How to Use 'the Law of Reciprocity' to Build Better Business Relationships

Building trust with customers is key, of course. But how do you do that?
How to Use 'the Law of Reciprocity' to Build Better Business Relationships
Image credit: Pattanaphong Khuankaew | EyeEm | Getty Images
Guest Writer
Serial Entrepreneur, Content Creator, Avid Learner
5 min read
Opinions expressed by Entrepreneur contributors are their own.

As an entrepreneur, you have countless relationships you need to manage on a daily basis. There are your employees. There are the vendors who provide needed support services to help you run your business. And of course there are also your customers.

Related: Asking For A Favor: Apply Reciprocity As A Constant, Not An Anomaly

Maintaining quality relationships with each of these groups will prove vital for your lasting success. And perhaps the best way to ensure that you enjoy strong relationships is to make ure that you always follow the law of reciprocity.

As sales training authority Brian Tracy wrote in a blog post, the law of reciprocity is “considered by many to be the most powerful law of human nature. Basically, it states that, ‘If you do something nice for me I’ll do something nice for you. I feel obligated to reciprocate.’”

So, how exactly do you put the law of reciprocity into real-life practice?

Start by building trust.

Building trust with consumers, particularly those who have never interacted with your brand before, is key By giving something of value away for free -- as the law of reciprocity details -- you establish your industry authority and demonstrate that you have your customers’ best interests at heart.

This is why you see so many startups, (particularly SaaS companies), offer free trials that allow users to try those companies' services before buying. It’s why many industry authorities post a wealth of blog posts sharing actionable information, or share free ebooks with their users.

Related: Use Givers Gain as a Networking Personal Standard -- Not as an Excuse to Criticize Others

As Impact BND’s Ramona Sukhraj highlighted in an article, “GoToWebinar reportedly sees around 40 percent of its free trial-users convert into paid plans, while the best-in-class softwares see more than 60 percent."

As Sukhraj continued, a free trial for SaaS prospects lets them "see behind the curtain." It lets them experience what your product looks like, how it functions and how they personally will interact with it.

This builds trust in potential customers because they know exactly what to expect from your products or services. With other business relationships, a similar strategy of offering advice or assistance free of charge will go a long way in building a positive foundation for your relationship.

Continually show appreciation.

Building trust at the beginning of a customer relationship is vital. But to continue to enjoy that strong relationship for many years, you must periodically show your appreciation.

As Satwick Saxena of EvaBot, noted, “According to data from the U.S. Small Business Administration, 68 percent of customers end a business relationship because they don’t feel appreciated or cared about. That’s a lot more than the 14 percent who ditch a business because they don’t like the product.”

Added Saxena, “When you show appreciation to your customers, it humanizes you. It makes them realize that you know them and they matter." And that humanizing builds loyalty, which may give you a life-long customer, Saxena said, as well as bring you a referral or recommendation.

Loyal customers often appreciate special offers or discounts -- especially when these offers are personalized based on previous purchases. This can greatly increase the likelihood of these customers making additional purchases.

A CMSWire case study is relevant here.  It revealed that "in a recent 12-month period, businesses with a 40 percent level of repeat customers generated 47 percent more revenue than similar businesses with only a 10 percent level of repeat customers.”

The same principles are vital for retaining your most valued employees. While positive affirmations and words of thanks can help employees feel appreciated, tangible items like a promotion, raise or bonus can foster greater loyalty among your top performers. 

Incentivize your audience.

Sometimes, you can be up-front with how you use the law of reciprocity and still go a long way toward strengthening your brand. Your current customers are often willing to do something that helps that brand when they know they will receive something of value in return.

Few examples of this principle are better than that Dropbox. As a case study reported on by Overthink Group revealed, Dropbox used its referral program to grow from 100,000 to 4 million users in a 15-month period. The key to this success?

“Referring your friends and family to DropBox makes your account more valuable," the case study reported. "Free users automatically get 2 gigabytes of cloud storage, and every referral earns you an additional 500 megabytes … the referral program is framed as a benefit to the user.” 

Highlighting the free storage space users would get for each referrals created a highly engaged audience willing to invite others to join Dropbox. Today, Dropbox has over 500 million users -- not a bad result for a company that gives away some free storage.

Give before you receive.

At the end of the day, the most important element of the law of reciprocity is that you be willing to give away something of value without expecting something in return. 

Whether you choose to use words of affirmation with a top employee, offer meaningful gifts to a loyal client or demonstrate added trust with a business partner, you will strengthen the relationships that matter most for your business’s growth and build a positive brand image.

Related: Why Brands Need to Shut Their Mouths and Open Their Ears

You won’t always get something tangible in return. But by increasing customer loyalty, employee productivity and more, your company will get the growth it needs to succeed.

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Are you paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.

Latest on Entrepreneur