Saturday 15 August 2009

Nudge Nudge, Wink Wink. Know what I mean?


There was an interesting addition to the urinals at work this week – each one had a small red bulls eye stuck onto it.

Now bear with me on this blog post before you run off thinking I’ll be discussing the men's cloakroom – I will however be linking that addition to the urinal to loyalty marketing…

The bulls eye was in fact trying to achieve the same effect as the image of the fly that was famously etched into the urinals at Schiphol airport – and that is to improve the aim of men and hence reduce spillages – and it works, reducing spillages by up to 80%.

Men weren’t asked to change their behaviour, instead the addition of the fly image caused men to automatically try to hit it.

This type of solution has been termed a “Nudge”, documented in the book of the same name as:-

Knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families, and their society

Whilst this is a very noble thought, many companies have been using this type of solution for many years – not to help people (explicitly) but to sell products. Retailers (and brands) for example know the effect of product positioning on shelves and overall store layout on the sale of products.

One of the interesting examples from the book however is the story of a School Food Services Director, responsible for school meals across a large city school system. She found that by moving around how food was positioned – where desserts, french fries or carrot sticks were placed – it was possible to increase or decrease consumption of certain foods by up to 25%.

This is stark contrast to the large scale public campaigns there have been in the UK to encourage healthy school meals by restricting choice – and the backlash this has caused in some cases.

This is in essence the point of the Nudge approach – it’s not about taking away things but instead making subtle changes to the environment to encourage the desired behaviour – termed “choice architecture”.

Obviously this can work in positive and negative ways. If required, the schools could easily have promoted unhealthy options as much as healthy options through the positioning.

An example more related to loyalty marketing is what I presented in my last blog post where I discussed how when visibly reassuring people about the security of their information, people provided less personal information than when this was hidden away more. This security information (or lack of) is in essence a form of “choice architecture” or a nudge.

Within loyalty marketing there are a number of key behaviours that many programmes are looking for. This may include initial programme acquisition, usage of cost effective online channels, or getting members to redeem - and a Nudge could help in these areas.

We’ve used Nudges across a number of loyalty programmes and indeed built whole programmes around them.

For a card network, we ran a programme which rewarded retailers for simply asking customers “Can I put that on your <card network> card” – and the results were impressive. Simply asking for a particular brand of card resulted in people picking that card type out of the wallet in preference to their normal card.

In another programme we provided “concierge” style rewards which allowed people to redeem their points for anything they wanted. These types of rewards are typically aimed at high value/premium customers but the issues with them can be two fold. Firstly, giving ultimate choice can actually limit redemption; as Nudge discusses:-

More choice isn't actually in keeping with human nature - in fact people can be overwhelmed by choice and either choose to do nothing or choose poorly when presented by many options.

The second issue can be around sourcing and fulfilment; whilst being able to source anything can be a great “sell” for the programme, in practice this can take time if each request is unique and individual. Instead, we used Nudges to to help “prime” members by presenting ideas for rewards they could use their points against.

In line within priming theory, if we make suggestions for something and then ask what people want, the original stimulus in the form of the reward ideas results in more requests within these categories.

Nudging is an interesting concept and whilst we probably use many of the techniques currently through a combination of common sense and experience, explicitly considering how we can Nudge members along a defined customer journey can help keep programme costs down and increase member engagement.

So next time you see a fly in the urinal, think about your customers – or maybe wait until you’re at least out of the bathroom ;o)

PS. The title was just an excuse to link to the classic Monty Python sketch.

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