Does nudge theory work in customer experience?

Originally popularised by the behavioural economist Richard Thaler, nudge theory’s most high-profile proponent is arguably the UK government.

First established in the form of the infamous Nudge Unit under David Cameron’s coalition government in 2010, ‘nudging’ is now guiding the current Conservative government’s Coronavirus COVID-19 strategy. 

Whilst other European countries opt for social distancing measures such as closing schools and banning large sporting events, Boris Johnson’s behavioural insights team, led by David Halpern, has opted for behavioural “nudges” instead: encouraging people to stay at home if they feel ill, self-isolate if they have a continuous cough, avoid touch faces and crucially – wash hands. At the point of writing, very little official lockdown procedure exists.

Time will tell if nudging alone is enough to contain the virus in the manner the government hopes it will. However, The Guardian’s Tony Yates explains the rationale: “If the effectiveness of social distancing measures is time-limited, the logic seems to be, better to reserve these measures for when we’re closer to the peak of the epidemic.”

Nudge theory and hand washing

In their new book, Ripple: The big effects of small behaviour change in business, authors Jez Groom and April Vellacott highlight that hand washing is not a nudge reserved solely for COVID-19.

As part of a team of behavioural scientists working for Cowry Consulting – which helps major brands apply theories such as nudge into customer and employee experience outcomes – Groom was once hired by a global hygiene solutions company to try and encourage more rigorous hand-washing among employees in a Chilean abattoir, as a result of falling into bad habits during break periods. Their solution was a novel ‘nudge’:

“One idea clearly stood out amongst the rest: a washable handstamp to be inked onto workers' hands during each break,” says Groom, who is the founder of Cowry Consulting and was part of the on-site team working with the abattoir.

“Featuring an ugly illustration of bacteria, the stamp would create disgust amongst the workers and make the invisible germs salient.

“The stamp would act as a visual trigger to wash hands and ensure that workers wash for long enough to remove it, thus creating a default hand washing period. The stamp would make it obvious if workers failed to wash their hands so peers would now know whether their fellow workers had done so. This would provoke shame if the stamp remained and generate a social norm of thorough hand washing. And...repetition of this behaviour would render it habitual.”

As a recent article in the New York Times suggests, this idea – whilst seemingly extreme – is not a million miles away from the reality of COVID-19, a virus which creates a potential risk in which, “every grocery store chain and ride-share company and fast-food company could become known as a center of epidemic spread”.

As the incentive to avoid spreading the virus is ever-increasing, so the behavioural science around ensuring customer-facing professionals adhere to the right hygiene process increases too.  

Nudges in the call centre

Away from COVID-19, Groom and Vellacott explain how nudge theory can also help call centres encourage new behaviour from customers.  

Take the example of Standard Life, which was looking to improve the process of pension drawdown for its customers, but also its employees. As Vellacott explains, in Ripple:

“For companies like Standard Life, it's much cheaper to create and maintain a website than it is to train and pay a contact centre full of helpful employees. As such, encouraging their customers to use a digital platform [for pension drawdown] rather than calling them on the phone has significant cost benefits.

“But whilst this might save money in the short run, thus maximising shareholder value, it's a sure-fire way to reduce stakeholder value in the long run.”

Standard Life’s predicament was as follows – customers had two options; the first was to call customer service for support, which had a fee attached to it. The second was to undertake the process online for free, however with the age demographic of those initiating pension drawdown, this wasn’t always the most favourable.

Some customers were happy to pay for the phone option, however Standard Life's competitors were offering it for free, so the business had to follow.

Nudges should frame choices in a way which gives people freedom to choose

Having made their telephone service free, Standard Life were worried that this would lead to an influx of calls, and the company was concerned its employee might be suddenly overwhelmed with calls. It turned to nudge theory for help, says Vellacott:

“In order to weigh up a decision effectively, you need to know the benefits of both options. For many, the digital service could be the better option, but they may have been irrationally influenced by the fact that the telephone service was now free.

“In order to make the choice architecture as neutral as possible, so that customers could make an empowered choice, the change in price needed to be explained alongside the benefit of both options.

“The phone option was longer. It consisted of two 45-minute calls which, to ensure the caller was making the right financial decision, included several lengthy periods of regulations being read aloud.

“On the other hand, using the digital option could be done quicker and gave more flexibility.

“To reassure those who were in the habit of using the phone that the digital option might suit them, customers were told, "We've worked with customers like yourself to ensure that this [digital] system helps you in your decision making." For those customers who lacked the confidence to switch from the phone to digital, alluding to other customers was a powerful way to encourage them to try the digital option.”

Vellacott and Groom describe these types of approach to behavioural science as ‘ethical nudges’. However, they also acknowledge that unethical nudges are often a common practice among some brands. It’s something that industry as a whole is trying to snuff out with the name and shame website, Darkpatterns.org. Ryanair is a company that has featured on the site in previous years for its approach to using defaults on its website, in an unethical way.

“Nudges should frame choices in a way which gives people freedom to choose.”

“Companies who choose to design unethical nudges which only create value for their shareholders to the detriment of their other stakeholders...do not go unnoticed.”

Nudges in customer value proposition

Customer communications are an obvious opportunity to apply behavioural nudges, and in this final example from Ripple, Groom and Vellacott explain how they worked with Tesco, the biggest supermarket chain in the UK, to try and attract new customers to their online delivery proposition, ‘Delivery Saver’, which was under threat from new online-only players such as HelloFresh and Amazon.

The issue, they quickly discovered, was embedded in some of the actions outlined in the emails Tesco was typically sending out to customers they were hoping to encourage into using Delivery Saver.

The email contained information about the benefits of a free trial of Delivery Saver, with picture of a Tesco delivery van. It also highlighted the cost of Delivery Saver after the free trial had expired.   

Framing the end of the trial as a loss was an effective way to motivate customers to become full-time subscribers

Working with numerous stakeholders across the business, Groom and his team were able to apply a number of communicative ‘nudges’ that were able to better address some of the requirements of the Delivery Saver proposition, creating a subtle but powerfully more informative email as a result.

"The new email addressed all of the problems from the old version,” says Groom.

“To frame the end of the free trial as a loss, the email had a salient header which read "Don't miss out on unlimited FREE deliveries". We feel the impact of losses twice as much as equivalent gains, so framing the end of the trial as a loss was an effective way to motivate customers to become full-time subscribers.

To convey the benefits of Delivery Saver, a photo of a friendly woman was used to place customers in the hot state of receiving their groceries. What's more the woman was smiling. Our capacity for facial mimicry means that we simulate a smile we see someone else grinning, meaning the customers would feel more positive about the Delivery Saver proposition.

Finally, the woman in the photo was looking towards the pale blue lozenge. From infancy, we have the capacity to follow people's eye gaze, so our attention can be directed to follow another's line of sight. By included the image of the woman looking towards the lozenge, this meant that customers reading the email would have their attention directed towards the fact that "Delivery Saver customers save on average £76.44 per year".

The changes had the desired effect, with the project leading to a 10.2% uplift in conversion from free trial to paid plan for Tesco Delivery Saver users.

We may not yet know the outcome of the UK government’s COVID-19 nudge policy, but in customer experience there are clear cases that behavioural science, and nudge theory, can have a positive effect that benefits both brand and consumer.

Ripple: The big effects of small behaviour change in business will be available to buy on 31st March 2020. For more on April and Jez's behavioural science work, visit Cowry Consulting's website