This is true in life, and part of life is business. Giving is part of the customer experience. Customers like to receive, and when they do they return the “favor” by spending their money with you. In modern times, we call this The Law of Reciprocity. Zig Ziglar, the late and great motivational speaker summed it up well when he said, “You will get all you want in life if you help other people get what they want.”
I recently attended a great presentation from Shashi Seth, the senior vice-president of Oracle Marketing Cloud, who spoke about the concept of reciprocity in business. It’s simple. If someone does something for you, you will naturally want to do something for them. He then added that this works for human beings who are classified as “givers,” but for people classified as “takers,” it has little effect. The good news is that the world has many more givers than takers. Can this be proven? Yes!
If you have ever received a fortune cookie or a mint with your bill at dinner, you have, according to Seth, been a “victim of reciprocity.” He proved this with research. When the servers at a restaurant bring a check to their guests without a mint, the diners will tip according to their perceptions of how good or bad the service was for that meal. When servers add a mint to the check, the tip jumps up 3.3%. Two mints and the tip jumps to roughly 20%.
Seth explained that the Freemium business model is based on the law of reciprocity. Give someone something for free, and the customer reciprocates by spending money. And, it’s much bigger than an after-dinner mint. For example, Spotify and Pandora have created streaming music empires by giving away free versions of their product, which is financially supported by advertisers. However, both offer an upgrade to a paid version without advertising. Some of their customers pay, which results in approximately 50% of their revenue.
You don’t have to be a big company like a Spotify or Pandora to offer up something free. It can be something inexpensive, like a piece of candy with the dinner check. Or it can be something digital like an eBook, special report, or a video. As long as it has some value to the customer – and that there are “no strings attached.”
So, what can you give away that your customers will appreciate? Remember, the more you give, the more you get.
So, here’s something “free” from me… a special research article based on my latest book, The Convenience Revolution. This book will help you disrupt your competition – and maybe even an entire industry! Just click here!