Choosing an apple or banana when paying for petrol because the fruit is where we pay or snacks in a vending machine replaced by healthy choices are examples where customers are nudged in their decision-making process.
Nudging is subtle because the methods are indirect and appear to be too easy to be part of a marketing strategy. Yet, despite this, they are part of the choice architecture designed to influence customers' decisions.
Nudge theory was named and popularised by the 2008 book 'Nudge: Improving Decisions About Health, Wealth, and Happiness, written by American academics Richard H Thaler and Cass R Sunstein. The book was based on the Nobel prize-winning work of the Israeli-American psychologist's Daniel Kahneman and Amos Tversky.
A definition of a nudge is any aspect of choice architecture that predictably alters people’s behaviour without forbidding any options. Choice architecture is how choices are influenced by organising the context in which people make decisions. In other words, nudges are part of choice architecture because they are interventions that reduce the complexity of decision making to influence customers choices.
Instead of seeing people as rational, logical decision-makers, Nudge theory understands customers often make irrational decisions. Therefore, it seeks to understand how people think, make decisions, and behave and then provide opportunities for people to improve their decision making by managing change and identifying and modifying things that are unhelpful for the person.
A nudge makes it more likely an individual will make a particular choice, or behave in a specific way, by altering the environment to favour the desired outcome
Nudge theory also seeks to minimise resistance and confrontation, which commonly arise from more forceful 'directing' and autocratic methods of changing people's behaviour.
Some of the differences are:
Several well-known techniques for nudging are defaults, social-proof heuristics and increasing the ease of choosing the desired option.
A social-proof heuristic refers to the tendency for individuals to look at the behaviour of other people to help guide their behaviour. The example mentioned above of consumers being more likely to purchase fruit and healthy snack options when relocated next to the cash register is social proof heuristic.
Another example of a nudge is the setting of defaults, pre-set courses of action that take effect if nothing is specified by the decision-maker. This type of nudge, which works with a human tendency for inaction, appears to be particularly successful, as people may stick with a choice for many years.
Nudge principles and techniques are now increasingly significant in communications, marketing, and the motivation of groups.
Consumers are increasingly interested in the principles that brands embrace beyond transactional concerns like price. Customers want to invest in companies that align with their convictions and aspirations. This alignment is the basis of a brands promise and builds trust. The most potent brands help customers realise some aspect of their own potential by using nudge theory. A recent example is the green advertisements by Woolworths. These ads not only advertise Woolworths weekly specials but also align with people’s concerns about green energy, the environment, and healthy eating habits.
If a brand seeks to help its customers progress toward common goals, it must respect the client's reality, and the fact clients rarely decide things on a purely logical and rational basis. Brands need to embrace nudges as a means to encourage and support consumers’ positive choices.
When brands nudge for good, they honour the human truth at the heart of customer experience. This is what building a trusted brand is all about. Many brands resist this mode of exploration as reconsidering aspects of the customer experience seems too daunting. As a result, they stick to rigid performance patterns, wary of calling their business premises into question. For companies guided primarily by precedent, behavioural science strategies like nudging can seem novel.
The insights of behavioural science are too important to ignore for the modern brand. To understand and serve customers effectively, companies must engage with the latest findings of the social sciences, such as nudges and think through how to use these learnings effectively to maintain the centrality of clients in their business.