The Most Powerful Gift An Entrepreneur Can Give

A version of this article previously appeared in Forbes.

Researcher Robert Cialdini has studied the elements that comprise a powerful gift. From a scientific standpoint, the “power” of a gift is measured by the extent it triggers the reciprocity principle of persuasion. The greater the desire of the recipient to “repay” the gift, the greater its power. However, gifts have another source of power, the impact they have on the giver.

If your goal is to give a memorable business gift to your boss, customers, employees and other valued stakeholders, be prepared to put in some effort. Mr. Cialdini has concluded that the most effective gifts are: significant, unexpected, personalized and unconditional.

Much Obliged

Modern and ancient societies share a keen appreciation of reciprocity. This sentiment has survived for eons because asymmetrical relationships, in which one party largely gives and the other party mostly receives, do not tend to endure. In fact, an old-fashioned response to receiving a gift or a favor was, “much obliged,” which literally means, “Thank you. I’m now obligated to repay you.”

If your goal in gifting is to elicit the highest level of reciprocity, the four elements you should consider when selecting gifts are:

Significant – This does not mean expensive. In fact, an overly expensive gift might strain a relationship, as it could be viewed as an overt ploy to ask for an outsized future favor. For instance, if you give a casual business acquaintance a $500 watch, they will likely be defensive rather than appreciative. As such, the gift should be significant and meaningful to the receiver, not necessarily expensive.

Unexpected – Gifts which are expected have a quid-pro-quo feel to them and do not create a desire to repay the giver. Unexpected gifts are delightful, which heightens the recipient’s desire to return the favor. If possible, give your boss a gift outside of the Holidays or their birthday. If you have the appropriate relationship with your boss, an “I appreciate you” gift, out of the blue, can be very powerful. Without the right relationship, it can come across as creepy and self-serving.

Personalized – Think “thoughtful” not “monogrammed.” Gifts that reflect an intimate knowledge of the recipient’s interest and/or passions will have the greatest impact. A good example is a book that you know the recipient will enjoy, based on their hobbies or other interests.

Unconditional – Gifts with overt strings attached have the opposite effect, causing the recipient to feel resentment, rather than appreciation.

The Best Gift Of All

I am fortunate that I can perform small favors for my students and entrepreneurs. I relish helping startups raise money, recruit executive talent and establish partnerships. I likewise enjoy recommending former students for positions at promising startups. I realize that I am privileged to have the time and professional network to provide such small, but meaningful favors.

However, the number of people who take the time to say “Thank You” is frankly disappointing. Not only is it a bit dispiriting, I am less inclined to offer future assistance to those whom I only hear from when they are in need.

Turns out, I’m quite normal in this regard. Behavioral researchers have confirmed that people are more willing to offer subsequent help when they were previously thanked and reticent to do so when their prior assistance was not acknowledged.

“Thank You’s” are akin to the tax credit associated with a charitable donation. I do not make charitable donations in order to receive a tax break. However, it is still a nice side benefit.

Entrepreneurs need all the help they can get, so saying “Thank You” is not just polite, it is savvy startup strategy.

The Favor You Value So Highly May Already Be Forgotten

In Yes! 50-Scientifically Proven Ways to Be Persuasive, Cialdini, Goldstein and Martin describe a counter-intuitive phenomenon that occurs between the person doing the favor or giving the gift and the recipient,

Research has confirmed that a recipient usually places an initially higher value on the favor (or gift) than the person performing the favor or giving the gift. However, something interesting happens as time passes. The relative value of the favor decreases in the mind of the recipient while it increases in the recollection of the giver.

Both parties are justified in their perceptions. For instance, if I forward someone’s resume to a startup and they are subsequently hired, the employee could rightly point out that they had to impress the company during the recruitment process and then deliver value once they were hired. Alternatively, I may recall that the employee might not have had an opportunity to prove themselves without my initial recommendation.

Avoid Reciprocity AnimosityAs shown in the above graph, the ideal time for the person giving a gift or doing a favor (the Donor) is while the recipient (Donee) still values it highly. Over time, the recipient’s appreciation will gradually decline. The magnitude of the discrepancy between the giver and receiver continues to grow, until the respective value each party attributes to the favor/gift differs dramatically.

If a Donor desires to seek reciprocity after significant time has passed, she might first remind the Donee of the favor. Obviously, such a reminder should be subtle in order to avoid overtly coupling the favor and the reciprocity request.

The simple gift of a thoughtful “Thank You” to your boss, mentor or anyone who has significantly helped your venture, contains all of the elements scientifically proven to elicit reciprocity, assuming it is: significant (they care enough about you to value your appreciation), unexpected (it’s not perfunctory), personalized (such as a meaningful, handwritten note) and unconditional (it’s not tied to an “ask”).

Even if you never receive anything in return, you’ll feel great, because authentically saying “Thank You” to someone is one of the most meaningful gifts you can give yourself.

You can follow John on Twitter: @johngreathouse.

Image credit: rawpixel, via pixabay

John Greathouse

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara’s Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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