July 25, 2012

The #1 Thing That Creates Loyal Customers

The #1 Thing That Creates Loyal Customers

It would almost seem comical to limit something as important as customer loyalty to a single defining factor.

It would seem even more ludicrous to claim that there is "1 defining thing" that creates superstar customers who become self-appointed advocates for your brand.

It would seem comical: but that's before you consider the research on the matter that definitively says there is ONE essential element to creating loyal customers.

Do you know what it is?

If not, you're about to find out!

Revealed: The Social Construct that Holds Society Together

Stay with me here, you're not about to read a treatise on the rise of civilization.

The #1 thing that creates loyalty in anybody (that includes your customers) is the social construct of Reciprocity.

Reciprocity is a social norm that's been evaluated and debated since the days of Aristotle, and it has been said by many scholars to be one of the single defining aspects of social interaction that keeps society whole.

Why is it so important?

Additionally, how can it help us create loyal customers?

Why Reciprocation is Ingrained in Our Brains

Behavioral psychologists and historians have uncovered a lot of evidence that the process of giving and taking "fairly" seems to be apart of a massive majority of normally functioning people.

The classic anthropological example of reciprocity in early society is the Kula exchange, where indigenous peoples in the Trobriand islands where found to travel for hundreds of miles via canoe to trade goods with other towns (with a very distinct set of trading rules participants had to abide by).

In Prof. Robert Cialdini's now infamous Influence: The Psychology of Persuasion, he notes that:

The impressive aspect of reciprocation with its accompanying sense of obligation is its pervasiveness in human culture.

It is so widespread that, after intensive study, Alvin Gouldner (1960), along with other sociologists, reported that all human societies subscribe to the rule.

Within each society it seems pervasive also; it permeates exchanges of every kind.”

The point: Reciprocity is likely something that has evolved in the human brain in order to keep a majority of transactions "fair".

We often feel obligated to return favors, even if they are unasked for.

This is the ultimate reason why great customer service has such a fantastic ROI (return on investment).

Human beings are wired to follow the rule of reciprocity, and now that you understand it's importance, we can discuss how to use it to create incredibly loyal customers.

How to Use Reciprocity to Create Loyal Customers

Learning about the psychology of reciprocity is fun and all, but it means nothing if you can't apply it to your actual business.

Fortunately, the application of reciprocity is very practical (and already practiced by top companies around the world).

Let's dig in, shall we?

The first thing you need to know is that reciprocity comes in 3 different forms:

  1. One-to-one
  2. One-to-many (or many-to-one)
  3. General reciprocity

I highlighted the one-to-one form because that's the one you need to master: interaction with customers is typically a very isolated experience, that is, you tend to deal with them individually, even if they have similar issues.

Winning customers over starts with winning their thanks on individual terms.

Although technology allows you to scale the process, the fact is this: people remember acts of kindness more readily when it feels personal.

Got that? Good! :)

The second thing you need to know is that reciprocity can be handled in two different ways:

  1. Through subtle gestures (aka surprise reciprocity)
  2. Through obvious gestures (aka trumpeted reciprocity)

Wouldn't it be awesome if I finally got to some concrete examples?

Of course it would! ;)

1. How to Utilize Surprise Reciprocity

Have you ever ordered an item that you really wanted online, and as soon as you hit the buy button, you got that (positive) anxious feeling of, "I can't wait until it gets here!"

What if that item showed up on your doorstep the next day?

You'd be pretty overjoyed, right?

Of course!

Zappos recognizes that feeling, and it's done everything it can to give it to each and every Zappos customer.

How?

Did you know that while regular Zappos shipping states the item will be delivered in "3-4 days", Zappos automatically upgrades all customers to priority shipping... without as much as a single mention on the checkout or order page?

Why would they do this?

Simple: As a company that largely began it's growth through word of mouth, Zappos understands that it pays to surprise people.

Zappos CEO Presentation (Slide 1)

If the upgraded shipping was mentioned on the sales page, it would've become the norm; that feeling of placing your first order on Zappos and having it surprisingly end up at your house the next day wouldn't exist: people would just expect it.

As a company known for it's legendary customer service, it shouldn't be any surprise that Zappos doesn't mind the incurred cost of this extra perk.

The process of reciprocity begins here for most new Zappos customers, and there's nothing quite like getting "WOWed" on your very first order, after all, first impressions mean a lot.

The research points to this being a universal truth in social interaction and reciprocity: small surprises that feel like they were "just for you" can spawn some incredibly strong goodwill from the receiver.

