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Original post : 2 Sep 2014

Could you use a nudge?

Need a nudge?This summer, when I wasn´t immersed in the court of King Henry VIII (courtesy of Hilary Mantel), I was reading the book Nudge, by Thaler and Sunstein

Having been published in 2007 I realise that I´ve come late to this party, but it´s a concept that I´ve long been aware of and, now finally having read the full book, I can see evidence of all around me. The presentation on the new pension rules that I attended recently now makes much more sense (although it fails the test of simplicity that they strongly advocate)!

It´s a book I would strongly recommend to all marketers, as it marries product innovation and message creation with human behaviour. Humans, as most of us are well aware, are often not the rational, clear thinkers that we would like to present ourselves as. And this knowledge has implications if you are creating new or improved products or planning campaigns. 

The Nudge authors advocate what they term ´Libertarian Paternalism´. They demonstrate that there is no such thing as neutral information - we are always influencing our audience deliberately or unwittingly - so it is better to seek to benefit people rather than disadvantage them. Generally by ´nudging´people in the direction of the most beneficial/least harmful options, but always offering choice and opt-outs. Mandating and removing opt-outs becomes a shove rather than a nudge. 

Example nudges

Aside from the fascinating discussions about influencing economic and environmental behaviours, I took away some other useful pointers/reminders of things that you may already be familiar with:

  • Humans are busy people trying to cope in a complex world, so you need to present choices in as simple a way as possible. 
  • Providing too much choice is as bad (or worse) than too little as it increases inertia.
  • We suffer greatly from inertia and tend to be biased towards the status quo, so if you can establish an automated pattern of purchase early then you may well benefit from that over the long term.
  • How you frame information makes a huge difference. The statements "90% are alive" and "10% are dead" equate to the same thing, but would affect your choice of treatment (for example) depending on which you were presented with.
  • In the same vein, we apparently hate losing anything we have already, and a loss will make you roughly twice as miserable as a reward so may be more influenced by the statement that "if you do not save energy it will cost you $350" rather than "conserving energy will save you $350".

Is nudging ethical?

I admit to feeling a bit uncomfortable realising the extent to which this information and techniques can be used to direct people to do what you want them to - possibly not what they want to. That is not the objective of the authors of course. They very much present their approach as having a positive benefit, one that they hope will lead to more creative ways to help improve lives. They see it as a duty of anyone who is in a position of power through offering choice to help humans overcome our frailties: to help us manage complexity, resist temptation and avoid being misled.

You´ll have to read the book to get the full arguments, but suffice to say at the end of it I was reassured that there are checks and balances in place at various levels to avoid the worst exploitation. When applied to small consumer purchases the market most often prevails to protect consumers and the risks are low if you choose the wrong fizzy pop, at the other end of the scale then we are forced to rely on rules and regulations. 

The financial crisis of 2008, and subsequent mis-selling scandals, show us that rules and regulations may be slow to catch up but actually that the principles of nudge offer strongest benefit in these situations. Financial products such as mortgages are increasingly complex, we buy them infrequently, and there is poor/slow feedback and therefore opportunity for learning (before it is too late). An ideal situation for the human audience to be easily be exploited and one where greater transparency about the impacts of choices being made has to be desirable.

The good marketer

Of course private institutions (or individuals) are sometimes self-serving, greedy, incompetent and exploit their customers and/or suppliers. But in my small world I´m reassured by my experience that the companies I work with are motivated to earn their rewards by providing a good and valued service to customers.

If you read this book and stay true to its ideals of benefiting the customer then your marketing (and business) can benefit too!

 

Sharon WildingSharon Wilding is a Chartered Marketer with many years experience in marketing for businesses large and small. As a lecturer and a practioner she aims to help small businesses use theory in practical ways to improve performance. You can connect with Sharon on Google+, LinkedIn, Facebook and Twitter.

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