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Strategy

This Universal Law of Human Psychology Explains Why Customer Retention Matters

When you do something nice for your customers, when you serve them to the best of your abilities, they’ll feel inclined to reciprocate the generosity. It’s human nature working to increase your revenues

Adam Fout
September 13 2017

I’m a marketer. I work in a marketing agency. I hear this over, and over, and over:

“We need more leads. How do we get more leads? How do we get people in the door?”

This type of thinking is understandable. It’s even excusable.

It’s dead wrong.

If your focus is on getting people in the door, if your current customers aren’t your number one priority…

You’re gonna have a bad time.

Retention Builds Businesses — Leads Come Second

I’m sitting on an airplane right now, on a flight with a large carrier whose name I shall purposely neglect to mention.

They have a metal tube floating 30,000 miles in the air filled with current, paying customers.

Talk about a captive audience.

Guess what this airline is doing, right now, at this very moment?

They’re selling me something (or trying to).

As we sat on the tarmac waiting to take off, the screens on the seatbacks in front of me played a hilarious safety video (intentionally hilarious, and it worked — I paid attention — followed directly by an advertisement to buy more miles.

Right now, they’re hitting me with advertisement number two, using their flight attendants as sales folk.

They’re literally walking past me right this moment holding little brochures about how I can get 50,000 miles for some reduced price.

I’m 90% sure someone a few rows up already got one.

You might be tempted to argue that, “Hey, they’re just trying to sell you something — that’s not retention!”

Oh, but it is. If they sell me 50,000 miles, I’m not just making a current purchase: I’m setting myself up for at least one more round of buying as the miles either run slightly under what I need or go slightly over, prompting me to buy more in either case OR book another flight and reach the amount I need.

This flight has maybe 150 paying customers on it.

That’s 150 people who have already invested in their services. Of those 150, we’re probably going to land with a handful of customers who have bought some miles or will in the next 24 hours, who are decidedly going to fly with these kind folks again.

I just saw a woman walk to the back with a flight attendant to learn more about those miles.

You know what the best part about this is?

This particular marketing tactic costs the airline nothing to employ once they’ve trained staff and created the brochures.

They’re not paying a marketing company ongoing fees for this.

They’re not funneling money into a PPC campaign or paying some poor schmuck of a writer to churn out article after whitepaper after brochure after ad.

Nope.

This costs them nothing, and they’re likely making money on more flights than you would think possible.

Importantly, they’re sending current customers, who may very well have been inclined to forget this airline existed, back into the funnel, ensuring that a handful of their current customers become future customers.

That’s pretty smart, and compared to the amount they probably pay for leads through their myriad and sundry marketing campaigns, it’s astronomically cheap.

Their work to retain their current customers builds their business — they can worry about leads later.

But there’s more going on here. Those miles we’re being offered right now — that deal is only available to current customers. Some rando on the internet isn’t getting that deal.

They’re offering something exclusively to me. They’re saying, “We value your business. We want to do something for you, just for you. You’re the only one for us.”

And that speaks to people. Even if they don’t buy, they’ll remember that this airline is more interested in them than in new customers.

Which is more than you can say for many businesses. How many times have you called a business to hear this: “If you’re a new customer, press 1. If you’re an existing customer, here’s an absurd, labyrinthian list of options to stumble your way through. Good luck.”

When you do something nice for your customers, it shows you care. And that taps into something in human beings that’s been a part of us for a very long time.

The Law of Reciprocity Explains Why People Value Offers Like This

A lot of people like to talk about servant leadership these days (it’s back in vogue I guess).

It’s a simple (and cool) concept — leaders shouldn’t push people around or become lazy and let employees do all the work (those are called dictators, and the world has enough of those).

Instead, leaders should look at themselves as servants — to their clients and customers, but also to their employees.

I’m sure there’s a close implied correlation to a certain religious figure who shall remain nameless, but you get the point — leaders serve, putting the needs of others first, and by serving, their business prospers.

Makes sense. Customer service is one of the most important aspects of customer retention, and what is excellent customer service but a business taking the servant leadership philosophy as far as it will go?

And I’ll tell ya, even though they’ve got selling down to a science on this flight and I feel valued through these special offers I’m getting, if I get poor service on the stuff I already paid for (the flight itself), I’m going to think twice about flying with them again.

Airport cops haven’t forced anyone off the flight yet, and they just gave me fancy European cookies, so I think we’re probably alright.

Serving your customer, putting your customer first, thinking of your customer as not just a source of money, but rather as your partner, your reason for being, your friend, someone you would do anything for — this is how businesses prosper and thrive.

