The “Favor Request Effect”
This article, entitled “Favor Pitch – Georgetown McDonough Researchers Uncover a Surprising Negotiation Tactic,” reviewed a research project led by Georgetown University Marketing Professors Kurt Carlson and Simon Blanchard (along with Penn State University PhD Candidate & teaching assistant Jamie Hyodo); the title of the study, published in the Journal of Consumer Research is The Favor Request Effect: Requesting a Favor from Consumers to Seal the Deal. It describes a way for sellers of certain products to improve the outcome of negotiations with buyers. Their study revealed what they refer to as the “Favor Request Effect” – that under certain conditions sellers can achieve better negotiated results when they accompany a (modest) price concession with a request for a favor from the buyer.
According to Professor Carlson, with whom I spoke for this piece, the study focused in on negotiated transaction scenarios that met certain conditions needed for the effect to work. Such conditions being that the offer and request being made dynamically (or at least appearing so to the buyer), and the buyer and seller communicating one-to-one. If a discount offer and favor request is communicated to everyone, the effect will be diminished. Also, the favor requested has to be appropriate to the situation and not overly onerous; examples can include asking for a recommendation or endorsement, a customer referral, or providing certain customer information.
The article states that “The Favor Request Effect is found across multiple shopping contexts and multiple types of favor requests…”1. However, the study was conducted only in the US, and did not explicitly look at other countries or alternative sales channels such as telesales or e-commerce. (They are working on a new study, however, to see if the same principal applies if the seller refers the buyer to a competitor for a complimentary product).
The study’s (seemingly counter-intuitive) conclusions have received a fair amount of attention – even being covered by the Huffington Post - as it could have a meaningful impact on sales negotiation tactics going forward.
See the article from Georgetown Business here: Favor Pitch – Georgetown McDonough Researchers Uncover a Surprising Negotiation Tactic
See a Georgetown University press release regarding the study here: http://msb.georgetown.edu/newsroom/news/favor-request-effect-requesting-favor-consumers-seal-deal
Why Does it Work? What Are The Implications?
According to the article (and my conversation with Professor Carlson), the Favor Request Effect hinges on the premise that the asking of a favor drives a normally adversarial relationship between buyer and seller towards alignment by virtue of the requested reciprocity. A sales negotiation is typically a situation where buyers are trying to get the best price & value, but asymmetric information (around pricing, costs, and market factors) gives sellers an (at least perceived) advantage.
Professor Carlson explained that the seller offering a moderate discount, along with requesting a favor, sends a strong signal of value credibility - that the sellers bottom line price has been reached. This signal neutralizes the perceived seller advantage, creating buyer-seller alignment that a “win-win” has been achieved, and a deal can be done.
In other words, Carlson says “it’s an alternative to haggling – when the discussion is somewhat adversarial and each party seeks to only maximize benefit for themselves. The favor request effectively aligns the buyer’s and seller’s interest and creates an environment of reciprocity.” The study’s write-up also describes the effect of the seller’s signaling that the advantage has been neutralized:
“While a consumer may, by default, perceive a seller’s willingness to negotiate on price as a self-interested activity, adding the request for a favor should alter the consumer’s perception of this activity, causing the buyer to see it more as the first step in a reciprocal interaction.”2
No doubt these observations must provide an encouraging new tactic for salespeople – who can now increase sales close rates and achieve better sales results, all while getting customers to do favors that will benefit the overall business. Seems like a “win-win,” and testing it would be a no-brainer.
The Favor Request Effect and E-commerce
However, it did beg a question: what if we were to apply this approach to an e-commerce context? If the right circumstances are presented to an online consumer, would the same effects occur – i.e. would it increase e-commerce conversion? Can a sense of reciprocity and alignment be created within online merchandising pages, in the cart, or in the check-out funnel? How closely would one need to simulate the conditions of the dynamic person-to-person negotiation?
In answering this, a good place to start would be an examination of what (if any) e-commerce techniques or scenarios are currently in use that simulate the favor request. Do these tactics in an online e-commerce situation improve conversion rates and product sales – by as much as 50% as the study found for live negotiations? If so, the implications for e-commerce marketing and merchandising could be huge.
