“Carrots and sticks” are passé. Enter the “Nudge” – a subtle push that aims to influence a person’s behaviour without being conspicuous. Instead of forbidding choices, or using overt incentives, the Nudge uses indirect suggestions to impact people’s behaviour, thus facilitating certain choices over alternative ones.
The Nudge theory is based on the idea that small tweaks in “choice architecture” – or how choices are presented to consumers — can help steer people in a preferred direction. The concept was first widely acclaimed in 2009 when authorities at the Amsterdam airport had stickers of flies affixed near the drains of urinals. Consciously or sub-consciously, men aimed at these images and spillages were reduced by 80%
The success of any Nudge hinges on its ability to minimise the effort required to make the desired choice and/or to improve one’s motivation to opt for that choice.
A classic example of an effective and successful Nudge was the “Save More Tomorrow program” which automatically enrolled employees in retirement saving plans, and which was in sync with people’s natural tendency to put off saving for retirement to a later date. Participants agreed to and started by putting a small percentage of their pay check into a 401(k), then automatically increased their savings rate every time they got a raise. What also made it so successful was people’s innate inertia – few participants opted out and the majority stayed enrolled in the programme.
Nudge – for a Greater Good
Nudges are often implemented to influence the behaviour of society as a whole. In grocery stores, it was found that when grocery carts were sectioned with duct tape to provide separate space for fruit and vegetables, and people were shown a flyer that instructed them to put the fruits and vegetables in front of the tape and everything else behind, there was a 105% rise in the purchase of fruits and vegetables.
In another study, American grocery store, Pay and Save, had green arrows on the floor which led to the fruits and vegetable section. It was found that shoppers followed the direction of the green arrows 9 out of 10 times.
Companies are also increasingly jumping onto the bandwagon in nudging employees towards a healthier lifestyle. Google rearranged vending machines in its cafeterias so that bottled water is at eye level and sodas are at the bottom. By doing this, Google increased water intake by 47% and decreased calories from drinks by 7%.
Nudge – for Influencing Consumer Choice
The Nudge can be a powerful tool to veer consumers towards a particular choice or path of action. Here are three concepts which can serve perfectly as a Nudge –
The Default – as a Nudge
It has been seen that countries which have their citizens as organ donors by default (which allows them to opt out) have substantially higher donation rates vis-à-vis countries where you need to “Opt-In”. Interested donors, who may otherwise have been too pre-occupied or lazy to register, are already enrolled, and many of the unwilling ones stay put because of the process of opting out.
It is our inherent tendency to stay on the path of least resistance, and thus applying it to marketing – having your consumers do nothing at all can be a very potent Nudge. Having a default option means your consumers do not have to spend time comparing and weighing different options. Marketers can get consumers to opt for a particular option by simply making it the default!
Companies use defaults to their advantage, for example, by making sure that boxes which enrol consumers into their offers or newsletters are pre-ticked. Travel websites get consumers to shell out more for products like insurance by pre-selecting them when a ticket is being purchased – the cost of the pre-selected offer of a “secured” trip comes across as a pittance (vis-à-vis the cost of the flight) and very few consumers opt out. Similarly, Phone companies have pre-configured settings and pre-loaded apps thus making switching over possibly entail efforts or costs.
Social Proof – as a Nudge
Social proof is based on the premise that we are significantly influenced by other people’s actions or behaviour. This emanates from our inherent need to fit in and be part of a social group.
In a survey, 72 percent of customers said that positive online reviews made them trust a company more, and 88 percent said that they trust online reviews as much as personal recommendations.
Marketers don’t miss an opportunity to flaunt their subscriber or user counts. MailChimp highlights that over 10 million people use MailChimp to send 600 million emails every day. TV shows play canned laughter to elevate viewers’ perception of humour in the dialogue and plot to create a laugh riot. Social proof or positive reviews from Experts further lend to the credibility of a product or offering. Thanks to social media, social proof has got an added impetus in recent years. This is why influencer testimonials and marketing work so well.
Scarcity – as a Nudge
Something that is scarce or in short supply is always perceived as being more valuable. Scarcity nudges us to want more of it or to act quickly before it runs out.
In a study, 200 students were asked to rate the quality of a batch of cookies. The participants tasted cookies from a glass jar containing either ten or two cookies. When the cookies were in limited supply, students not only rated them as much more likeable but were also willing to pay about 11% more. Scarcity can be manifested in different ways – time-limited offers, limited editions, exclusive content, etc. Travel companies, as you scour their websites for those alluring deals, display pop-ups of the limited number of rooms or flights that are left, to prevent you from dilly-dallying any further. Entry memberships to clubs are almost always preceded by long waitlists to convey a heightened sense of demand and exclusivity.
Have you “Nudged” your Consumers lately?
In a world inundated with consumer choice, how does the marketer propel consumers towards his own product or service? The humble “nudge” at the crossroads of consumer decision-making may just be the leg-up that the marketer needs!
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