When ‘nudge’ risks customer ‘shove’7th March 2022
Measuring rulers are quite useful. They help measure things for us. We used them all the time in school to measure stuff. Without them we would have been a bit stuck. So I expect we all agree they were a useful tool. Yet we also probably remember one or two of our classmates using that measuring ruler to cause unwanted outcomes – deploying it as a catapult to launch things at people or even as an instrument of attack.
As a chartered psychologist that is how I feel about nudge and behavioural economics. That it can be constructive and useful – but in the wrong hands it can also be destructive and damaging.
Most people are by now familiar with ‘nudge’. There have been a raft of books on the subject and a whole industry of ex-communication and branding people have re-invented themselves and their new agencies as ‘behavioural experts’.
I can see the appeal to both those who wanted to evolve themselves and to those who might want so called ‘quick resolutions’ to their organisational and brand ‘challenges’. The very word ‘nudge’ intimates a quick and gentle action to bring about a response. Indeed, many nudges can result in fast outcomes. That I do not dispute. What does worry me as a trained psychologist however is the observation that ‘nudges’ are often:
- used rather naively and bluntly (a bit like using a default checklist when your printer has a problem).
- deployed in total isolation to any deeper psychological understanding of the target motivations, needs or context.
- the rather glib or perhaps naive consideration for the potential negative effects on the target audience and Brand.
- taken at face value and with a licence to use in very broad generalisations, on any audience
I know this, as more and more brands are asking for help to rectify the damage that has actually been caused by ad hoc application of said ‘behavioural nudges’ (often by agencies and individuals who actually lack the proper understanding of psychology but understand the potential ‘popularity’ of behavioural economics).
Let us look at some examples of what many would consider ‘home run’ nudges that “should always do the trick”, but that in real life, over time, had the opposite effects.
Take the example of a US based electric utility company. It wanted to try see if it could get its customers to use less electricity. It tried to ‘nudge’ its most consuming customers by sending reports comparing their electricity use to those of its “average” and “efficient” customers. Nudge psychology would predict that such comparisons should encourage conservation. But subsequent follow up analysis of electricity use found that while politically liberal consumers were nudged successfully into lowering electricity consumption, conservatives rebelled and actually increased their energy use!
Studies of retail purchase behaviour both online and in store (at airports and in the high street) have also revealed that nudges based around time urgency (if you fail to make a quick decision now you will loose out on a potential positive reward) and scarcity (fear of missing out) can also have unintended negative effects on customers. Customers with medium to lower self confidence often suffer from higher levels of cognitive overload (too much information to process overloads the brain and causes a stress response) when they are time pressured and not only fail to buy but are more likely to fail to return! Similarly the scarcity nudge can also significantly increase both aggressive and impulsive purchasing – which has been seen to lead to much higher levels of consumer post purchase regret and irritation – for which they blame the brand for. This in turn blocks any chances to build trust or loyalty and sends your ‘potentials’ to your competitors or worse puts them off the category.
Given all this – am I trying to undermine the use of Behavioural Economics by writing this piece? No.
What I am trying to say is that Behavioural Economics can be good at explaining behavioural economic topics – but it isn’t particularly cut out to explain other fundamental influences in human choices and decisions. Nudges can be good at nudging – but they do not always get to grips with ‘why’ people (consumers) do and do not do what they do. To know why your best new product isn’t hitting its target, or why people are churning on your second webpage or why your consumers said they wanted ‘yellow’ but are really buying ‘blue’ – for that you will need to more richer understanding of human behaviour and a requirement to invest in specialist consumer psychology.
I think this is becoming a bit of a bug bear for many consumer psychologists who have undergone a minimum of 5 years plus of specialist training. That a top up certificate in behavioural economics is a licence to do all things behavioural and psychological in the consumer space. A top up qualification that many are using to suggest that they can nudge away your brand problems. That ‘nudge’ is going to come riding gallantly over the hill in its shiny armour and save the consumer day. In reality, that fully plated knight might well slay a few dragons – but given the poor visibility that its helmet offers its going to slay some of the poor villagers too.
That is not to say that there are not some really good behavioural agencies out there – there are, and we often work in partnership with some of them. But there are also some very bad ones. In terms of choosing to work with a behavioural agency, you need to think about what you will get for your buck. Clients need to check credentials more carefully – ‘behavioural agencies’ wheeling out one graduate in psychology into a meeting when the rest of the team are from communication backgrounds should raise an eyebrow – if not both. Just because I might have redecorated my cousin’s bathroom doesn’t really make me a plumber. But if you just need some cosmetic upgrades ‘that look right’ then I am definitely your man.
For those who need more fundamental support that also holds up over time, they should seek a combined service of psychology AND behavioural science. Nudges are pretty blunt when applied without any real understanding of the context or the psychology of the target audience. Otherwise a nudge is no better than saying ‘everyone needs to reduce their salt intake by this much to live longer’ – when we know some people would be more at risk if they lowered that salt intake any further.
So for example, the classic loss aversion nudge that everyone loves – we have seen work well (in the finance, health and retail sectors) with people who score low on risk tolerance but that same nudge becomes more ineffective against audiences who are more risk tolerant. We actually saw it break onboarding and conversion numbers. So be careful.
So one nudge sadly is not ‘ a one size fits all’.
Nudge can be useful but it can also be damaging if applied unintelligently. If you are prepared to do some homework with psychology to understand the needs and motives of your audiences, how their ego’s and self esteem work etc – you will better understand IF and WHAT nudges might work best for you. It will probably even enable you to understand all that data you collect. You will most certainly be more likely to understand why your audience does what you observe it doing.
Applying nudges without really layering that on top of understanding the dynamics of your audience also smacks of ‘manipulation’ rather than enhancing customer experience. How would you feel if someone was ‘nudging’ you to make certain decisions? Uncomfortable? Irritated? Is that what you want your customers to feel? Would that feeling build valued, loyal and trustful customers? Brands want to build strong relationships with their audiences – they want trust they want repeat purchases and they want strong subscription models. A relationship by its very definition is based on mutuality – both parties play an active role to form and maintain a relationship. There is no meaningful relationship to a consumer if all you are doing is ‘funnelling’ their behaviour and decisions with nudges.
This partly explains why we decided to develop Innovationbubble – a combination of psychologists and behavioural scientists whose combined thinking is underpinned by marketing, branding and comms commercial experience.
If you found this interesting and would like to learn more about the strategic psychological support we offer brands in understanding their employees and customers – email me on [email protected]