I love my brothers (they are not the bats - that will come later); we are completely different people professionally and personally. However, our commitment to one another is something we deem so valuable that it’s key to our sense of happiness. How do we express that love? Reciprocity.
Reciprocity is the give-and-take of life and relationships. My brothers and I never take advantage of one another, not sometimes; not ever. Jeopardizing that relationship for short term gains or selfish reasons is out of the question. Don’t get me wrong - our relationship is not perfect - we fight - and I would be lying if I said no one had punched a wall during an argument. But we know that we are there for each other - consistently, reliably, and against all odds.
Trust, commitment, and reciprocity are the building blocks of every successful relationship. This is true for family and friends. It is equally true for your customers. (If you indulge me, let’s get a little academic - but only for a few paragraphs)
ECONOMISTS take a foundational stance when explaining the buyer-seller relationship. They argue it pivots on an equilibrium reflected in price and volume. The concept of equilibrium suggests that successful exchange between customers and sellers requires the perception of equity. The value a customer receives from a seller is captured in the price paid for the product and/or service purchased.
MARKETERS build on this fundamental concept of exchange and suggest exchange is a function of meeting unmet needs. Marketers accomplish this by focusing on trends, understanding customers’ needs relative to customers’ demographic and psychographic characteristics, and creating products and services that compete to fulfill customers’ unmet needs. When meeting unmet needs, its easier to create the perception of value at a higher price.
For STRATEGISTS, the relationship between customers and sellers is about power. Strategists think about a customer’s competitive choices, the threat of substitute products and services relative to a customer’s switching costs, a customer’s price sensitivity and willingness to pay. The more power an organization has over its customers, the more easily it can create the perception of value.
Marketers and strategists offer practical applications to the exchange definition offered by economists. However, all three approaches to exchange assume: the customer’s value calculus is a function of the value he/she receives from the product/service offered and the price paid. This is how reciprocity works in the customer-seller relationship. Certainly, there are things like after-sale service, customer service, product quality and warranties, but most would agree that all of these benefits are reflected in the value calculus above. The key question is: Does price reflect the entire scope of exchange between buyers and sellers? If not, so what?
(Now back to the real world)
In today’s world where information is king, the exchange relationship between customers and sellers is changing, and the key question is: Are organizations taking more then they are giving?
The buying experience in today’s online world is markedly different:
Sellers compel buyers to be active and engaged with the seller before, during, and after a purchase.
Many organizations will only share relevant information about their products or services when a customer divulges key information about their identity and contact information.
Many organizations will not allow browsing until they can place a spying mechanism onto the customer’s computer or cell phone. (Sorry, companies call these cookies to make you feel good because cookies are so delicious).
Customers are often automatically added to mailing lists without their consent, with unsubscribing being a highly confusing and delayed process.
Customers are surveyed during a purchase, immediately after purchase and then some time post-purchase.
If you are a customer of Air Canada, WestJet, or Marriott hotels, expect to be a repeated winner of prizes that are only available to you via a robocall. These calls find the customer debating between whether the caller is authentic or a scammer. (I vote scammer).
Imagine a customer walking into a brick and mortar store (praying we can do this safely soon) and being asked for their email by the greeter. Imagine a salesperson conducting an ocular scan and then lining up with 15 items the customer may be interested in buying based on what they bought the last time they were at the store? Imagine another salesperson asking them to complete a short survey mid-purchase. Imagine post-purchase, if we only allowed the customer to leave the store, if they answered a question about their willingness to participate in future surveys? Now, imagine, a week later, stalking this customer as they visited other stores - asking them to return to your store to make new purchases. This has the makings of a great Saturday Night Live (SNL) skit. But, would you expect this customer to come back? I know some of you are thinking - “I am expecting the customer to sue me for harassment and stalking.” But the question remains: would you expect this customer to come back?
Before you say NO, think back to how marketers and strategists define the exchange between buyers and sellers. If a seller is unique in fulfilling an unmet need, then despite these egregious behaviours, the customer may go back to the store. But rest assured, the minute the customer can meet this need at around the same price at another store, their loyalty ends. Note this is not an immediate mechanism like instant coffee. When loyalty ends, it ends over time, and it tends to end rather permanently.
