4 Psychological Principles to Build Strong Business Relationships
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This document discusses 4 psychological principles for building strong business relationships: 1) employing the endowment effect by making others feel like part of the company, 2) leveraging the rule of reciprocity by helping others first to build cooperation, 3) encouraging investment by making contributing easy so people continue connecting, and 4) overcoming risk aversion through transparency, frequent touchpoints, and trustworthiness. It recommends the collaboration software Cureo, which allows sharing processes securely to bring remote stakeholders together.
4 Psychological Principles to Build Strong Business Relationships
- 1. 4 Psychological Principles to Build Strong Business Relationships MOVING FROM “THEM” TO “US” ureo™
- 2. www.cureo.com “The business of business is relationships; the business of life is human connection.” —Author and motivational speaker Robin S. Sharma “Eventually everything connects — people, ideas, objects. The quality of the connections is the key to quality.” —Designer Charles Eames
- 3. www.cureo.com Think about all the people who play an integral part in your business, yet aren’t physically located within the four walls of your office: Remote Employees Board Members Partners Clients Contractors Suppliers Your ability to build and maintain strong relationships and create a commitment and culture of teamwork that extends to everyone connected to your brand (clients included) is the foundation of growing and improving your business.
- 4. www.cureo.com THE PROBLEM? Thanks to the digital revolution, the average company’s geographic reach has expanded to the point that many of your key constituents will rarely, if ever, meet face to face. Trying to build and maintain strong “virtual” relationships can be difficult. Without careful planning, your key people may disconnect. As a result you need to think strategically about how you can develop the strong bonds that move you from the realm of employer or vendor to trusted partner— in other words, to move the relationship from “THEM” to “US.”
- 5. www.cureo.com First, understand the psychological principles behind strong connections. These principles will teach you to: Employ the Endowment Effect Leverage the Rule of Reciprocity Encourage Investment Overcome Risk Aversion Second, understand the digital tools you have available to you that enable you to collaborate effectively in a virtual environment. All tools are not created equally, so it is important to carefully consider whether or not the ones you choose can help you create committed partners and raving fans out of your constituents. Managing the process of building connections requires making decisions about how you connect. 1 2 3 4
- 6. www.cureo.com The Endowment Effect 1 TECHNOLOGY TIP: Find a tool that makes it possible for you to invite those outside of your office into your own personal collaboration space. Essentially you want to be able to give clients, contractors, and other collaborators a virtual “seat at the table” so that they can feel more engaged and part of the collaborative process. Source: Thaler, R. (1980). Journal of Economic Behavior & Organization, 39-60 The Endowment Effect states that ownership is directly related to peoples’ estimation of value. What does that mean? It’s all about perception. If your contacts see your company as their company, they are much more likely to stick. How can you apply this knowledge? The challenge is to communicate to the people in touch with your business, “You are a part of this.” Small gestures can go a long way here. Find a way to give your contacts a seat at the table. Mention these key people in your company newsletter, invite their feedback whenever possible, and include them in your victory celebrations.
- 7. www.cureo.com The Rule of Reciprocity 2 TECHNOLOGY TIP: Look for a tool that offers personalized, specific value to your constituents. It’s all about the “little things.” Find a tool that greets users by name and doesn’t clutter their inbox with tons of automatic emails. Psychology and Marketing author Robert Cialdini explains reciprocity as the obligation to return a favor. This is a deeply ingrained dynamic in all human cultures, and a powerful psychological force. Put the rule of reciprocity into practice in your business. Don’t wait for clients or partners to ask: find ways to take the first step in helping others advance their business. Taking the initiative in this manner creates a strong inclination to repay your kindness. Continuing the back-and-forth process of reciprocation builds a strong foundation for future business. Source: Cialdini, R.B. (2009). Influence: Science and practice (5th ed.). Boston: Pearson Education, Inc.
- 8. www.cureo.com The Investment Model 3 TECHNOLOGY TIP: Look for a tool that ensures that investing in your team is a positive experience. Find a tool with easy log-in and simple navigation. Your on-the-go constituents will appreciate tools designed to scale to their phone or tablet screen. Source: Rusbult, C. (1980). Journal of Experimental Social Psychology, 16, 172-186) The investment model states, in short, that people who invest in you will probably continue to do so. (Investments can include anything from money, to time, to emotion spent on a project or relationship). The investment model is powerful when paired with the rule of reciprocity. Cooperation between you and your clients is habit-building. Make investing in your team an easy process, and your constituents will stay connected. Famous experiment: In 1966, Stanford researchers called two groups of women to ask if they could bring a group of researchers into their homes to examine the cleaning supplies in their closets—kind of intrusive, right? The test group had been “primed” for this request—they’d already been asked to invest in the study by answering a few questions about their cleaning supplies. The results? Women who had already invested in the study (just by answering a few questions) were 28.6% more likely to agree to the more intrusive request.
- 9. www.cureo.com Overcoming “Risk Aversion” 4 TECHNOLOGY TIP: Find a tool that allows you to introduce transparency and increase touchpoints with everyone who plays a role in your business. The best collaboration systems allow you to share your process and build familiarity without compromising security. As humans, we have a natural tendency to fear and avoid uncertainty. We prefer activities, places, and organizations that are safe and familiar. In 1964, research by Harvard’s Dr. John W Pratt demonstrated the power of our human tendency to avoid uncertainty, even if it means missing beneficial opportunities. Unless risk aversion is anticipated and planned for, it may present a barrier to building strong business relationships. So how can you overcome this fear of the unfamiliar? Make sure that your relationships include “ The 3 T’s:” TRANSPARENCY: The more your contacts can see about your business, the better. Find ways to open your process to your contacts. TOUCHPOINTS: Simply bringing people into contact with your brand builds trust and comfort over time. Today, this can be as easy as an email interaction or a visit to your website. TRUSTWORTHINESS: Make a promise or commitment. Follow through. Repeat. There is no substitute for demonstrating that you will stand by your word. Source: Econometrica, 32(1-2), 122-122
- 10. www.cureo.com Cureo is collaboration software that plugs in to your existing website. It allows you to turn your website into a secure place to: It’s a secure, easy-to-use way to bring everyone involved in your business into one space. Plug in Cureo. Schedule a demo or free trial today or call 440-424-4311 to learn more. If you’re looking for a tool that makes all of this possible, try Cureo. Store files Communicate feedback Schedule meetings Share news Connect People Reduce email overload ureo™