Because, when your customers see that you value them, when you give them something of value, even if they don’t take it, they do what human beings have done for millennia when someone gives them a gift — they feel obligated to do something nice back.

This is called the law of reciprocity, it’s a universal law of human nature, and it’s how you hack human psychology to encourage customers to keep coming back.

Those cookies are another great example — they didn’t have to give me a snack, much less an awesome one, but they did. Even though I paid for the flight, the cookies, the offer, and a dozen other little things (they didn’t ping me too bad on the bags, for example) combine to make me feel like maybe I owe them a little something, even though, rationally speaking, I don’t.

I mean, I paid a lot for my ticket. I’m good, right?

My rational side says yes. My lizard brain says no — you owe something now. It’s almost instinctual.

And that’s powerful.

Now, you can ignore this if you want, ignore your customers, serve no one, and focus on only getting new business and leads and let people who’ve already demonstrated a willingness to pay you money fall to the wayside.

That seems stupid, but whatever, you can do it.

That might work for a while.

But at some point, it stops working. At some point, you eat up all that juicy low-hanging fruit, and you end up spending more and more to get leads.

The law of diminishing returns is harsh and true and unavoidable. As the price to bring in new leads goes up, as the well starts to run dry (and it will run dry eventually, even if it takes decades), your business will suffer.

But the savvy servant leader who makes it their priority to build relationships by doing everything they can to keep their customers happy, who understands and employs the law of reciprocity — well, that leader can weather the hard times that every business inevitably faces. It might not be now. It might not be for 20 years.

But I remember the lessons learned during The Great Recession:

Lean times always come — one must be prepared for them.

As Game of Thrones fans know, Winter Is Coming.

The servant leader survives the winter.

The bridge burner does not.

The Law of Reciprocity Is a Foundational Piece of the Human Experience — Use It Wisely

Today, human beings walk the Earth howsoever they please, but not so long ago, our ancestors lived in caves and clearings, forests and plains, and life was… shorter, less comfortable, and brutal.

Human beings survived and got to where they are today by working together, by helping each other, by always recognizing that one good turn deserves another, that life is not possible without the help of others.

You cannot live on the results of gathering alone — you need hunters to fill the calorie and protein gap. Hunters don’t have time to waste on gathering — they must hunt. And in the meantime, while all this hunting and gathering is happening, who’s watching the children? Who’s ensuring the village isn’t taken over by the tribe next door? Or eaten by roving lion prides or wolf packs? Who’s taking care of sickly grandma and crazy grandpa? Who’s cooking food and reinforcing buildings and fixing broken tools and all million-and-one things a semi-permanent nomad village needs to make it through to the next day?

Human beings need each other. This is a truism that goes back to the foundation of our species.

Just because we are more isolated than ever before doesn’t mean we’ve forgotten that.

In fact, it’s likely a big part of the reason the internet means so much to so many people — it’s a method of connection in a disconnected modern world that fills a hole our species only began to develop in the last 100 years.

We’ve always needed each other, we’ve always helped each other, and that’s why you find, in every human culture the world over, that gift giving is a really, really important thing, that it’s fair to do something for someone and expect something in return, and that someone who ignores all this is a real mailbox head.

The law of reciprocity tells us, basically, that tit for tat is truth, that one good turn does deserve another, and that we should always repay kindness with kindness.

Ironically, this usually results in something a bit odd — we feel the strongest need to repay the people who have done things that they absolutely do not want us to repay.

Think about it — look on your own personal experiences. How do you feel when someone does something completely from the kindness of their own heart, with no expectation in return?

I usually feel… not that I owe them something… but rather, that I want to do something nice for them now, to show them that I appreciate what they’ve done.

Contrary to what the goal of service to another is, we find that someone who serves us, who helps us, who does something for us, especially something free, something that quite clearly is done from a place of love or respect and comes with no expectations or strings, that this person has unintentionally tapped into a part of human nature which leads us to feel that we now do owe them something, that we should do something for them.

Now, this all assumes, of course, that you’re not a psychopath, sociopath, or just a selfish little jerkface, but that’s another discussion for another time.

For the majority of folks, when you do something nice for them, when you serve them, they’re going to feel motivated to do something nice back.

And even if they don’t, if they truly feel that you’re doing this from the kindness of your heart, their estimation of you — as a person, as a business — is going to rise, and they’ll probably even do something as nice as make a purchase.

Or, at the very least, not unsubscribe from your email list.

That’s why, all things considered, these awesome cookies mean more to me than the special offer — they’re completely free, they’re just a super nice thing, they have nothing to do with anything other than someone caring about their customers, and they make me happy.

