Two ways to ethically use Nudge Theory for CX success
While Nudge Theory can be used to drive change from customer experience management programmes, it is easy to mis-use it to ‘twist’ customer behaviour.
Nudge is a concept in behavioural science that’s being used more and more to influence decision making in day-to-day lives – including in some business contexts. Put simply, behavioural economics outlines that - surprise surprise - we human beings are not as logical as we think we are and the decisions we make are influenced by many factors.
Nudge Theory then goes on to show how positive reinforcement and indirect suggestion can help us make the right decision and influence action – often much more effectively than direct instruction, legislation or enforcement. We see examples of this around us every day, such as the replacement of sweets with fruit and nut snacks at supermarket checkouts to promote improved public health.
While Nudge is becoming widely embedded across the public and not-for-profit sectors with great success, it’s still a relatively new concept in our industry. Opportunities abound to use the concept in all aspects of customer experience, helping organisations to influence customer behaviour, adapt future purchasing habits and drive channel shift.
But we need to be very careful here, because while Nudge is perfectly suited to the increasingly digital way we work, it is easy to mis-use it to ‘twist’ or change customer behaviour. Nobel prize winning economist Richard Thaler calls this ‘Sludge’, illustrating how powerful Nudge Theory is and how we need to ensure that we use it carefully and positively, rather than for ‘dark’ outcomes.
For us, CX Nudge is a way to ensure the success of CX programmes in two ways:
- Increasing the willingness of individuals to respond to requests to feedback, which in turn provides the insight needed for organisations to change or adapt. This is NOT about influencing or manipulating purchasing or other behaviours.
- Nudging our internal team members to actually do something with the insights that we generate rather than simply measuring them: CX only improves if something changes.
Of course, concepts are nice to discuss on a theoretical level, but what does Nudge Theory actually look like in practice for your average B2C brand? And how can it be applied to the very different customer journeys within the B2B environment?
Nudge as a trigger for action
To understand the relevance of Nudge, let’s remember why we collect customer feedback in the first place. We say it is because we want to identify action and drive change for better business results. And while most companies have good intentions, according to Forrester the reality is that only 33% of companies that collect customer feedback use it to drive change, and only 15% deliver improved financial results from their programmes.
Increasing the percentage of organisations who actively drive change from CX programmes is entirely dependent on two groups of people: customers themselves, who need to tell us what we do well and where we can improve; and internal teams, who need do something with the feedback they gather. This may seem obvious, but as any CX practitioner will tell you, uniting the two groups to create an action-driven CX programme is hard!
Nudge is one solution that we can harness across both groups to improve our opportunities to drive change and boost business results. As the name suggests, this isn’t about making sweeping changes to an entire programme. Instead, it’s about looking at the way in which programmes are designed, both in terms of the questions we’re asking our customers and the insight we’re delivering to our executives, and making subtle changes that are more likely to promote action.
Applying Nudge internally and externally
The easiest way to assess what changes need to be made is to follow the core principles of Nudge Theory, outlined by the Behavioural Insight Team in 2014: do they ask for customer feedback and deliver executive insight in an Easy, Attractive, Social and Timely manner?
From a customer perspective, the main driver for providing feedback is ‘what’s in it for me?’ They increasingly need to know why they are providing feedback and what action will be taken as a result before they take part. So, Nudges that suggest customers might want to share their views have to be both easy and attractive, catching their attention through personalisation and a clear indication of how their views will be used to make future experiences better.
The easiest way to assess what changes need to be made is to follow the core principles of Nudge Theory: do they ask for customer feedback and deliver executive insight in an Easy, Attractive, Social and Timely manner?
Critically, you must ask for feedback from the perspective of the customer, NOT the perspective of the business. Changing the wording of a question from ‘Did our store staff welcome you at the door?’ to ‘Did you feel welcome in our store?’ provides a subtle Nudge to respond based on the individual experience, not on how well shop staff were trained to do their job.
The social aspect of Nudge is particularly important in customer experience. People are strongly influenced by what others are doing or have already done. We have an intrinsic desire not to be the ones left out, so if we’re told than an offer is ending soon, or that we’re one of the few people in our area not to have signed up to a new service, we’re much more likely to take action.
