Image of Booking.com with scarcity indicators

Nudge

Definition:

A nudge involves using the design of the choice architecture to change a person’s selection in a predictable way. This does not mean adding a large financial incentive to one option as this clearly changes the cost of a decision. A nudge is about using how choices are presented and communicated to influence behaviour in a certain way.

Thaler and Sunstein in their book Nudge define it as

“any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives.”

There are many ways of changing the choice architecture to influence behaviour. Here are 14 types of nudges to consider using:

Default settings – People are lazy and often don’t change pre-set default settings.

Hedonic framing – How a choice is framed influences behaviour. For example if all options are going to result in a loss we are more willing to become risk seeking due to loss aversion.

Hyperbolic discounting – Please put more value on immediate gain than a potentially larger win sometime in the future. Offering instant access to resources or guaranteed next day delivery is attractive to customers because of their desire for instant gratification.

Anchoring – The first price or option that we see is automatically seen as the benchmark for which all other options are compared.

Availability bias – Our perception of the probability of a rare event occurring is heavily influenced by how easy information about it comes to mind. Insurance companies exploit this by selling people accident and breakdown insurance when the chances of us needing such cover is often much lower than people think it is.

Centre-stage effect – People often display a preference for the middle option if there is little difference between the other options other than price.

Decoy effect – By introducing a decoy option that is clearly inferior to all other choices this helps make a decision much easier to make.

Mental accounting – Research has shown that people are more willing to gamble with savings that are considered house money. If you can link your product to an existing budget prospects are more likely to consider spending money on it than if it doesn’t fit onto their different mental accounts.

Directional cues – Using white space or more explicit cues (e.g. arrows) can highlight choices to influence behaviour.

Authority – Demonstrate authority and expertise through awards, white papers and achievements as people respect authority and are more willing to accept advice from experts. Testimonials can also help build your credibility.

Scarcity – People value items more if they are scarce and are less likely to procrastinate if they think they might miss out on something (loss aversion) if they delay.

Social proof – Customers like to follow the crowd as it reduces the perceived risk of making a bad decision. Showing which is the most popular option or how many customers have purchased an item recently can assist in the decision making process.

Free – People don’t like missing out on free products, services or resources as they see this as a potential loss and as a result the word free can be a powerful motivator to take action.

Encapsulation – Create a clear visual hierarchy using directional cues, boxes, colour and shading to improve prominence and reduce distractions around the primary call-to-action.

 

Conclusion:

There are many ways to influence human behaviour through nudges because we are prone to many cognitive biases and rules of thumbs (heuristics) that insidiously drive choices. Further, simple design strategies that reduce clutter and distractions can also significantly impact on the choices we make.

 

Resources:

Conversion marketing – Glossary of Conversion Marketing.

Over 300 tools reviewed – Digital Marketing Toolbox.

A/B testing software – Which A/B testing tools should you choose?

Types of A/B tests – How to optimise your website’s performance using A/B testing.

Digital Marketing and Insight