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Nudge

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Nudge, Changing Consumer Behavior

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Nudge

  1. 1. NUDGE Your Way To Success! The Secret to Changing Consumer Behavior! Joe Barnes @joebarnes
  2. 2. 2
  3. 3. 3 Tyranny of Choice! http://www.economist.com/node/17723028
  4. 4. 4 http://mommylife.net/archives/2012/03/18/Too-many-choices.jpg
  5. 5. “Behavioral Economics” PHOTO: http://stemgenex.com/blog/adultstemcelldiscoveredinthebrain.html
  6. 6. 6 ©Penguin Books, 2008 ISBN: 978 0 14 311526 7
  7. 7. WHY IS THIS IMPORTANT? Choice has some of life's biggest personal decisions. Internet dating to having a child to choosing what to buy. 7
  8. 8. What’s The Definition of Nudge? 8
  9. 9. Nudge: Dictionary Definition To push slightly or gently, to get someone's attention, prod someone into action, etc. 9
  10. 10. Nudge Thaler and Sunstein define a nudge as ‘’…altering people’s behavior in a predictable way without significantly changing their economic incentives’’ 10 http://ssrn.com/abstract=1883243
  11. 11. SO WHAT DOES THAT MEAN? 11
  12. 12. Nudge Nudges are about designing choices to try to help people make choices in a more simple way. 12
  13. 13. 13 The Marketing of the Nudge
  14. 14. NUDGE: Behavioral Economics About choices How people make choices Limiting Choice! Assumes people have limited time 14 Nudging
  15. 15. NUDGE: Behavioral Economics Create more effective messages How we name their choices (Naming Conventions) Change way we motivate consumers How to “nudge” people into a commitment 15 Nudging
  16. 16. NUDGE IN A CONSUMER SETTING 16
  17. 17. NUDGE: Behavioral Economics 17 Nudge Example Which Cheese Would You Buy?
  18. 18. 18 Nudge Example Studies show most people tend to choose the second most expensive item on the list. http://thebusinessofadvertising.blogspot.com/2010/04/choice-architecture-and-advertising_9693.html
  19. 19. SO WHAT DOES THAT MEAN? HOW YOU FRAME PRICES MAKES A DIFFERENCE! 19
  20. 20. Nudge: Framing Gym Memberships: Do you want to spend $600 for the annual membership or $12 week? 20 PHOTO: http://blog.livewellmarket.com/wp-content/uploads/2012/07/workout.jpeg http://www.rotman.utoronto.ca/-/media/Images/Programs-and-Areas/behavioural-economics/GuidetoNudging-Rotman-Mar2013.pdf
  21. 21. EXAMPLE HOW TO MOTIVATE PEOPLE THROUGH A NUDGE 21
  22. 22. NUDGE: Behavioral Economics 22 Nudge a Commitment http-www.youtube.comwatchv=cFdCzN7RYbw
  23. 23. SO WHAT DOES THAT MEAN? PEOPLE WILL MOVE FORWARD IF YOU ASK FOR A SMALL COMMITMENT FIRST! FIRSMAKES A DIFFERENCE! 23
  24. 24. 4 Types of Nudges Mindful nudges guide people to a more controlled state such as eating healthier, stop smoking, exercising and saving more money. Mindless nudges use emotion or framing to sway decisions that people make. Encouraging nudges facilitate the implementation or continuation of a particular behavior. Discouraging nudges hinder or prevent behavior that is believed to be undesirable. 24 http://www.rotman.utoronto.ca/-/media/Images/Programs-and-Areas/behavioural-economics/GuidetoNudging-Rotman-Mar2013.pdf