They make me feel a tiny bit indebted to these people. So, if they send me an email after the flight about that offer, I’ll probably open it.

We’re Wired to Help Each Other — Help Your Customers, and They’ll Help Yo

When I teach people something, I find that teaching them exactly what to do is not nearly as effective as teaching them why something must be done.

I think many of us in the business world are well aware that customer service is a good thing, that it sets your business apart from the crowd, that it engenders customer loyalty, that it’s a foundational aspect of retention.

But I always wonder if people know why.

Service, helping others — these are not new things. They’re tied into our very genes, the pieces of us that make us human and took us from shivering simians in dank caves to rulers of the world.

We may be the most intelligent animals on the planet, we may have opposable thumbs and tools, and we may be able to run really long distances, but that all means nothing when you’re stuck in the wilderness alone.

A single human in the wild does nothing but survive — maybe. A human that’s forced to go head  to head with a grizzly, or a herd of elephants, or a pride of lions, or a pack of wolves, or a tiger… that human doesn’t last long.

One human alone can do little.

But a little fleet of humans can do quite a bit (like killing or running off all those predators).

The biggest changes in our world come from massive alliances of humans working hard toward a single goal.

This is who we are.

So, when we say to each other “Customer service breeds retention!” the question we should ask is why.

The answer is in our history.

When you help your customers, when you serve your customers, something is happening at a biological level that is hard for anyone to deny, whether they consider it rationally or not.

Because rationally, objectively, loyalty to a company makes zero sense unless that loyalty is expressly rewarded — and even if loyalty is rewarded, it only makes sense to be loyal to a company if that loyalty is rewarded with something of great value.

If humans were completely rational creatures (robots), we would only ever reward a company with our business if that company provided the highest value around.

But that is far from what happens. We often reward a company with our business because it’s convenient, because time is limited, because what we need is in close proximity to where we are, and we end up paying a much higher price than we would have otherwise. In other cases, we give a company our business simply because we couldn’t tell the difference between two products and just gave one a shot.

Sometimes, we buy because the branding resonates with us in some way despite the product being of lower value than what the branding would have you believe (*cough* BEATS HEADPHONES *cough*), or because we got drawn in by a flashy offer or a price that appeared to be quite low due to a sale.

But most often, I think, we buy out of loyalty and comfort. We buy based on emotion, informed by our past experience, and because it’s just easy to stay with one product or service, to not make a change.

Even when we set convenience factors aside, we do this. Even when it’s less convenient to buy our preferred brand, when another brand has greater value, we still stick with what we know.

That’s crazy. That makes no sense.

That’s humanity in a nutshell.

I’ll leave you with a story.

I know this couple who have purchased Toyotas for the last 20 years (at least). If it were up to the husband (who is an exceedingly rational man) this would not be happening, but it’s a joint decision, and so, many Toyotas are purchased.

This makes no sense. There are many cars out there that are higher quality than Toyota, and these people can afford just about any car they want.

There are many cars that are safer than Toyota — let’s not forget their suicidal accelerator issue or their homicidal airbag problem.

There are many cars that are simply a greater value, or that are engineered better, or that look nicer, or drive nicer, or are better for the environment, or that support American business and don’t send money overseas, and on and on and on.

A million reasons why this American couple should not buy Toyota.

And yet they do.

They have for years.

And probably will for the rest of their lives.

Why?

Because they’re loyal.

Despite the horrific beating that the brand took in the last decade with all these catastrophic engineering failures.

Despite all the reasons listed above.

These people remain loyal.

That’s not rational.

And yet there it is.

I can tell you that the foundation of this unreasonable loyalty is customer service.

When these people think of that brand, they think of how wonderful their service has always been at every dealership they’ve ever been to.

They think of how wonderfully they’ve always been taken care of.

And they are loyal to the people who have treated them right for so long.

Toyota has many issues, but customer service is not one of those issues — at least, in the minds of this couple.

That’s insane.

That’s irrational.

But there it is.

Your current customers matter more to you than anything in the world.

If you do something nice for them, they’ll do something nice for you.

Like be a loyal customer for 20 years.

Because, if you can serve them, if you can show them, through your actions, that they matter to you.

If you can do them one good turn.

They’ll do you another.

For life.

That’s how a business takes over the world.

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Adam Fout

Adam Fout, resident content sorcerer at Blue Steele Solutions, turns blogs and social media accounts into marketing machines for your business. In his free time, he writes strange bits of fiction and posts them on his blog.

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