Below I provide some examples of e-commerce tactics similar to a “favor request” in place today that may shed some light on the dynamic. Let’s examine…
Abandoned Cart Offer Coupled With Request For Social Referrals:
Getting customers to return to abandon online shopping carts and complete their orders is a nagging problem for e-commerce marketers, and seems like it would be conducive to the Favor Request Effect. The conditions seem appropriate: discounts or other incentives can be offered to the buyer on a one-on-one basis (albeit online). Such an incentive, coupled with a favor request, could possibly improve abandon cart conversions. In fact, there is currently an app on the Shopify e-commerce platform - Checkout boost by Beeketer – that seems to put this tactic into play. The Checkout Boost description says that it offers a discount to abandoned carts, coupled with a request for a social referral, to get consumers to complete their cart checkouts. According to the app’s reviews, abandoned cart conversion can increase as much as 50%, coupled with a noticeable increase in social traffic. This is a positive indicator that simulating the favor request can help close more online sales with hesitant customers.
Social Referrals, Social Sharing, and Social Proof:
Social referrals are fairly commonplace, and it has been demonstrated that they have a positive effect on e-commerce sales traction. This marketing and merchandising tactic is fairly well-known by e-commerce professionals, and in use on a number of landing pages and product pages of e-business sites. A favor request of a social referral would offer some of the strongest benefit that can help boost conversion on the immediate sale, as well as others down the line.
Similarly, social proof and social sharing (broadcasting a specific purchase or support of a site on social media) legitimizes the transaction and site in other’s eyes and is considered one of the “six pillars of persuasive marketing.” Requesting social proof has effectively improved conversion rates in studies (see link). Asking customers for social proof is common and not a big imposition, so it’s even possible to ask this favor for everyday low prices, while also reaping the other marketing benefits of social proof.
Requesting a Product Review:
Asking customers to write reviews is straightforward and common practice (as it was in the buyer-seller live negotiations). It’s well known that more customer reviews lend credibility to e-commerce sites and their product. Reviews are a key determinant in search results on Amazon and Google, for example. Asking customers to write reviews makes sense, and gives customer a familiar and easy way to reciprocate for the discount. It may also prove to be quite an effective conversion boost.
Requesting a Site Registration Or E-mail Newsletter Sign-up:
It’s now commonplace for E-commerce sites to offer customers incentives for becoming “registered” customers or signing up for marketing e-mails. These incentives usually comprise of discounts on future purchases, gift cards, or other “preferred customer” perks. But what if the tactic were reversed and tried the other way? What if a small discount on the current purchase was provided to shoppers, in exchange for signing up to an e-mail newsletter? Would this increase conversion for the immediate transaction (due to the favor request effect), while also boosting e-mail address capture? Worth testing, it seems.
Asking to Accept Slower/Downgraded Shipping:
Asking a “favor” of accepting slower shipping (at the same price – or free) may be a lot to ask consumers, but it could be worth trying. Amazon has tried a form of this idea, with its “no rush” shipping program for Prime members. They have offered larger discounts on books, as well as a $1 discount on instant video service. However, I could not find any indication if this increased the conversion rate of these items. It could be worth testing, when tried in conjunction with a free shipping offer.
Has this ever been A/B tested? It should be… It’s a low (or no) cost way to increase conversion and revenue, while also deepening customer engagement and potentially generating loyalty.
Final Thoughts: Implications for E-commerce Marketers
Professors Carlson, Blanchard, and Hyodo’s study on the “Favor Request Effect” indicate that sellers asking for a favor from buyers in live negotiations can result in greater sales success. Even though the study didn’t explore whether the effect can work to positively impact e-commerce sales, it seems to me that the general principal can be applied to e-commerce carts, checkout processes, and merchandising. The examples of in-use favor request tactics I provided above indicate solid evidence that these principals are being successfully applied in e-commerce today, with encouraging results. I believe further testing and optimization of some of these ideas would be a worthwhile endeavor. I for one will vigorously test the favor request to boost conversion and accelerate revenue growth in the e-commerce businesses for which I consult and manage.
Thoughts, comments or questions? Feel free to reach out to me directly here at www.lukegrant.net.
1: Simon Blanchard, Kurt Carlson, Jamie Hyodo: “The Favor Request Effect: Requesting a Favor from Consumers to Seal the Deal” Journal of Consumer Research – Oxford University Press,
2: Bob Woods: “Favor Pitch – Georgetown McDonough Researchers uncover a surprising negotiation tactic,” Georgetown Business, Georgetown University Press, May 2016