GIFT GIVING TO GAIN MORE BUSINESS – DOES IT WORK?

At this time of year, there is a lot of gift-giving. It begs the question of why? More specifically, do corporate incentive gifts positively impact Customer Experience? What evidence do we have that gifts deepen relationships, increase in retention, customer loyalty, and trigger positive emotions?

There has been a lot of research on gift-giving. Marketing professor Morgan Ward from Emory University shared a lot of it with us on a recent podcast. Most of the research on gift-giving is that givers and receivers are misaligned. 

Gift-giving research has changed. It started in Sociology as a qualitative idea. Early research says the foundational concept behind gifts is reciprocity or the fundamental feeling that once people give someone a gift, the other person should return it. In this way, a gift propels relationships into the future. 

Today, gift research occurs in controlled conditions. Researchers endow people with gifts or have them imagine receiving gifts and then observe what happens in response and how those exchanges affect relationships.

When Ward was first learning about gift-giving as a science of it, she was surprised by the idea that gift-giving was about reciprocity. She had always thought of gift-giving as a benevolent action, or, in other words, being kind. Reciprocity has a hard underlying edge of obligation. Ward also learned that research shows that gifts can enforce norms or impose one's preferences on others. Furthermore, there were many more agendas, as well. 

The most common agenda is altruistic. Gifts are given to satisfy a need in others and show that the giver cares. 

One of those agendas is reminding the recipient of the relationship between you. Perhaps a book from a professor or a briefcase from a business mentor. 

Another one is to give people gifts that guide or lead them in some way towards other behaviors, so, a paternalistic gift. An example of this type of agenda (and a bad one at that) is a package of personal training sessions to someone that you think could spend a little time in the gym. 

The idea of altruism has the idea embedded in it that the giver is so intuitive about the recipient that he or she can pick a gift that perfectly matches the recipient's preferences. It says the giver knows the recipient super well and that you pay attention to your needs and desires. So the gift has a message in it above and beyond satisfying the recipient. 

Ward says a lot of times, people think a good gift is an expensive gift. But that is not the only resource that we value as recipients. We also value things like the giver's insight and effort into finding gifts that please us. So good gifts that attempt to please recipients and indicate the giver’s knowledge of recipients often have many resources that the giver puts forward to procure these gifts.

Ward says in communal relationships, like friends or a similar association of importance, we don't enforce the reciprocity of gift-giving. However, we often exchange gifts that have the same value to them. For example, you watch their dog for a weekend, and they pick you up at the airport. They have equal amounts, but they are not identical gifts. 

Other relationships have more reciprocity to them. As humans, we feel the need to maintain equality in our relationship. We are sensitive to experiences where we feel like we've put some value into somebody, and they haven't given it back to us. We have a term for that: Takers. We know when somebody is always taking from us, and we're giving. We keep track of that equality somewhere.

The way we measure value is different for different resources. It can be the expense of the gift, but it can also be the amount of effort. Did I look long and hard for something that you want? Did I go out of my way to get it? That kind of thing. However, in addition to effort, it is the idea that the giver knows you. 

Ward says research shows that recipients have a preference for experience gifts more than product gifts, like concert tickets or a massage. That said, givers don't anticipate that preference very well. 

We have this bias where we think that everybody wants a thing. Moreover, a part of us feels that recipients will remember a thing longer because you'll see it more. However, researchers show that recipients prefer these experiential gifts, even though they don't use it daily. Their recollection of it is more favorable than a material item.

In my corporate life, we used to have corporate events where you take clients out. We wanted to get to know the client better and build the relationship. In some ways, giving an experiential gift does the same thing. It’s a way to propel the relationship into the future.

When Does Gift-Giving Go Wrong?

So when does the gift-giving backfire and ruin the relationship? Ward says research shows that many gift failures occur because givers and recipients are misaligned. It results in disappointment on both sides. Ward thinks it’s weird since both the givers and recipients have been on the other side and should understand what’s essential in the activity. 

