Use the Rule of Reciprocity to Gather AUM
August 5, 2014
by Dan Solin
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Advisors seeking to convert prospects into clients commonly overlook the rule of reciprocity. The rule states that a debt must be repaid. What’s fascinating is how far people will go to pay what they perceive to be a “debt,” even when they didn’t incur that debt voluntarily.
Some of us are familiar with the aggressive solicitation efforts of the Hare Krishnas, an offshoot of Hinduism. The group became well known in the 1960s and 1970s for the way in which it approached potential donors. Rather than simply ask for money, they offer flowers to passers-by on the street. Then they solicit a charitable donation. Even though recipients of the flower didn’t want it, and even though they did not support the Hare Krishna faith (in most instances), this tactic was remarkably successful. The authors of this academic study concluded that the success of this fundraising process was because the Hare Krishnas “had a firm grasp on the norm of reciprocity.”
The study sets forth many examples that show how powerful the rule of reciprocity is. Automobile dealers give away free coffee and donuts. They believe consumers will be more inclined to reciprocate by purchasing a car. Participants in an experiment responded to an unsolicited gift of a can of Coke by purchasing twice as many raffle tickets as those who did not receive the soft drink.
The force of our seemingly inherent obligation to reciprocate is best illustrated by this story involving eccentric chess champion Bobby Fisher. Fisher was an odd and unpopular figure. After Sept. 11, 2001, he appeared to praise the hijackers involved in the attack. Fisher left the U.S. and began looking for another country to grant him citizenship. His request was granted in 2005 by Iceland, a loyal ally of the U.S.
Why? Because Iceland was reciprocating for a chess match held in that country 30 years earlier between Fisher and Boris Spassky. Bjarni Benediktsson, chairman of the parliamentary committee that recommended Icelandic citizenship for Fisher, gave this explanation: “A new generation of international chess players was born here in Iceland after the world championship match in Reykjavik, and it was very clear from the outset of this matter that the authorities in Iceland have very warm feelings toward this memory.”
Translation: Iceland felt it had incurred a debt to Fisher, who put the country on the international chess map. It was paying back that debt. It didn’t matter that the “debt” was incurred 30 years earlier. It still had to be repaid.
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