giving

Reciprocity is a common enough theme here at Neuromarketing. The concept of reciprocity suggests that giving someone something, or doing a favor for someone, establishes a subtle return obligation. An interesting study by German researcher Armin Falk showed that a bigger “gift” amplifies the reciprocity effect. Falk’s study involved mailing 10,000 requests for charitable donations, divided into three groups. One group got just the letter requesting the donation, one group received the letter plus a free postcard and envelope (the “small gift”), and the last got a package containing four postcards and envelopes (the “large gift”).

The idea that sending a gift along with a charitable donation request boosts response is well-established, and the experiment bore this out: the small gift boosted donation totals by 17%. The recipients of the large gift, though, were even more generous: they donated 75% more than the no-gift group.

This experiment is significant in a couple of ways. First, it tested reciprocity in the real world, not in an academic setting with undergrad psych majors as subjects. Second, it demonstrated that the reciprocity effect is relative to the perceived size of the gift or favor, even when the variations are relatively minor.

Non-profit reciprocity strategy

Non-profits are well aware of the reciprocity effect, and use it to great advantage. Some use an approach nearly identical to the test, mailing unsolicited small gifts to boost donation rates. This research suggests that testing different gift values and types is important. Clearly, four cards had passed some kind of tipping point that spiked donations compared to a single card. But would two cards have done nearly as well? Would six cards have caused enough of an increase to justify the even higher cost? And what if the cards were of exceptional quality (and apparently higher value), or if the gift was something other than cards?

The great thing about direct mail is that it lends itself to testing. It’s easy to segment donor lists for different mailings and to track the response rate for each package. With a little investment in testing and gift options, a non-profit can determine if a bigger gift will boost the donation rate by more than enough to cover the added cost.

Business reciprocity

While businesses don’t send gifts to potential customers asking for donations, a reciprocity strategy can still work. (Conference “swag” is one example – give someone a t-shirt, and many will feel an obligation to listen to your pitch.) One business use of direct mail that is somewhat similar to Falk’s experiment is the “appointment request” letter often used in sales prospecting. The typical letter introduces the salesperson, mentions the business purpose (e.g., showing the customer how to save money on their insurance), perhaps mentions a reference, and suggests meeting in person. A business that uses this approach should try increasing their appointment-setting success with the inclusion of a small gift for the recipient. Not only will reciprocity kick in, but the mailing piece will stand out from the flood of other mail on the recipient’s desk.

The old saw says, “it’s better to give than receive.” The reciprocity effect might change this to, “it’s best to give, and then receive!”

email