Lithium reportedly buys Klout for a whopping $100 million

Where will Klout fit in?
Tools

Social customer service company Lithium reportedly paid $100 million to buy social reach score keeping company Klout. Re/code broke the story.

It's not clear what Lithium intends to do with it, but Brent Leary, Partner at CRM Essentials and author of the upcoming book "The Amazon Effect" (Fall 2014), says there could be a fit here. 

"With Lithium buying Klout, this gives their customers the ability to better understand which community members are driving activity, what influences the community, and what actions businesses should take in order to provide better customer experiences on an ongoing basis," Leary told me.  

He added, "This is not influence for influence's sake, but really looking to tie influence to hard metrics, likes sales, retention, engagement and other important areas. This really does have a chance to be a big development for Lithium customers."

According to the report, Lithium is itself in startup mode with $150 million in funding to date. That means it paid at least two-thirds of funding to-date for a company that doesn't fill a pressing need for it, as far as I can tell, beyond giving Lithium customers the ability to gauge if they should be more likely to engage with a customer because they have more reach.

Just this week, Klout updated its interface and changed its focus a bit by allowing users to submit content through their interface. I've tried using it and for now at least, it lets you send tweets immediately or on a schedule. The submissions live in Klout and are sent to Twitter too, and eventually Klout promises you will be able to see performance analytics. You can share your work and that of others, and it's supposed to help build your Klout score as you share.

And Digital Clarity Group president and principal analyst Scott Liewehr sees a good match here, especially in light of the new feature set. "I see the potential for this marriage fairly clearly: Businesses look to Lithium for community platforms and social listening, but the suite of tools doesn't necessarily help them identify and understand who in the community they should seek to influence and promote, nor does it help to source content for their social audience to find and promote, which is a capability that Klout just launched last week. So, not only can Lithium help brands to enable and participate in social conversations, but it should now be able to help foster new conversations with influencers to attract even more engagement, and then fuel those conversations with topical content recommendations," Liewehr explained.

Chris Bucholtz, who has been covering CRM issues for a long time as a journalist, and is currently Director of Content Marketing at Relayware and CRM Buyer Columnist, says he can see why Lithium pulled the trigger, but wonders about the price tag.

"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? Not by itself--Lithium must have some additional uses in mind. Creating their own directory of influencers and using it as the basis for new products may be an aim. And they're buying the brand--Klout is synonymous with measurement of influence in social media, for better or for worse," he told me.

A Klout spokesman responded to our request for a comment on the story by saying, "We don't comment on rumor or speculation." Lithium had not responded by the time we published this story.

This an ongoing story and we will continue to add to it as we get additional information.

For more information:
- see the Re/code article
- see the Klout blog post

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