I discussed this very process of the "secrets of personalization" when I addressed the psychological study that examined how waiters were able to increase their tips by 23%... simply by coming back a second time with more mints!

Talk about some incredible customer service ROI!

Key takeaway: Sometimes the best way to approach reciprocity and to build goodwill with your customers is to surprise them; chest-thumping about every single good aspect of your business makes people blind to the benefits you may truly offer.

Zappos takes a BIG loss on shipping just to "surprise" customers and create reciprocity. Find out why here - http://hlp.sc/M610zb
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2. How to Use Trumpeted Reciprocity

Surprises are great, but sometimes it does pay to let customers know just how far you will go to make them happy.

I could go on and on about what this process looks like, or I can just give you what I believe is a fantastic example of going "above and beyond" for the sheer purpose of telling an amazing customer service story.

If you've never heard of this tale before, allow me to be the first to introduce you to the adventures of Joshie the Giraffe (story previously featured on the Huffington post):

Joshie is a toy giraffe that got left behind by the son Chris Hurn.

In an attempt to appease his upset son, Chris assured him that Joshie was simply taking an extended vacation at a Ritz Carlton Hotel, where the Hurn family had been staying.

After receiving a call from the Ritz customer service team with news that they had found Joshie, Chris was unsure about how to approach his son now that he knew that he could get the giraffe back: after all, he had told a little white lie to make sure he wasn't upset, and was in an understandable predicament.

Mr. Hurn then had an idea: he told the Ritz staff what he had told his son about Joshie's "extended vacation", and wanted to know if his plan of making that happen could be done.

The result?

The Ritz staff, in a testament to their notoriously good customer service, acquiesced every request, taking Joshie around the hotel and even photographing what he was up to on his "extended" stay!

First things first, they knew Joshie couldn't just be wondering around the Ritz without a staff card... so they made him one!:

Joshie Card

After that, Joshie headed over to the pool area to relax until his owner's picked him up:

Joshie pool

Not one to sit around and do nothing, Joshie is given a job in the loss prevention department during the day:

Joshie looking at Monitors

Noted for his very mellow personality, Joshie then decided to melt away some stress with a spa day:

Joshie at Spa

What a story!

To top it all off, the Ritz sent Chris Hurn and his son a booklet filled with information about Joshie's stay, and it included the above pictures along with quite a few more.

What does the tale of Joshie teach us about "trumpeted" reciprocity?

Here's the thing: the Ritz staff didn't help Mr. Hurns out in the hopes of getting some free press, the main goal was to provide the level of service that they are known for (and what allows Ritz Carlton Hotels to charge such high prices).

Despite that, the Ritz staff didn't hold back on their support.

Nothing about this tale is "subtle", while Mr. Hurns may have been surprised at the results, this isn't the same as adding "surprise" to an order like Zappos does with it's shipping.

What actually happened was that the Ritz was able to "show off" their amazing customer support by using storytelling.

The immediate takeaway from this story is that the Ritz Hotel company cares about their customers to the point of being fanatical: in our minds, only a company that truly cares would make this big of an effort for a boy and his giraffe.

The best part?

There was no "chest-thumping" coming from Ritz Carlton's marketing department.

The story did the talking for them: it's apparent now why people are willing to pay Ritz prices without a single word from the company having to justify them.

Why do you think using case studies and profiling superstar customers is so popular?

Stories such as these are noted by psychologists as being incredibly persuasive.

They allow you to "brag" without directly saying a single world: there's nothing quite like letting your actions do the talking.

How can you utilize this form of reciprocity?

When opportunities present themselves, don't be afraid to do the 'outrageous' to bring satisfaction to your customers... and also don't be afraid to tell the story about what happened either!

You can bet that Chris Hurns and his family feel immensely obligated by the kindness shown by the Ritz, but this story created by the Ritz staff has reached far more people than Mr. Hurns and his son.

Even though they only helped one family directly, the story has likely resonated with thousands of people, it's a fantastic example of building rapport through word of mouth. (You can bet that when the story went live, Ritz did it's part to promote it)

"If the Ritz is willing to do that for their customers ... maybe I should consider staying there ..."

Could you think of any better way for your business to be introduced to new customers?

I can't.

Key takeaway: Psychologists have noted that an incredible story is often the most persuasive way to take advantage of "trumpeted" reciprocity, or highlighting just how far your company will go to make sure people are happy and satisfied.

Joshie the Giraffe: Ritz Carlton shows (through this heartwarming tale) what it means to give GREAT customer service - http://hlp.sc/M610zb
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Your Turn...

