Nudge (Thaler and Sunstein)

I’ve blogged on this idea before, and as it’s one that I’m minded to view favourably, I thought I’d spend a couple of hours of downtime reading through the associated blog.  It began 25 March 2008 in support of the book’s promotion.

Their ‘nudge’ that I’ve read referenced the most (and a damning indictment of where our 24-hour rolling news culture bereft of context or comment obsessed with celebrity and sensationalising of ‘crises’) concerns the fly painted in urinals at Schipol airport.  This move dramatically cut ‘spillage’ (by 80%) and provided benefits such as lower cleaning costs and better hygiene/safety.  Here’s what I think are the dozen most mind-catching selling stimulants that I took from their first year of behavioural economics blogging:

1. Most people avoid being seen as first in to something, so think about how you can ‘nudge’ them into following suit (coins already in tip jars at start of the day and even wine bottles pre-opened at parties for instance).  How to generate testimonials for the very latest products is one obvious b2b impact.
2. Buyers will prefer to “take a small reward now over a larger reward in the future”
3. “If you keep telling people from above ‘you must be more energy efficient’ not much happens. If you put the typical electricity bill for a house like theirs in a neighbourhood like theirs, it transforms their behaviour.” Implications for sellers are clear.   Rather than make ever-more outlandish claims for the financial returns your products unleash, pick a process that you improve, and document the difference in output between people with your help, and those without.
4. How can you obscure your “reference price”?  Namely the price against which people would calculate your value for money (which is apparently why cinema foyers have such unusual serving sizes so that you don’t know if it represents VFM and buy anyway).
5. A pair of tips on what makes a successful rep; “Optimistic sales agents … significantly outsell pessimistic ones”, and when you know you avoid an essential yet unappetising task (cold-calling springs to mind) deploy a “loss aversion” “commitment strategy”.  A cool example of the latter was someone writing a big red ‘X’ for each day they performed the task, then becoming dependent on  not ‘breaking the chain’.
6. Be wary that “increasing choices can turn people off, leading them to opt-out of the decision making process. (For retailers, this phenomenon means lower sales and profits.)”
7. It’s worth sharing with anyone stalling on a decision that “Procrastinators tend to be more miserable, less wealthy, and less healthy than those people who don’t dilly-dally”!
8. You’ll discount less if your prices do not end in a round number in the hundreds, or worse, in the thousands.
9. Brilliant insight into where to influence buyer decision making in teams: “A disturbing result is that many deliberating groups do not improve on, and sometimes do worse than, the predeliberation judgments of their average or median member”.  The four reasons being; “predeliberation errors … are amplified”, initial speaker thoughts merely cascade throughout unchecked, group polarisation leads to more extreme views beyond predeliberation judgments, and “shared information often dominates or crowds out unshared information, ensuring that groups do not learn what their members know”.
10. What self-initiated mistake most irritates your customers?  Can you ‘nudge’ them to avoid falling foul?  For instance, Lufthansa developed transparent seat pockets so that flyers would not leave treasured belongings behind.
11. “Put your prompt near a decision point”: use of stairs over the escalator rose 200% when the sign was next to them, but how many people remember go to the gym when the post-it note is on their fridge?
12. Understand two barriers to buyers acknowledging they can go ahead; that “mental accounting” limits on what is/can be spent might need to be broken, and debilitating change- or inattention-blindness must be brought to their notice.