“Give, and you shall receive.” Who hasn't received this advice growing up?
It's based on the simple psychological principle of reciprocity: We tend to feel obligated to return favors after people do favors for us.
Yet in the rational world of business, the approach tends to be: “If you do that, then I will give you this in return.”
I got to appreciate how reciprocity can work in business when running Clubcard for Tesco:
1) When we gave customers a general coupon with no conditions on what they spent it on, it got massive redemptions, customers thanked us for it, and their overall spend increased over time.
2) When we gave them coupons for specific products or categories they hadn’t bought before, redemptions were very low, customers didn't appreciate them, and there was no change in spend over time.
3) When we gave them coupons for specific products but for products that they often bought, redemptions jumped up, customers thanked us, and again their overall spend increased over time.
The reason for this was simple. In the first and third case, customers felt we were doing them a favor as we were not asking for anything in return, and they reciprocated. But in the second case, they felt we were trying to change their behavior for our own benefit, and they ignored us.
But reciprocity doesn't just have to be about coupons. The principle can be applied in all sorts of ways. For example:
• Why not alert customers to the promotions they might be interested in based on their purchase history?
• If you’ve got an overstock of flowers going out of code, why not give them to your customers in the store, and see what happens?
• Or what about giving your employees or store managers a small budget for random acts of kindness to customers, however they see fit?
In the rational world, this can seem fanciful, as you're not rewarding a specific behavior. However, your customers will certainly feel appreciated ... and some at least will return the favor.
What do you think? Have you tried this approach?
Simon Uwins is a former CMO of fresh&easy and Tesco UK, and author of Creating Loyal Brands (2014). Find him online at www.simonuwins.com.