Monday, July 11, 2005

The Power of Reciprocation: Why Freebies Increase Sales - Post #76

Excerpt from "The 7 Essential Steps to Successful eBay Marketing."

If you give, you will receive. This not just a religious homily; it’s a psychological fact that operates in every culture on the planet. The phenomenon is discussed at length in Robert B. Cialdini’s Influence: The Psychology of Persuasion (1998), with statistical studies to back it up. If you’re interested in the psychology involved, pick up a copy and delve deeper.

Reciprocation is built into our societal code of ethics, our culture, and our collective behavioral systems. People reciprocate when they are given a gift. It doesn’t matter whether they like or don’t like the gift or the giver; they feel an obligation to reciprocate.

You may say, “Hey, that’s not me. I don’t feel obligated to reciprocate.” You may eat the cheese at the supermarket freebie station and pass on purchasing. You may receive personalized address labels from the American Heart Association, actually use them, and toss the donation card into the garbage. It’s probably because you recognize and analyze the marketing concepts at work and second-guess your impulses.

Most people do reciprocate, though. On impulse, we’re trained to reciprocate and feel guilt and shame when we don’t live up to that contract. Giving back provides closure when we’ve been given a gift.

You can really see the power of the contract in action when you try to return or refuse a gift. Have you ever been given a gift and then decided to give it back after accepting it? You usually don’t give it back because you don’t want it or you can’t use it; you give it back because you don’t want to be bound by the reciprocation contract. You don’t want to be obligated to the exchange relationship. When you accept gifts, you accept the reciprocation obligation. This is where the phrase “much obliged” comes from.

eBay does have some restrictions about selling gifts as part of a listing (see “eBay’s Rules Concerning Advertising Gifts” for an explanation). However, you can certainly slip a gift into the package you ship. When you do this, make sure that you give a reason for the gift that indicates your expectation from the customer. This could be anything from “remember me the next time you purchase” to “please e-mail your friends and tell them what a great deal you got.”

Here’s a real-life eBay example. A ticket broker who specialized in concerts slipped a free six-pack of Coronas and limes into each of his Jimmy Buffet ticket shipments. How did he do it? He included a $10 gift certificate to a local supermarket chain in each envelope.

Tip: Consider investing in promotional gifts that are custom printed with your business name, contact information, and eBay Store URL. Items such as printed pens, key rings, magnets, notepads, and other novelties are inexpensive when ordered in bulk and deliver the message of returning to your store to shop more.

Remember, gifts don’t have to be anything fancy. People just like getting free stuff—period. You can even throw in overstock inventory items that aren’t selling well. Anything you add to the package will increase the perceived value of your transaction. It will leave your customer feeling positive and make her enthusiastic about returning to shop with you again.

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