The word nudge in marketing became popular after a book called Nudge was published in 2008 by an Economist from the University of Chicago and Nobel Laureate, Richard H. Thaler and Harvard Law School Professor Cass R. Sunstein. According to this theory, people can be encouraged to make small positive changes in their lives through positive reinforcement and indirect suggestions.

In digital environments, Chris Higgins, Senior Vice President - Marketing, Netcore Cloud shares that we can be more personalised and contextual with the use of digital nudges. A nudge such as a contextual walkthrough for onboarding can help users to understand how to locate the feature they are looking for. Nudges are powerful because they are subtle and don’t interrupt or annoy the user.

Excerpts:

Q1. What are some of the common nudges that marketers leverage and how does it impact their business?

A very common nudge is to add labels to the products on an ecommerce site to help the user make decisions. For example, a ‘bestseller’ label is very helpful on a restaurant menu, same with a ‘chef’s signature dish’ label, if you are a new customer. Sizing hints can be helpful in a clothes store, ‘relaxed fit’ or ‘tall’ can save time spent looking at each item and understanding the fit. A key feature of a nudge is that is subtle, the customer can easily ignore the label and keep shopping as they wish, but many people will find these labels helpful.

Q2. 'Nudges can steer people to make better choices.' Do you agree?

Yes, I agree. Nudge is based on positive reinforcement, and it is not forced on anyone. Nudges are tiny changes in the environment that can help people make better choices. Companies use them to guide users to perform a particular action and suggest the next best step. Contextual Nudges can help users discover helpful features and enable users to optimise the functionality of the app during the customer journey. For example, in an ecommerce app, nudges can help the users discover relevant discounts on their favourite brands, highlight the value/benefit of upgrading to a premium account, highlight the offers on various payment methods, etc. At the core, nudges help provide a positive customer experience.

Outside of digital marketing, supermarkets have experimented with green arrows on the floor that lead to the fresh fruit and vegetable section. Electricity companies use nudges to encourage customers to reduce their power usage. Governments have tested nudges to encourage doctors to reduce antibiotic prescriptions.

Q3. How can new or even established brands get started with nudge marketing?

The great thing about nudges is that it is simple, to begin with. It can be as basic as footprints painted on a street, or as complex as a multivariate multi-segment test. The most important thing is to identify the problem you are trying to solve and explore it from a customer perspective. Just saying “I want more sales’ doesn’t help. Are customers struggling to open an account, find the right size, or understand what specials are available?

From there, think of a subtle way to highlight the information or the next step. Then run a test with a small group of customers to see if there is a measurable difference.

Q4. What according to you are some of the common challenges and silver linings while leveraging digital nudges?

Unlike other technologies like marketing automation systems or email marketing that have existed for a long time, nudges are relatively new. Brands are slowly understanding the use and application of nudges. Traditionally, any of the new features in apps would usually take over 15 to 20 days to implement. However, with no-code/low-code nudges, companies can deploy the feature within the app in 15 minutes.

The two common challenges are customer understanding and technology. Designing a nudge requires an understanding of your customer’s existing knowledge, what challenges they have, and what might motivate them to respond to a nudge. From a technology perspective - how will you design and deploy the nudge, to a segmented test audience?

Q5. What are some of the ways in which marketers can control situations where nudges have backfired?

Any behavioural experiment has the potential to backfire - this is called a ‘perverse incentive’. You are trying to promote a particular behaviour, but the outcome is the opposite. As a marketing example, you might offer some discount coupons to drive immediate sales, but the outcome could be that people delay their purchases and wait for future discounts.

The key to avoiding backfires is to run a series of tests. A nudge should never be rolled out to everyone at once. You start with a test segment and measure the outcome. If successful, you can expand the test group slowly.

Thankfully, modern no-code nudge tools let the marketer instantly roll back a nudge that isn’t working as planned.