How to use reciprocity to grow your startup

You can get $5K increase in revenue by using simple reciprocity principles. Here's how to do it



You might think that reciprocity works in this way: you give something to your customer, and they return back the same level of value. For example, if you’ve offered a $5 gift, they will spend not less than $5 (hopefully, $10) on your website. That’s not how it works in real life.


Using reciprocity as a growth model: real-life example

Let’s start with an example.

A person you have mastered reciprocity — Arvid Kahl, an ex-CTO of FeedbackPanda (sold 2019) and now content creator.

I landed on Twitter because of Arvid. I heard his interview in Indie Hackers about the book he’s just launched (Embedded Entrepreneur). I loved the narrative, bought a book — and 2 days after I was all over Twitter. My account had maybe 4 followers (people who I know in real life). You know who was the 5th follower? Arvid! And I did nothing special to get this gift from him. I just commented under his posts a couple of times and shared his content. And boom! — just like that Arvid used his authority and reputation to support me on Twitter.

Twitter profile of Arvid Kahl
Arvid Kahl's profile on Twitter

Arvid has one of the largest numbers in the Following section. He is following over 13K people. Many of them are obviously big accounts with authority. But if you check them out one by one you’ll notice that many of them are pretty small. Arvid keeps on offering the gift of his support on social media to newbies..



One of the accounts Arvid follows


How more likely are these people to buy Arvid’s courses and books then total strangers who received no gifts from him? Definitely more likely but maybe not x2 likely? Fine. Then how likely are they to follow him on his new YouTube channel? Or sign up for his newsletter if Arvid asks? Probably x5 likely, right? And just like this, with very little effort and a simple tap on the Follow button, Arvid has created a community of people who are eager to support him in return, amplify his message and if not buy directly from him — then contribute considerably in growing his other channels and revenue streams.



Example of reciprocity on social media

Will reciprocity work for you?


At this point you might have 2 thoughts:

  1. Nah, it will never work for me. My audience will never fall for it.

  2. It seems kind of fishy. Being good to people hoping to get something in return is just yick!

As an answer to question Number 1 let me tell you this. A study ran several years ago by Cornell University in the restaurants show: little cheap mint candy and fortune cookies restaurants give before offering a bill increases tips by 3%. Keeping in mind the cost of mints it looks like a great ROI! But here’s the catch: what happens if a restaurant offers 2 mints? Did the tips double? Nope! They went up almost 5 times! To a 14% increase. Let’s do the math: for example, the average meal cost is $20. Average tip is 15% ($3). Offering 2 mints (2 cents) will bring the tip to $3,44. Multiply it on 200 daily customers and 1400 weekly customers. And you’ll get a $616 increase in revenue by — what? — offering just a couple of mints before providing the bill.

Want to know something even better? When a second mint came as a surprise (a waiter gave 1 mint, started walking away and then said something like “You know what, you are such nice people, here’s an extra mint for you”) the tips went crazy and showed 25% increase (up to $3,75 per tip = . $1050 increase per week, + $4.75K in a month). Just think of it! Two mints and a second of effort can bring you +$5K increase in revenue. That’s how pleasant surprises work. More on surprising customers in a good way you can read here).


So, if such a trifle as a restaurant mint, a gift that everyone can see through straight away, can be crazy efficient — can you imagine how far you can go if you decide to use reciprocity as a guiding concept in business?


As an answer to question Number 2 I can tell you: if you keep doing good things only hoping to get more in return, it will show eventually and this will be an even bigger turn-off than not doing anything at all. And all the way around: if you adopt a respectful attitude to people around you and invest some effort in genuine help I don’t see how this can be something “fishy”.


How you can use reciprocity to grow your startup

Let’s see what kind of gifts you can offer as a founder? Usually we all start thinking in terms of content (”I’ll write free tips on X and share in my blog post”). But I encourage you to be more creative and stand out from everyone else.

  1. Make it a rule to support at least 2 product launches on Product Hunt a day. Comment under the launch post, wish all the best to founders and connect with them on Twitter.

  2. Make at least 2 weekly shoutouts about newsletters you read or indie products you use. Write a testimonial, reach out to a founder and ask them if they want to use it on the website.

  3. If you’re in design industry — create a set of free logos for companies you hope to get as your customers and mail them (yes, mail! that will definitely make you special)

  4. Run landing page roast sessions

  5. Offer to automate a simple process for free


This will make you stand out as in practice many companies go for the anti-reciprocal exchange:

— Buy 1 get 2 (ok, we’ll give you one more but first you have to buy one)

— Take part in our survey and get a 10% discount (the discount is waiting but first you have to answer our questions).

We have it everywhere. If you show up and offer a free logo design, an audit, an email where you list the most prospective keywords a customer can go for based on your analysis of their website (no commitment implied) — it will immediately make you different.


This is NOT a reciprocity

Some founders we have heard about the power of reciprocity effect, want to jump into using it — and do it all wrong. What they end up doing is to offer ideal customers a $10 gift card or a coupon, or a voucher saying “Hey, here’s a card for you — you can get it no matter what. But we also would love you to take part in our survey”. (Un)fortunately, reciprocity doesn’t work this way. It’s a long-term game and you have to learn to be patient if you want to use reciprocity to grow your startup. It’s all about investing your effort and offering value without demanding something in return. It is about granting people a freedom of choice if they want to reciprocate and — most importantly — how they want to do it.

It takes time to create this link between you and your customers. But as soon as it is created customers can become your raving fans. They will be spreading the word about your product without any nudges. They will be the first to share your content. They will recruit others to sign up for your newsletters and promotions. As all good marketing initiatives, it takes time, patience, and it can only be built on authenticity from both sides.


 


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