Nudge Theory Best-Practices For Business (With Examples)

Nowadays everyone's been getting nudged. Whether it’s a free trial, subscribing to an email list, or accepting cookies to a website you don’t expect to again, we’re bombarded by them. In this article, I’ll go over the 6 most common types of nudges, provide examples and give the latest nudging best practices so you can apply them to your SME or B2B marketing.

You don’t want to miss out on this, do you? (nudge, nudge) I didn’t think so!

So let’s jump in.

What Is Nudge Theory?

There’s been a lot of talks recently about Nudge Theory and strategy in online marketing and customer-engagement circles. So what, exactly, are nudges?

We define nudges as an intervention in choice architecture that causes a person to behave in a desired way or to choose a preferred option over alternatives.

How can nudges help your business?

1. Improving customer experience.
2. Increasing conversion rates.
3. Gaining accurate customer feedback.
4. Reducing buyer remorse and costly customer returns.
5. Upselling products and services by breaking through natural buyer resistance.
6. Increasing open rates and reducing churn from email marketing campaigns.
7. Increasing the potency of your social media campaigns by using social-proof to increase the efficacy of call-to-actions
8. Growing sales revenues by understanding how choice architecture directly affects KPI outcomes.

How do nudges work?

Nudges work by taking advantage of our mental shortcuts (AKA heuristics). Here are the most successful mainstream categories of nudges designers are using in choice architecture right now:

1. Strategic use of default options

2. Pre-commitment nudge

3. Social norms nudging

4. Loss-aversion framing

5. Gamification

6. Precision engagement nudges

   
   

Strategic Use of Default Options

People are more likely to choose the default options than to modify them. But if you make people have to think about it, you are more likely to get a “no”.

Strategic default business tips

1. If you want a customer to take one option over others, make the preferred choice a default!

2. If cancellation rates for your product or service are high, consider nudging the customers to start at a lower tier as to reduce the potential for cognitive dissonance. This will help to familiarize themselves better with your solution without feeling pressured by time, cost, and your refund or warranty window.

Pre-Commitment Nudge

Getting a person to take a position or make a commitment to do something greatly increases the chances they will follow through on it. If we know what our customers’ top priorities are, and know our product or solution solves them, getting them to confirm acts as a micro-commitment that can start an agreement momentum.

Pre-commitment business tips

1. Ask your customer what their top priority is, and how committed they are to finding a solution.

2. State your call-to-actions in the first person. Switching to first person signals a shift in the conversation.” Ex: “start your free trial” vs “Start my free trial”.

Social Norms Nudging

Humans originated from pack animals -- we’re hardwired to be social and take social cues from others. Because of this ancient hardwiring, we’re more likely to do something if we believe that’s what others are doing (especially our colleagues, peer groups, and personal networks).

Social norms business tips

1. Include customer reviews on your product and landing pages as well as social media metrics when applicable.

   
   

2. On Thank You pages, place your relevant customer testimonials visibly near the top. This will help to reduce cognitive dissonance associated with buyers’ remorse and second-guessing themselves that they made the right decision buying or requesting to speak with a salesperson.

Loss-Aversion Framing

People value what they currently possess more than what they don’t yet own. We’re more motivated by potential losses than potential gains. For example, a majority of people will exert more effort to prevent the loss of $10,000 than to acquire $10,000 because the satisfaction lost is more overpowering than the with the same amount.

Loss-aversion framing business tips

1. Get customers on a free trial or money-back guarantee so they can experience how well your product works. They won’t want to revert if you gave them the desired results.

   
   

2. Experiment and A/B test by expressing gains made from your product or service in the negative to exacerbate a pain point they’re having.

   Example: X improves business efficiencies = Stop needlessly wasting time and money on Y

Gamification

Adding game-playing elements such as scoring, competitions, changing difficulty levels, and random rewards lets you encourage higher engagement levels for a service, product, or policy.

Gamification becomes more effective when it can be brandished among target peer groups and carries a sense of prestige or authority. The more social and shareable, the more effective your gamification strategies will be.

Gamification business tip

1. Create reward systems, run digital contests, acknowledge customers or users with high engagement, and periodically throw in surprise bonuses and gifts.

   
   

2. Give leads/customers something tangible or intangible that increases their sense of prestige.

   Tangible Example: A credential, certification, token, or another visible signal that shows one has attained increased status or prestige.

   Intangible Example: Novel ideas or valuable concepts that solve an immediate problem that their peer group experiences.

Precision Engagement Strategies

Semi-customized nudges are delivered to precise, well-defined groups, and often at the best possible time.

Precision engagement business tip

Make your marketing automation system messages more granular with customer types, rather than sending the same message to your different buyer persona groups.

Precision engagement nudges can also be influenced by actions your prospect takes reading an email or visiting your website, or timed to calendar events like Christmas shopping for eCommerce businesses.

Nudging Best-Practices For Businesses: Conclusion

Nudges have become both pervasive and highly invisible for most people. Businesses use nudge architecture to improve customer experience and lower attrition, gain valuable feedback, improve conversion rates and improve their bottom lines.

Why leave your customer’s choice of architecture up to chance? Apply Nudge Theory choice architecture to your business today!