“Isn’t that just luring people into buying stuff they don’t need?” This is what my friend asked me when we talked about the possibilities of utilizing the latest lessons from behavioral psychology in digital marketing. I suppose I’m not the only marketer who has faced this question, whether it's about nudging or any other form of marketing. These questions do not rise out of nowhere. But is there more to the story?
The nudge theory and use of behavioral economics in marketing have gained a lot of interest in the past 10 years. At the same time, opposition to these tactics has also gained ground. The critics call nudging just another form of psychological manipulation, a way to fool consumers into doing something they regret afterwards. Nudge theory, first introduced in 2008, was intended to help people to make good decisions for themselves and for society. In the real world, many of the applications are purely for the benefit of the business. Sadly, often at the expense of the customer.
Most of us are familiar with nudges that are designed to outsmart us. I fell into a classic trap just recently. A telemarketer called me and offered a free trial to a streaming service I knew I probably wouldn’t use. You can cancel it anytime, I said to myself, and gave in to the persistent salesman. Of course I didn’t remember to do it in time. The nudge worked. Status quo bias was too powerful.
Persuasion tactics are nothing new. Aristotle wrote about methods of persuasion over 2000 years ago. Using those ancient strategies to convey your marketing message rarely faces any opposition. What makes nudging a sensitive topic, compared to many other forms of marketing, is the way it taps into our automatic and even subconscious cognitive processes. We are afraid of what we can’t control.
Concerns about sophisticated persuasion methods shouldn’t be just shrugged off. What’s on the table is the customer’s trust in your brand. The stakes are high. According to a study by Accenture, there’s a clear link between trust and bottom-line performance. Of the 7000 companies in their sample, 56% had experienced a drop in trust during a period of 24 months. Those drops had caused a loss of at least 180 billion US$ in revenue.
Losing customers’ trust in your brand can get expensive. But you shouldn’t give up nudging altogether. There is a better way. Nudging doesn’t have to be something consumers need to be worried about. Not all nudges are bad. Often it’s the opposite and these tactics can be used to benefit both you and your customer.
Use nudges to promote good choices
Nudging is an effective way to lift conversion rate and sales but it doesn’t have to be just that. The nudging movement started off as a toolbox to compensate irrationalities of decision making and promote consumer and environmental well-being. The original Nudge book talks a lot about the possibilities nudging offers for policy makers. Nudges can help consumers to save more, eat more healthily or make less impulsive decisions.
You can use nudges in digital marketing to help your customers to make good choices. When extra sales isn’t your sole purpose, you can make nudging more acceptable and even desirable by your customers. Start by thinking about your company values and mission. What are the values your company wants to emphasize? What is your way of making the world a better place? Then, think what kind of actions those promises require. If your mission is to help people to live a healthy lifestyle, consider nudging them towards it.
Skyscanner, one of the largest flight search engines, states that their mission is to lead global transformation to modern and sustainable travel. They nudge their customers to greener choices by highlighting the flights that emit less CO2 than the average. The company says that this simple change has helped 19% of customers in EMEA region to find more sustainable flights. Well-placed nudges can help to save the planet and make the consumer feel good while building your brand and generating additional sales as the customers choose options based on criteria other than just price.
Keep the customer in center
Many concerns about the ethics of nudging rise from one common mistake: not keeping the customer in the center. Business needs to pursue sales but it shouldn’t be in conflict with the benefit of the customer. This sounds and is obvious but sadly many examples of nudges tell another story. Hiding crucial information in fine print or making email newsletters unsubscribe pages complicated are ways to nudge customers towards something they don’t want. Actions like this can cause backlash and diminish trust. No one wants to be fooled.
With a few rules of thumb you can go a long way. Seek the best for your customers. Do good. Or, as Google famously puts it: Don’t be evil.
Are your digital nudges following the previous guidelines? A good place to start examining it is digital marketing metrics. As the saying goes, you are what you measure. Consider measuring the effectiveness of nudges by not only looking at conversion rate but also metrics that measure customer experience, such as churn rate. It may help you to see how the nudging is affecting your customer’s online experience.
After all, it’s not nudging that makes the real difference, either for bad or for good. More important than how you do your digital marketing is why you are doing it. When the business is there to truly help the customer, you are on the right track to maintain and build good and trustful relationships with them.
Want to build better, longer lasting relationships with your customers? Allow us to nudge you towards a conversation with the team here at Luxus.