  25. 25. 4 Types of Nudges Mindful nudges guide people to a more controlled state such as eating healthier, stop smoking, exercising and saving more money. Mindless nudges use emotion or framing to sway decisions that people make. Encouraging nudges facilitate the implementation or continuation of a particular behavior. Discouraging nudges hinder or prevent behavior that is believed to be undesirable. 25 http://www.rotman.utoronto.ca/-/media/Images/Programs-and-Areas/behavioural-economics/GuidetoNudging-Rotman-Mar2013.pdf
  26. 26. 4 Types of Nudges Mindful nudges guide people to a more controlled state such as eating healthier, stop smoking, exercising and saving more money. Mindless nudges use emotion or framing to sway decisions that people make. Encouraging nudges facilitate the implementation or continuation of a particular behavior. Discouraging nudges hinder or prevent behavior that is believed to be undesirable. 26 http://www.rotman.utoronto.ca/-/media/Images/Programs-and-Areas/behavioural-economics/GuidetoNudging-Rotman-Mar2013.pdf
  27. 27. 4 Types of Nudges Mindful nudges guide people to a more controlled state such as eating healthier, stop smoking, exercising and saving more money. Mindless nudges use emotion or framing to sway decisions that people make. Encouraging nudges facilitate the implementation or continuation of a particular behavior. Discouraging nudges hinder or prevent behavior that is believed to be undesirable. 27 http://www.rotman.utoronto.ca/-/media/Images/Programs-and-Areas/behavioural-economics/GuidetoNudging-Rotman-Mar2013.pdf
  28. 28. 4 Types of Nudges Mindful nudges guide people to a more controlled state such as eating healthier, stop smoking, exercising and saving more money. Mindless nudges use emotion or framing to sway decisions that people make. Encouraging nudges facilitate the implementation or continuation of a particular behavior. Discouraging nudges hinder or prevent behavior that is believed to be undesirable. 28 http://www.rotman.utoronto.ca/-/media/Images/Programs-and-Areas/behavioural-economics/GuidetoNudging-Rotman-Mar2013.pdf
  29. 29. 29 Nudge By Asking The Right Questions!
  30. 30. 30 Nudge By Asking The Right Questions! 2009: Daniel Pink Drive: The Surprising Truth About What Motivates Us
  31. 31. 31 Nudge By Asking The Right Questions! People want choice. People want autonomy. Autonomy leads to engagement. Use non-controlling language.
  32. 32. 32 Nudge By Asking The Right Questions! https-//www.youtube.com/watch?v=WAL7Pz1i1jU&feature=youtu.be
  33. 33. NUDGE: Behavioral Economics Science shows we are likely to reciprocate when someone does something nice for us! Restaurant tipping example. 33 Nudge: Reciprocation
  34. 34. NUDGE: Behavioral Economics 34 Nudge: Reciprocation http-www.youtube.comwatchv=cFdCzN7RYbw
  35. 35. CAN WE HAVE TOO MUCH OF A GOOD THING? TOO MANY CHOICES? 35
  36. 36. Participants choosing from a selection of 30 chocolates instead of 6 chocolates were “more dissatisfied and regretful of the choices they made.” 36 Iyengar, S. (Columbia) & Lepper, M. (Stanford), 2000, When choice is demotivating: Can one desire too much of a good thing? Journal of Personality and Social Psychology, 79, 995-1006
  37. 37. 37 • http://www.slideshare.net/rnja8c/paradox-of-choice-2139360?from_search=12 The paradox of choice: Too many good options?
  38. 38. 38 Too many good options? http://blog.rejoiner.com/wp-content/uploads/2012/08/choice.png
  39. 39. 39 Decision Paralysis!
