” to try to make the site better for users. As we pointed out, the features added — focusing on content sharing and scheduling social media updates — are late to the market.  Other players are already entrenched.

And now comes the news that CRM platform Lithium is buying Klout – and paying what insiders believe is a high price.  According to Chris Bucholtz, Director of Content Marketing at Relayware and CRM Buyer Columnist, speaking in an interview at Fierce Content Management:

“Klout, in theory, can tell you which people are most influential–and thus which customers are more influential. That would allow a business to give greater weight to customer support issues with customers who are more likely to talk about their experiences. Is that worth $100 million?”

What does the acquisition mean for entrepreneurs and business people who use Klout?

No one is suggesting that anything will change immediately. It’s unclear what Lithium intends to do in the long run with Klout. But according to Leary, it raises interesting possibilities for renewed purpose once Klout is incorporated into Lithium:

“Klout in its current state is very limited and doesn’t add significantly to the understanding of influence from a transactional standpoint.  But tweaked and coupled with Lithium’s treasure trove of data on community behavior, it could give Lithium customers great insight into what and who is important to their communities, and help create better experiences to extend customer engagement into customer activities – like buying something, and/or advocating on behalf of the company.”

That seems to align with the focus on using data intelligence to define influencers that Lithium’s Chief Scientist, Michael Wu, spoke about at length in an interview a few years ago.  At the time he said, “At Lithium Technologies, we have about 10 years of data from over 200 communities.”

Now that kind of data, combined with Klout scoring, raises interesting possibilities for business intelligence.

Image: Klout

10 Comments ▼

Shawn Hessinger - Editor


Shawn Hessinger Shawn Hessinger is the Editor for Small Business Trends. He is a journalist and social media networker with more than a decade of experience in the traditional newspaper business before moving to the digital world. He was the former community manager of BizSugar and the former community editor at AllAnalytics, a site dedicated to professionals in the business intelligence and analytics community.

10 Reactions

  1. Although it’s possible the acquiring company got in over their heads, it’s more likely that they see something in Klout that they are not openly discussing. A $100 million valuation for that kind of service probably suggests some proprietary, highly leverageable technology

    • Hi Sean,
      I think in the end the idea of scoring social influence is interesting. Klout’s problem was arguably that it had no way of dealing with the gaming of the system that many felt made its scores questionable. But, of course, that doesn’t mean there’s anything wrong with the underlying technology.

  2. Can somebody tell me what Lithium is? There doesn’t seem to be any description about it anywhere in the article. It would be better to know what the company is all about so that we can predict the direction that Klout is heading.

    • Hi Aira,
      Be sure to check Brent’s second comment in the post for more on this. Lithium provides data on customer behavior in social media communities. Also be sure to check Lithium’s homepage for more information.

  3. Klout is one of my best Social Strategist Im following :) .

    I hope to find another site Same like Klout can give us more features

    Thanks & best Regards for this information .

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