First of all, as always, thank you for reading! :)

Now I want to hear from you...

  1. Why do you think reciprocity has seemingly evolved in the human mind across all cultures? Is the rule of reciprocity really that important? (Would love to hear your thoughts, feel free to wax poetic!)

  2. What's something specific that your business does to keep your customers happy? If you need some ideas, be sure to check out our free e-Book on 25 Ways to Thank Your Customers, which you can download instantly.

Thanks for stopping by, and I'll see you in the comments!

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Written by Gregory Ciotti Greg ciotti

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7 Comments

Aaron Wheeler Sep 30

Great article Gregory! Reciprocity is one of those things you take for granted unless you aren't receiving it. People care a lot about what is fair, especially as it applies to them being treated fairly. Do you think that there are situations in which giving perks to certain customers or on special occasions can lead to envy and unhappiness for the majority of customers? Or do providing these treats to a few raise all boats, so to speak?

ann hobson Jan 5

This is so true, as is the previous article about the perception of being noticed affecting how satisfactory the result feels - here are some contrasting examples from my own experience as a consumer: 1) My friends liked Smarties and were trying to collect the whole set of letter from the caps. They had lots, but no letter Q ever appeared. I wrote to Rowntree's and a while later received a letter back saying that they did in fact issue equal amounts of all letters, so we must have been unlucky - and including 2 letter-Q caps. So a real person read the letter and went to the bother of solving our problem. HAPPY! 2) My kids were collecting those story-book stickers, and I eventually sent off to buy the few missing to complete the book. The information on that request form was then used to send a letter to my then 7-year-old daughter, advertising a new issue of DIsney princesses or some such. Boy was I angry!! I wrote back saying I thought it was completely unethical as she now wanted this set and I couldn't afford it. They should never be sending advertising material directly to a child. They did write back apologising, and included the advertised book and complete set of stickers for her. SATISFIED 3) The Caramac bar was made to a new recipe - the wrapper invited me to write and give my opinion, which I did - I explained that it was far inferior to the original recipe; in fact it had been my very favourite bar and was now quite unappealing - I detailed why. They asked, I took the time to give them useful information. Their response? A standard complaint response "We are sorry you were disappointed, please send wrapper for a refund etc" I am still (disproportionately) irritated and frustrated by that. I wasted my time, and will never get my favourite bar back. DISSATISFIED

Deyson Feb 1

Great article thank you. I love the story of the Ritz, very inspiring.

My question is what can someone do if they sell digital goods to extend reciprocity to their visitors?

Thank you again and have a wonderful day!

Ryan Engley Apr 11

Hey Deyson - I have the same question. It's hard to think of creative ways to surprise when you're in the digital space.

That being said, I hosted a webinar a few weeks ago and a would-be attendee let me know that she couldn't attend because she had to go in for surgery. I had her email address so looked up her company online, found the address and mailed her a card. When she came back, one of the first things she did was email me and register for our next webinar.

I find working in SaaS, that you need to have more of a 1-on-1 relationship with your customers and that they'll drop small hints here and there about how you can surprise them. Still, I struggle for something as awesome as Zappo's free shipping... it's tough to wow when you only have a name and email address.

Jeet Palavwala Jun 12

Great article. Thank you for sharing.

Sara Woodward Sep 20

Gregory, This was a great way to start my day with the obligatory cup of caffeine. The Marketing Team at the Ritz were very clever with the story telling of Joshie the Giraffe. They gained invaluable publicity and made a child very happy. Customer service, albeit it with an agenda, at its very best. We all know examples of the worst sort of customer care. One of my particular favourites - in a busy supermarket, trolley full of shopping, fractious child and I asked if I could have help packing. The reply: "You'll be lucky".... what training manual had that response! One lost customer. Thanks for a great article. Reciprocity is now my new byword. Regards. Sara

Dave Nov 12

Hi Gregory,
Just came across your article, great stuff. In response to your first question, i think this is related to the seminal work by Marcel Mauss called 'The Gift'. It is concerned with obligations on the part of gift-receivers towards gift-givers, in a range of cultures. Thus the giving of a gift begins a process of reciprocity, and whilst in anthropological terms it is about the constant gift giving exchanges, it seems to me you could usefully substitute some elements of customer service and customer response here. I'd probably go further, and say that because of the gift-led reciprocity, customers that have been very well treated feel a reciprocity not only to re-purchase, but to recommend, as a way of fulfilling the reciprocity demanded by the 'gift' of extra service. Just a thought. Keep up the good work.
Dave

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