How Startups Can Use Reciprocation and Perceptual Contrast to Increase Sales

Marketing gifts can create reciprocity.jpg

There’s one book that taught pretty much every successful marketer how to be more persuasive.

Influence: The Psychology of Persuasion, by Dr. Robert Cialdini, highlights his groundbreaking work in the realms of consumer psychology and behavioral economics.

Basically, it’s all about what makes people say “yes”.

It was a game-changer when it was released in 1984, and it remains just as strong of a force today. It’s been so influential (ha) that Cialdini was even hired to help get Obama re-elected in 2012.

In it, Cialdini identifies 6 different “weapons of influence” that can be used to impact people’s decisions, typically without them even noticing.

These effects can be extremely powerful.

Let’s take a look at how tech startups and other businesses can use those persuasive techniques to get people to click, sign up, and buy (or invest!).

You can use these techniques:

  • In your ads
  • On your landing pages
  • In your pitches
  • In your product

I’m going to break this up into six parts, with each blog post covering one of the six persuasion techniques in Influence.

Here's the first one.

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.

 
smart chimpanzees use psychological marketing tricks
 

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.

Free trials.

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.

 
position your free trial as a gift.jpg
 

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.

For example:

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.

 
pricing psychology - Trello pricing options.png
 
  • 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:

  1. A subscription to the electronic version for $59

  2. 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.

Crazy, right?

Let's do one last example.

If I wanted to use the principles of Reciprocation and Perceptual contrast to encourage you to subscribe our email newsletter, I might say:

We’ve used psychological concepts like these to help drive millions and millions of dollars of revenue for our clients. I hope this post helps you do the same.

If you’ve gotten any value out of it, I’d be thrilled if you would click here to subscribe to our email list.

Each week, you’ll learn proven, priceless marketing tactics like these -- all for free.

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.