The term “reciprocal link” describes the practice of exchanging links between two or more websites. A ‘you link to me, I’ll link to you’ type situation.
This practice is often employed in the misguided belief that Google will rank both sites higher. At best, this is simply a waste of time. At worst, Google may penalise your site because you are employing spammy techniques.
Reciprocal links should only be employed when there is a genuine relationship between the two sites, for example - we link to Bison Grid all the time, because they make awesome online applications and they link to us because we’re ace at online marketing. Our business services complement each other, so each business recommends their customers to use the other.
Online, this relationship is underpinned by the fact we talk to each other on Twitter, we both like each other’s Facebook pages, we run seminars together… Google is able to see all this activity which demonstrates our ‘real world’ relationship and Google can also see that we’re not linking our sites to get more ‘Google juice’.