Why is loyalty at stake?
The seller is asking the customer to give more than they are receiving. The value calculus is less equitable. Look, some of us love how Amazon keeps suggesting things we should buy while we are online. Some of us think it is creepy. Some of us realize that when you add up the transaction costs associated with all the tangential clicking we have to do to buy what we want and all the deleting of emails we have to do because we don’t want to leave a review of our purchasing experience, we realize that that online shopping requires us to spend as much time on these (BS) activities than the actual purchase.
Is it OK to lean into a customer’s personal online space because the leaning lasts only a few seconds each time?
When retailers ignore the fundamental requirement for reciprocity in every successful and sustainable buyer-seller relationship, they are toying with their survival.
(And now what the bats can teach us)
In the age of COVID, let me tell you a story about bats. Vampire bats require blood from large animals whose skin they pierce to inconspicuously sip a blood meal. However, this is a difficult procedure and bats often fail. Young and inexperienced bats recurrently go hungry one in three nights, and it is not uncommon to experience a sequence of two or three failing nights. Once a bat has not eaten for more than 2.5 nights, it is dangerously close to starvation. However, vampire bats have developed an exchange relationship that allows them to deal with this difficult situation. When bats eat, they gorge themselves. And a gorged bat can regurgitate blood for a fellow bat that is hungry (I know it’s so gross but keep reading because it’s super interesting). Although not sharing the blood would be in the immediate self-interest of the bat that has fed, a reciprocal and equitable exchange, over time, amongst the bats would be better for all concerned. However, as with other forms of exchange, there exists a serious potential problem with this type of exchange relationship – opportunists or cheaters – freeloaders who partake of the benefits but do not reciprocate (you should be thinking about how your organization treats its customer).
But Vampire Bats have a solution. See, they roost in groups of 8 to 12 in the same nest for up to 18 years. “Vampire bats have by far the largest neocortex of all bats. It is no accident that they have more complex social relationships than most bats, including, as we have seen, bonds of reciprocity between unrelated neighbours in a group. To play the reciprocity game, they need to recognize each other, remember who repaid a favour and who did not, and bear the debt or the grudge accordingly.” (Ridley, 1996: 69) If you take more than you give, they identify you, and they kill you. Simple. They don’t murder you; they take away loyalty. Based on the actual feeding frequencies, the mortality rate among selfish bats who take advantage of exchange relationships by ignoring reciprocity is well over 80 percent vs. the 24 percent for the rest who play fair (Wilkinson’s (1984; 1990). Survival, of bats, brothers, and retailers, depends on fair and equitable exchange relationships.
6 Managerial Lessons
Gathering information about customers is a lifeline for most businesses. Here are some suggestions that help ensure you are not taking advantage of customers.
Ask your customers if they want to participate in your information collection endeavours and then ask them again after every five to seven purchases (if that makes sense for your business). Create an online experience for them that reflects this preference. Email customers to let them know you are following their wishes, and if they would like to start sharing, they can change their minds at any time; do this judiciously.
Provide real tangible benefits to customers who share information. This will allow you to collect more information from customers. It will also allow you to be more scrupulous about the kind and amount of information you collect. Not only will this make your relationship with the customer less transactional, but also allow you to optimize resource investments around information collection and integration, something many companies don’t think about. Collecting information is not free.
Quantify the aggregate benefits you have provided to customers who have shared information with you, e.g. “Because you shared information with us about your purchases, we were able to help XX other customers benefit from your experiences,” “We were able to offer $XX in savings to our customers who participated in our post-purchase surveys.”
Be better at collecting information about how customers behave on your website vs. survey data. The quality of data that asks about espoused theories of action is much lower than data that measure actual behaviour. Also, measuring actual behaviour online is seamless.
If you are not using information, ask what are the benefits of collecting the information; is the information you are hoarding both costless and ageless?
Share with customers how you are using their data and how you are protecting it. Celebrate data security regularly by communicating milestones with your customers.