It was around 6PM on a Friday. The sun was setting and I was getting ready for a long, lazy weekend. That’s when I got the call. A call that would lead to a cup of coffee worth $1.000.
How did it come to this? It all started with a series of unfortunate events.
“My laptop just crashed.” No good discussion ever started with those words.
“I have to redo everything from scratch.” Oh, boy.
“This may take a while. I’ll be in my car and call you once I’m done.”
The guy on the other end of the call was frustrated and tired. And for good reason. It had been a long day for both of us. Going through the paperwork for a project worth around half a million dollars is no easy task. Doing it for the second time on the same day is like eating rice with a toothpick. You wouldn’t wish it for anyone.
“Why don’t you come upstairs and finish the papers here?”, I offered.
He was a nice guy and I felt for him. The document we were about to sign had 20 points and we saw eye to eye on all of them. Well, almost all.
There was one point where I said his firm had to do some extra work. He saw it differently. So we agreed to move on and discuss it at the end. Now the end was here.
Before he came upstairs, my wife said there was no way he would agree to cover the costs. Truth be told, I thought my chances were slim at best. But I had a card up my sleeve.
The turkey and the business market
Imagine the following scene: you’re celebrating Thanksgiving at your mother-in-law’s house. The whole family is gathered around the table. You enjoy a delicious turkey, share some laughs with that uncle who always drinks a bit too much, and look at funny photos of your lovely nieces. It’s the most fun you’ve had in weeks. At the end of the night, you go to your mother-in-law, pull out your wallet, and say:
This was a lovely dinner. How much do we owe you?
Do you consider this question rude? Of course you do. In most cases, such a remark would not only ruin the lovely dinner but also get you smacked with a frying pan.
But why? Think about it for a second. You’ve eaten better food than in most restaurants and you’ve had more fun than the last dozen times you went to the movies. And you payed for all of those experiences. So why wouldn’t you repay your mother-in-law for her effort in cash?
Because this would cross the boundary between two worlds: one in which social norms prevail, and one governed by market norms.
The world of market norms is cold and precise: you get what you pay for. It’s all business. The goods are countable and the price is fixed. But the world of social norms is warm and fuzzy. It’s based on reciprocity, cooperation, and kindness — things hard to measure.
So when you find yourself in a social setting (like Thanksgiving dinner), it’s a bad idea to introduce market norms and put a price tag on people’s effort. But if you do it the other way around it’s like motivation on steroids.
Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as wellDan Ariely, Predictably Irrational
The power of small things
Now imagine a different scene. You’re again having dinner, but this time it’s only you and your better half. You’re sitting at a quiet table in a nice restaurant. The romantic lighting, the flavourful food, and your witty humor have made this a memorable evening. After dessert the waiter surprises both of you with a small glass of Limoncello.
Are you likely to leave a bigger tip?
Take a moment and think about it. Most people would say no, they would have given a tip anyway. And it takes more than a sip of Limoncello to change that amount. But reality shows otherwise.
Several studies conducted in restaurants have all shown the same thing. A small gift will increase the tip by an average of 3%. Two small gifts will drive that up to 14%. Adding a small and convincing compliment will increase the tips by a whopping 23%.
Why? Because people are social beings. We have evolved in groups and have relied on each other for millennia. As a result, we have a deeply rooted sense of obligation to return a favor.
This is called the Principle of Reciprocity. Our urge to return a favor is so deeply ingrained that we do it without thinking. Of course, we want to be nice to someone who’s done a nice thing for us. And because it’s instinctual, it’s not proportional. The smallest favors often result in generous responses.
We all like to return favorsRobert Cialdini, Emeritus Professor of Psychology
A sip worth $1.000
Now let’s head back to our apartment. Again, it’s evening. But no dinner this time. Just two guys, a laptop, and a bunch of paperwork. And coffee.
Knowing the two principles I just described, you can probably guess the outcome of our negotiation. But actually, there was no negotiation.
The guy came upstairs and my wife offered him a coffee (without knowing any of the psychological stuff I learned after reading dozens of books). He accepted. And after taking his first sip I knew the negotiation was over.
Working in our home changed the setting, shifting from market norms to social norms. And receiving a small gift activated his sense of reciprocity. The result? At the end of the discussion, he offered to let his firm do the remaining work. I never even mentioned it.
And so I witnessed the first $1.000 coffee of my life.
I’ve since applied the same principles in many different situations and they never fail to amaze me.
No matter if you’re in a high stakes negotiation or if you just want to ask you neighbor for a favor. A little bit of kindness can make a big difference. Try it and you will be surprised.
A little thought and a little kindness are often worth more than a great deal of moneyJohn Ruskin
* * *
If you liked this post you will love my Life Optimization Crash Course. It contains over a decade's worth of research and self-experimentation compressed in just 5 short emails. And, best of all, it's FREE. Click here to join. I promise you won't regret it.