If a programme asks for feedback by suggesting the respondent ‘adds their voice to the 1,500 people who’ve already shared their views and improved our service’, it’s much more likely to elicit a response than a simple request to ‘tell us how our service was today’. It’s even better if organisations can state the things they’ve already changed or improved based on customer feedback, and if they ask people to make their voice heard if they don’t agree with other opinions.
Real world Nudging
We’ve worked with a number of organisations who have implemented such customer-facing and internal Nudges into their programmes, and who’ve seen the positive results that even subtle changes can make to their results.
A case in point is a leading private healthcare provider which uses a ‘you said, we did’ notice when inviting people to provide feedback on their experience. The invitation page picks out three key improvements that have been made as a direct result of customer feedback, making the implicit suggestion that if others also provide their views, their voices will be heard and other improvements made.
‘Nudging’ employees to perform to their very best and achieve recognition – as well as driving positive internal competition – is a really effective form of nudge that has a significant impact on CX success.
The same healthcare provider uses internal Nudges that drive positive team behaviour, such as a ‘complaints star of the month’ campaign. While incredibly simple, the campaign provides internal recognition for customer service agents or teams who have made a real difference to the complaint handling process. ‘Nudging’ employees to perform to their very best and achieve recognition – as well as driving positive internal competition – is a really effective form of nudge that has a significant impact on CX success.
In another example, this time in the B2B world, a financial services organisation recognised that the focus on their Account Directors was always on hitting their quarterly revenue targets. They didn’t respond to reports around CX metrics, so instead they changed their reporting to focus far more strongly in terms of the revenue that was at risk of disappearing. Talking to the team in the language that they understood and Nudging them in the right direction to take action was key to changing their behaviour.
These are just two of the literally thousands of examples of Nudge around us, many of which we’re unaware (that being the primary point!). But what they all have in common is that they show an understanding of the subtleties of employee and customer behaviour.
There are three general ‘rules’ that we believe make these Nudge examples successful, and which we can apply more broadly to drive CX success:
- Don’t offer too many options. Too much choice leads to inertia, so it’s important to pick out three ‘top’ options that are most likely to create action.
- Appeal to social norms. It’s important to appeal to different personalities and understand what drives individuals or groups to take action. By demonstrating to risk averse audiences that others in their situation have done ‘x’ and achieved ‘y’, it’s much more likely to prompt similar action.
- Share expert opinion. Using third party, authoritative advice is much more likely to make things happen than using internal rhetoric or hearsay.
Using these rules, we’ve seen how Nudge Theory has boosted CX success by delivering better insight to executive teams and prompting customer-facing action. Here, the most critical aspects of Nudge are for insight to be easy and timely, which extends the ‘choice’ argument one step further. Time-poor executives are unlikely to spend hours wading through feedback analysis tables, but will respond to visual, easy-to-digest dashboards that pick out the most critical elements, such as change in NPS score, departments where feedback scores are lower, or snapshots of live customer feedback.
Nudges that are as simple as highlighting areas for immediate action in red and areas that are working well in green are highly successful in allowing executive teams to focus on the actions that matter most to their business. What’s more, if these insights are provided in a timely manner – for example using a live customer feedback stream that demonstrates a current issue with online purchasing, for example, they are much more likely to Nudge an executive to take action and call the web team straight away.
A case for honesty
Of course, it’s essential to be mindful that for Nudges to work, they must be relevant: to the customer, to the context of individual company culture, and to the desired outcomes of the CX programme as a whole. There is no point implementing Nudges that steer people towards behaviours that aren’t going to drive bottom line success.
But it’s also critical that your approach to Nudge is as honest as it is subtle. As we alluded to at the outset, critics argue that Nudge is a form of manipulation and can actively promote ‘bad’ behaviours as well as desired outcomes. As well as following the practical principles we’ve outlined, then, CX practitioners must adhere to the more ethical principles of providing transparency, freedom of choice and mutual benefit.
Of course, these should be the guiding principles of any CX programme in the first place, in which case, Nudge only serves to enhance what you’ve already put in place.
Claire helps organisations drive shareholder value by delivering better experiences for customers, employees and partners.
A globally recognised Customer Experience and Customer Success expert with >20 years experience driving innovation in use of insights, behavioural economics and technology to empower decision making and...