The most significant contributors to the misalignment are: 

• Givers have a tough time knowing what recipients value. For instance, how recipients value experiences more and givers wanting to give products more. 
• Givers that are close to the recipient choose to ignore gift registries. So, even though recipients have said, “I want this item,” the giver says, “I know you better than that.”

In business-to-business, ethics plays a role. So I guess I'm thinking of a scenario where, you know, a customer sees a gift as some form of bribe. Ward says that’s because of our need for reciprocity. We get a big gift, so we think we need to give a big gift. 

Ward says the Pharmaceutical Industry started a discussion about the ethics of gift-giving, or more specifically when gifts become bribes. Drug reps were taking doctors on extravagant trips. The doctors, who are just as sensitive to reciprocity as anyone else, then felt that they were compelled to write prescriptions for the drugs of the company that took them. It called into question whether the doctors were incentivized through gifts. 

Now, in some cases, that might have been true. In others, doctors might have leaned (unconsciously) toward the drug from the company that took them on the trip if two medicines might have worked in the situation. So, in the best-case scenario, the pharmaceutical company was presenting less of a quid pro quo and more like gentle pressure. 

 Ward is working on a paper about how firms can give gifts to their employees. She is researching how they do that appropriately and where they can go wrong. She learned that there are times when giving can be offensive. It turns out that sometimes nothing is better than something.

Ward says what she thinks drives the backlash is that when gifts come spontaneously, people read into those gifts. Perhaps because the giver doesn’t have to give a gift, they are doing it with an agenda. Therefore, when you get a gift that you feel is subpar, you feel devalued. It makes you feel less attached rather than more attached to the giver. However, if you had no gift, you wouldn't make all of those inferences about your value. 

However, these situations do not happen in normative gift-giving condition. For example, if you give a gift for a birthday that is just okay or even bad, you recognize that the giver honored their social obligation. In these cases, it doesn't hurt your relationship, but it doesn't help it either. 

So, What Should You Do About Gifts?

Ward says regarding gifts, you need to remember what it's like to be a recipient when you're a giver. Often, she says, we forget what it's like to receive gifts when buying gifts. Taking the recipient's perspective will help us a lot in determining what to buy. If you wouldn’t like it, then you shouldn’t give it. 

Ward also says that givers should be aware of their agenda when giving gifts. In other words, it is best to be honest with yourself about what you want to express because gifts embody the relationship you have with the recipient. Taking this into account could mean buying gifts that are less about what you need to say and more about what the recipient needs and wants. In her life, Ward says she now buys off the registry, which is something she might not have done before her research. She says she thinks she is a much better wedding-gift purchaser as a result. 

Having the recipient in mind is common sense. However, research shows that “common sense isn’t all the common” in this instance. Generally, we tend to focus internally on corporate gift-giving with things like:

• What is my budget?
• What can I afford?  
• What are our goals? 
• Where can we place our corporate logo?

However, if we take Ward’s advice and consider the recipient, we might have success at giving a gift that enhances our relationships with customers. Moreover, if we can, we should provide experiences rather than another stress ball with a corporate logo on it. Experiences deepen the relationship. 

Like all things, giving corporate gifts goes back to knowing your customer. If you want to give something personalized to a customer, by definition, you've got to know them personally.

To hear more about Giving Gifts in more detail, listen to the complete podcast here. 

What customers say they want and what they really want are often different things. It is vital to know what drives value for your organization. Our Emotional Signature research can tell you where you are compared to other organizations and what to focus on to drive value for your customers. To learn more, please click here. 

Hear the rest of the conversation on Does Giving Gifts Mean More Business? on The Intuitive Customer Podcast. These informative podcasts are designed to expand on the psychological ideas behind understanding customer behavior. To listen in, please click here.

Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s leading Customer experience consultancy & training organizations. Colin is an international author of six bestselling books and an engaging keynote speaker.

Follow Colin Shaw on Twitter @ColinShaw_CX