  40. 40. NUDGE: Behavioral Economics “As the number of choices keeps growing, negative aspects of having too many options begin to appear.” 40 Too Much of a Good Thing? Psychologist and Author Barry Schwartz http://www.swarthmore.edu/SocSci/bschwar1/Choice%20Chapter.Revised.pdf
  41. 41. NUDGE: Behavioral Economics “As the number of choices grows further, the negatives escalate until, ultimately, choice no longer liberates, but debilitates.” 41 Too Much of a Good Thing? Psychologist and Author Barry Schwartz http://www.swarthmore.edu/SocSci/bschwar1/Choice%20Chapter.Revised.pdf
  42. 42. 42 Too Many Choices Isn’t Good! https-//www.youtube.com/watch?v=VO6XEQIsCoM Psychologist and Author Barry Schwartz
  43. 43. WHAT DOES THAT MEAN? TOO MANY CHOICES CAN LEAD TO DECISION PARALYSIS! 43
  44. 44. ONE BUSINESS HAS FIGURED OUT THE SOLUTION! WHICH ONE? 44
  45. 45. 45
  46. 46. 46 Ketchup: One Choice
  47. 47. 47 Mixed Nuts: One Choice
  48. 48. 48 Wiper Blades: One Choice
  49. 49. 49 Cherry Tomatoes: One Choice
  50. 50. 50 Golf Clubs: One Choice
  51. 51. 51 SIMPLICITY IS GOOD http://www.slideshare.net/rnja8c/paradox-of-choice-2139360?from_search=12
  52. 52. 52 http://www.slideshare.net/sgmitch/nudge09
  53. 53. 53 nal survey included this question, it increased purchase http://www.slideshare.net/sgmitch/nudge09
  54. 54. THE WORDS WE USE “NAMING CONVENTIONS” 54
  55. 55. “10 out of 100 die.” vs. “90 out of 100 are cured.” 55 Naming Conventions
  56. 56. 56 (c) MOZ.com
  57. 57. Naming Conventions Hamburger “90% Fat Free” vs. “10% Fat” Which Do You Want to Eat? 57
  58. 58. 58 http://www.slideshare.net/sgmitch/nudge09
  59. 59. 59 VISUAL CLUES
  60. 60. THE NUDGE 60 http://www.youtube.com/watch?v=OaLGg1wYztk
  61. 61. NPR: “Urinalfly” “peel-off flies for school and home bowls” 61 The NUDGE Works http://www.npr.org/templates/story/story.php?storyId=121310977
  62. 62. Nudge Nudging Is Also About Whether You Give Consumers A Choice or You Give Them a Default Choice Automatically. 62
  63. 63. EXAMPLE 63
  64. 64. Nudge Large railroad Europe made small change to its website so seat reservations would be included automatically with ticket purchases (at an added cost of 1-2 euros), unless the customer unchecked a box on the online booking form. . 9% of tickets included reservations before the change, 47% did after, earning the railroad an additional $40 million annually. 64 GoldsteinJohnsonHerrmannHeitmann_NudgeCustomers_HBR08.pdf
  65. 65. SO WHAT DOES THAT MEAN? Use a NUDGE as a small default setting for any product/service that provides benefits to consumers. 65 GoldsteinJohnsonHerrmannHeitmann_NudgeCustomers_HBR08.pdf
  66. 66. How Nudge Is Used In Politics 66
  67. 67. 67 ‘The Victory Lab’: The Science Behind Winning Campaigns Sasha Issenberg - Columnist for Slate http-//www.youtube.com/watch?v=FnDoRNV4i_I
  68. 68. SO WHAT DOES THAT MEAN? ASK FOR A NUDGE… 68
  69. 69. NUDGE Online 69
  70. 70. 70 (c) MOZ.com Demonstrate Social Proof
  71. 71. 71 From: Get Satisfaction (c) MOZ.com Play The Name Game
  72. 72. 72(c) MOZ.com Flip Everything!
  73. 73. 73 From: Social Media Examiner (c) MOZ.com Limit Choice TOO MANY CHOICES
  74. 74. 74 Check out this study: http://www.staging.omniture.com/en/resources/articles/conversion/ringcentral_boosts_conversions (c) MOZ.com Limit Choice NUDGE: Fewer Choices Lead to More Action
  75. 75. WHAT DOES THAT MEAN? DECISION ARCHITECTURE “An effective design enables people to easily focus on the right things and make meaningful evaluations.” 75 http://uxmag.com/articles/decision-architecture-designing-for-decision-making
  76. 76. 76(c) MOZ.com Nudge Over Time, Not All At Once
  77. 77. SO WHAT DOES ALL OF THIS MEAN? 77
  78. 78. MAKING DECISIONS CAN BE DIFFICULT. 78 http://www.drbsystems.com/public/resources/market_view/images/marketview_36_confusion.jpg
  79. 79. THE MORE CHOICES WE HAVE, THE MORE DIFFICULT THE DECISION. 79
  80. 80. MAKE IT EASIER FOR CONSUMERS 80
  81. 81. 81
  82. 82. 1 Joe Barnes thank you!

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