The ClientWise Blog

The Power of Reciprocity: The Weight of Obligation

Posted by Chris Holman on Dec 14, 2010, 11:58:00 AM


The Principle of Reciprocation states that one should repay favors in return for favors that we receive is a psychological phenomenon in which we feel somewhat compelled to repay what another has provided for us first.

This explains why restaurants often include candies or mints when presenting the bill. (In a study completed by the Center for Hospitality Research, it was found that giving customers fancy chocolates increased tips by 15-23%. In fact, the highest tips were received when the server gave dining parties one piece of candy per person and then “spontaneously” offered a second piece per person.)

In a good blog post in the Harvard Business Review, Steve Martin (not THIS Steve Martin!) points out that positive reciprocation is definitely not the “If you help me, then I’ll help you” variety. Constructive reciprocation requires one to give first without the blatant expectation of receiving something in return.

Indeed, numerous studies have shown that when one extends a service in this manner, those who we “invest” in very often return the favor by exceeding the expectations of scale in their reciprocation:

  • When hotel guests were informed that the hotel had already made a donation to an environmental organization, those guests were 45% more likely to reuse their towels and linens.
  • In a study of wineries offering complimentary wine tastings, vs. those that charged a small fee, visitors who had complimentary wine tasting spent significantly more money at the wineries than visitors who paid a fee for tasting. Furthermore, visitors who tasted wine for free felt significantly more appreciative of the personnel than did visitors who paid a tasting fee.

As Mr. Martin points out, there is also a delicate balance between the aggressive posture of… “Yes, I did help you out and now you owe me” and the much more compliant response of “Hey, it’s no problem. I’m happy to help.” The deficiency of the second response, from a business standpoint, is that it doesn’t really lead anywhere. “Happy to help…I know that if the situation were reversed, you’d help me” is more suggestive; as is…“You are most welcome. That’s what we do for important clients such as you.”

The one big exception to the Principle of Reciprocation rests in overt requests for trade. If someone feels something will be expected if he/she accepts, the power of reciprocation is greatly diminished.

Financial advisors who understand the persuasive effects and nuances of the Rule of Reciprocity can enhance their ability to build stronger networks, create more trusting relationships, and become more influential over others. Some specific examples might include:

  • When sending out client surveys, include a $5.00 gift card from Starbucks, or your local coffee purveyor. Organizations that have included "preemptive gift cards" have doubled their response rate to client surveys.
  • Never, ever, never say to your clients something like… “There are two ways that I get paid, and one of them is from your providing referrals to me.” Cheeeeesy!
  • For your clients who are business-owners and entrepreneurs, reach out to them and help them grow by advocating and promoting their services and businesses to your own clients and networks.
  • The Golden Rule, i.e. treat others as you’d like to be treated yourself.

"The Golden Rule is not a sacrifice. It is an investment."...Paul Bunyan Walker

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Topics: Client Engagement