Behavioral design for Chinese New Year – Reciprocity bias, & how you can leverage it to sell more.

Lunar new year and Behavioural Design

Lunar New Year, also known as Chinese New year, is a big deal here in Southeast Asia, there are many people of Chinese and Vietnamese heritage living in the region and this is a major event for them.

One of the big customs of the season is the exchange of gifts – if you have Chinese friends, partners, or colleagues be sure to have a gift ready for them on the 25th.  Be sure to avoid gifts with sharp edges (knives, scissors, etc.) They’re considered a bad omen in Chinese culture and indicate you want to sever your relationship with the recipient.

 

Introducing Reciprocity

The exchange of gifts is a private example of reciprocity. Social psychologists define reciprocity as the norm of responding to the positive actions others on our behalf, with positive actions of our own on their behalf. It also means that in response to hostile acts they’re likely to be nastier…

Simply put, Reciprocity is the idea that if you do something nice for me, I’m going to want to do something nice for you. It explains why people are much nicer and much more cooperative than predicted by a strict self-interest based model.

 

Reciprocity – The Behavioural Design view

Now that we’ve established what Reciprocity is, let’s take a look into how effective it can be, but before we do that, it’s important to understand that Reciprocity is a cognitive bias. Behavioural Designers like me love cognitive biases because they reflect behaviours we humans don’t normally have a choice about – They’re patterns that are literally baked into our operating system and are designed to help us make better and faster decisions – That’s why leveraging them is so effective.

Reciprocity is fundamental to our human experience – Evolutionary psychologists have identified reciprocal behaviour in primates, and have seen it surfacing in children under the age of 3!

It’s easy to see how the idea that if you do something nice for me, I should want to do something nice for you is important to cohesion in groups, and knowing that we humans are deeply social animals explains why Reciprocity is so important to us.

 

Reciprocity in retail is all around us

Ok, so we’re all clear on how important Reciprocity is, but how can you use it for B2C and B2B marketing?

The simple truth is that we’ve all experienced brands leveraging reciprocity to increase sales any time we received a taster or free sample in our local supermarket.

Retailers know that they benefit by giving us free samples because, among other things, they’re putting us in a position where we feel indebted towards them, and therefore are likelier to buy their products.

 

How effective is Reciprocity for marketing

Psychologists have run experiments indicating that Reciprocity can be very effective indeed.

In one example a study run in chocolatiers measured how the gift of a small tasting sample influences purchasing decisions. It turns out that when you accept a free sample at a chocolate shop you’re 24% more likely to make a purchase there. From the manufacturer’s perspective that’s a huge upside for a very small cost.

 

How can you leverage Reciprocity for B2B marketing?

Ok – That’s all good and well when you’re selling retail and B2C, but how about service and B2B marketing? As much as I love the thought of giving out chocolates to everyone, it’s not really possible or likely to be effective for these scenarios… So How to leverage Reciprocity for B2B marketing and your website behavioural design?

It’s important to remember that Reciprocity, at its abstract, is the idea that if you do something nice for me, I’m likely to want to do something nice for you. This isn’t behavioural design or B2B marketing, it’s just common decency!

This provides a good hint for how Reciprocity can be leveraged for the sale of services and for larger-scale B2B transactions.  The easiest example would a proposal and negotiation situation where after providing your counterparty with a proposal, and while they’re considering your offer, but before they return with a counter-proposal, you come back to them with a second proposal in which you improve on your initial offer. You could, for example, offer more features, upgrade the service package or extend the warranty period – within the scope of the price proposed in your original offer.

From a cognitive perspective what you’ve essentially done is given your counterparty an unexpected increase in value – a gift of sorts, and by doing so you’ve established that you’re a trustworthy partner and created an urge to reciprocate your kind offer.

Savvy negotiators employ this tactic all the time and actually have already figured in the cost of the “gift” in their calculations.

Again, it’s important to note that because Reciprocity is a cognitive bias, your counterparty will be affected by it, even if they’re well aware of the strategy! Does this guarantee that you close the deal? No, but it’s absolutely certain that it will improve your chances to do so.

 

Conclusion and acknowledgements

I want to wrap up this post by wishing you all a very happy and meaningful Lunar New Year.

I also want to show some reciprocity, and take this opportunity to give a special shout-out to my friend Claire Souchet, managing director of LRparis in Southeast Asia.

Claire’s company are globally recognized as the leading provider of branded experiences and corporate gifts. They do the gifts for The White House, Rolls Royce, and here in Thailand, they do the gifts for Siam Piwat / Icon Siam. I want to thank Claire for the trust she’s put in us over the years and for being such an amazing friend.

Finally – If you’d like to learn more about Reciprocity and how it can be leveraged for marketing and sales check out the book Pre-Suasion by Robert Cialdini. Cialdini the Regents’ Professor Emeritus of Psychology and Marketing at Arizona State University and was a visiting professor of marketing, business and psychology at Stanford University. He’s widely considered as one of the most eminent scholars on the psychology of marketing, and a pioneer in the field of Compliance.