Does Incentivising Customers Lead to Sales?

1. Reciprocity

Cialdini identified that people tend to perform an act if they feel they have received something first. This concept is known as reciprocity.

It refers to the tendency of users to give or receive something with the expectation of giving or receiving something back. For example, Prachi signs up for a one-month free trial of Amazon Prime services. When her trial expires, she moves forward to sign up for a paid subscription, even though other streaming services provide similar offers. Prachi would also feel a sense of loyalty towards Amazon Prime that she does not feel towards any other providers.

People tend to return favours, pay back debts, and treat each other how they have been treated. This leads to a feeling of obligation when someone has given us concessions or discounts. To avoid this feeling, we engage in reciprocity.

Reciprocity can also be used as a negotiation tactic with users. However, it is vital to keep two things in mind for successful reciprocity:

• We need to give the users something
• We need to ask the users for something

In addition, identifying what we have that might entice the user is equally essential. One can:

• Share content by offering white papers, cheat sheets, guides, templates, and research findings.
• Offer product discounts, free shipping or redeemable coupons.
• Giving free upgrades to first time sign-up or on first order.

Further, the organisation should capture the user’s email address and essential demographic details to facilitate follow-up marketing of the product.

2. Commitment and Consistency

As the year ends, the tradition of new year resolutions begins. People decide to have a healthier, wiser and richer life ahead by cultivating a new positive habit, this phenomenon is known as Fresh-Start effect.

But what happens within a few weeks? The honeymoon phase ends, the motivation and productivity eventually dwindle and most of us return to our previous functioning levels, despite our best efforts. But what if I told you that there is a way to influence behaviour – to nudge people in the direction of pursuing their goals?

Behavioural consistency refers to people’s tendency to behave in a way that aligns with their past decisions and behaviours. Behavioural consistency drives our way to take mental shortcuts which, by default, eases the process of decision making. It is easier to make one decision and stay consistent to it than making a new decision every time when presented with a problem.

Consistency acts at both, individual and societal level. These resolutions, when on an individual level, the pressure to follow it is on oneself. This pressure is even stronger at the social level, that is, if the promise is public and involves others. This inconsistency with self might result in some guilt, but inconsistency with other calls for interpersonal risks. These risks create tremendous social pressure to remain consistent. Hence, people try to ensure that their behaviour aligns with their past decisions to avoid undue stress.

According to Cialdini “Once we have made a choice or taken a stance, we will encounter personal and interpersonal pressures to behave consistently with that commitment. Those pressures will cause us to respond in ways that justify our earlier decision.”

Have you ever noticed Mac users who would never dream of touching a Windows laptop? Users are willing to pay more money to stay consistent with their commitment towards a specific brand.

Research indicates that when the original incentive, such as 10% off promotion is removed or the price of the product hikes, buyers would still buy the product since they have already committed and have decided to buy it. Another research found that 87% of the consumers during a purchasing process, even if they notice a small processing fee, will not bother dropping out because of the commitment and consistency rule.

Some of the ways to capitalize on consistency and commitment with your users is by:

• Making public commitments on social media, reviews, message board discussions, and online petitions to your product.
• Offering smaller sales that build into a bigger sale or commitment – Putting smaller products on sale and providing a larger discount on next purchase.
• Creating a profile in the system reflects a commitment that the users have made to use the product.

3. LinkedIn Case Study

LinkedIn is one of the largest social networking services that focuses mainly on professional networking and knowledge sharing. LinkedIn thrives on many concepts of the principle of influence. It provides the opportunity for users to influence each other, get influenced by each other, and influence potential employers.

LinkedIn incorporates the concept of reciprocity by engaging in number of acts including:

• Endorsing skills and expertise of a user
• Providing a testimonial
• Liking, sharing, and commenting on posts

Building a LinkedIn profile is time-consuming and may seem daunting to some users. Once users have built their profile, they are more likely to keep it updated. It serves as a recording of a user’s accomplishment – this would require the user to consistently update their profile as they achieve milestones, hence maintaining consistency and commitment with the website

LinkedIn also attempts to foster commitment by allowing users to login to other sites through their LinkedIn profile credentials, for example, Bloomberg Careers. Users logging in through their LinkedIn profile have created a deeper commitment to LinkedIn as it serves to access additional content through other products.