Nudge: A Gentle Push in the Right DirectionRahul Raj
We live in a world of choices and each choice takes us in a new direction. Sometimes it is the right direction, however, most of the times there is no certainty to it. How do you make sure its the right direction, you nudge. Nudge is doing things at a minimum cost to get the maximum output. It is also making choices for others which makes us as a society move forward.
Let’s take the example of the cafeteria owner. You own a chain of the cafeteria which serves food to school children. One day while sitting with a friend you come up with the idea of arranging dishes in a unique way in each of the cafeterias. The aftermaths are different for each school while the cost hasn’t changed the choice of consumption has changed considerably
This makes you a choice architect. You can decide whether to arrange the cafeteria to maximal nutritional value for the users or to maximize profits. This simple nudge made a large difference in your environment.
So how can you implement it in your Business?
Incentives work like magic. In the initial months of demonetisation, India had faced a crisis like none other. Although the government did not “nudge” the citizens towards digital payments it was more of a push. There was a company that grabbed the opportunity Paytm. Paytm offered cash back and referrals for others to join in. The incentive of having the first transaction or transiting above a certain limit nudged the citizens to digital payments options. Now it has become a staple diet in India.
Often people have problem mapping products into money. What does it mean? While we can calculate hour much does 5 snicker cost, it becomes much more difficult to calculate the breakdown of my flight tickets. What are the different components that add up to my total amount? By disclosing the total amount people can make informed decisions and might choose a better alternative for them from the basket available. This would help with customer satisfaction.
Default is the option which is automatically opted when users don’t select for themselves. When Netflix initially came to India it gave 2 months free subscription however there was a small catch. You had to enter debit cards or credit cards details and after 2 months you can opt out any time by calling Netflix. What happened after 2 months? Netflix started deducting bill automatically from your account. Now you are in default mode and you will face inertia to opt out so you end up subscribing to Netflix and start chilling.
Give feedback and Expect error
Humans are bound to err. Anticipating the error and building your business around it is a necessary step. Whether it is inserting the wrong side of the atm card or entering a wrong password, feedback is necessary for any system to run smoothly. The feedback itself can be both positive or negative. And you already know which one is more effective hint it is not the later.
Structure of complex choices
Whenever you go to Amazon’s Book section you get the option to choose a book by its genre, price range, author and many more options. By giving users the power to increase the dimensions of search paradoxically Amazon is making it less complex to choose a book and often you end up buying more. Structuring the complex choices is essential for any business in the long run. And as the payoffs become bigger so should the choices at hands.
“A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives.”
― Richard H. Thaler
Nudge your way towards a better choice and informed decision.