Note: this is part one of a series of psychological marketing techniques based on renowned psychologist Dr. Robert Cialdini’s work. To see the others, click here.
The Principle of Reciprocation
The reciprocation principle is pretty simple.
When you feel indebted to someone, even from a very small gift or favor, you're more likely to do what they want or to give back in some way.
These effects are so strong that it doesn’t matter whether you like the person or organization -- your urge to reciprocate is just as strong either way.
The smartest male chimpanzees even give gifts, because doing so doubles their chances of reproduction.
But how can tech startups use the reciprocity principle?
First, you could say the entire industry of content marketing is based on reciprocity: valuable information is provided in the form of a blog post/video/free download/etc., both building trust and instilling a small feeling of indebtedness in the reader or viewer.
Free swag at trade shows is another common way to employ reciprocity. A free t-shirt makes people more likely to buy that brand’s product.
And there’s one reciprocity technique almost every SaaS uses.
Though in most cases, it’s more “reciprocity-adjacent” -- it doesn’t quite follow the principle. But with a small tweak or two, it could.
There’s a lot of debate about whether free trials can trigger reciprocity, or if the sole purpose is simply to make it easier for people to sign up (and hopefully become addicted).
I say it depends.
It’s true that most people won’t consider a regular free trial to be a gift. If there’s nothing special about it, they won’t consider it a gift and so it won’t trigger any reciprocation.
But what if the free trial came with some better-than-expected, unadvertised bonuses, like white-glove concierge onboarding?
What if it lasted a year instead of a month?
What if customers knew how much it cost to run and maintain the product for them during the trial period?
What if the founder reached out personally to ask how it’s working and if there’s anything he/she can do to help?
Tweaks like these can undoubtedly change the perception of your free trial. And they may elevate your free trial to something that feels more like a gift or favor than a run-of-the-mill marketing technique.
The Perceptual Contrast Principle
The perceptual contrast principle is another super important concept.
It's really, really useful for marketing and sales.
(It isn’t technically part of the reciprocation principle, but Cialdini covers it in the same section as reciprocity rather than giving it its own chapter, which is why I'm including it here too.)
This principle says that when you compare two things, the way you perceive the second thing is strongly affected by the way you perceived the first one.
Your mind focuses on the difference between the two...
And you perceive a larger contrast than there actually is.
Room-temperature water feels hot if you’ve just been touching snow.
An average-looking guy will seem a lot uglier to his girlfriend if she just spent all day looking at pictures of Brad Pitt.
And a $300 product seems a lot cheaper after seeing a $3,000 one.
But here’s a critical detail:
In the case of pricing, it’s important to show the higher price first.
Because the first number is perceived as the baseline.
That’s why MSRP exists: to give customers a higher, often fictional price to compare the actual price to and make the product seem like a good deal.
You can use the perceptual contrast principle in a lot of different ways:
Upselling a smaller add-on item during the checkout process for the main product (making the smaller item seem like a cheap add-on in comparison, even if it’s not really cheap at all). Common add-on items include related products, or a higher level of customer support or consultations for a period of time.
Talking about the high potential value of something before showing what it costs.
For example, the amount of savings or increased revenue clients have benefited from.
Showing strikethrough “regular” prices above the sale prices.
Offering a monthly plan as well as a cheaper annual plan.
Having multiple pricing tiers based on different feature sets.
Interestingly, almost all SaaS companies show pricing options in ascending order, from low to high. But according to the perceptual contrast principle, this is ass-backwards: you’ll make more money by showing the higher-priced option first and going down from there.
Adding an option that's similar to, but obviously worse than, your highest-priced option.
This is a strange one. Dan Ariely talks about it in his book, Predictably Irrational, but it’s part of the perceptual contrast principle.
Using the actual subscription plans offered by the Economist, Ariely ran an experiment on his graduate students to see which plan they would opt for.
The first group of students were given two options:
A subscription to the electronic version for $59
A combination subscription to the print and electronic versions for $125
Result: 68% of that group chose the cheaper, electronic-only version for $59.
The next group of students were offered the same first two options, plus a third:
3. A subscription to the print version ALONE for $125
So this third option was the same price as option #2, but without access to the electronic version. It was an obviously a bad choice.
What did the students from this second group do?
This time, a whopping 84% chose the $125 combination subscription! (None chose the “bad deal” print-only option.)
Simply adding a third, crappy option that was the same price as (but clearly worse than) the other highest-priced alternative enticed the majority of students to select the $125 combination option, when most of them would have chosen the $59 web-only version otherwise.
In real-world terms, this means Economist was making a full 43% more subscription revenue simply by including a third option that no one actually bought.
Let's do one last example.
Now it's your turn.
Are you going to try using these techniques to improve your results?
Let me know in the comments what you’re going to try.