Want results? Learn how to nudge your customers
Posted on February 27, 2017
By Joanne Goveas
What’s the best way to get someone to do something? You can incentivize them financially, you can limit their choices, or you can nudge them. Nudging is an insight from the field of behavioural economics, a way to get someone to do something without restraining their freedom or changing the financial incentives.
The Behavioural Economics in Action (BEAR) research institute at Rotman conducts leading edge research in this field, working on real projects that help people design better products, services and programs.
But how does that work exactly? Let’s take a look at a real world example. If you want to encourage people to stop littering, you have a few options. You could:
- Hand out fines for littering
- Pay people for using the garbage or recycling bins, or
- Place green footprints on the ground pointing the way to the nearest bin
That last option is what Professor Dilip Soman would call a nudge. “Human decision making isn’t rational,” Dilip says. “People make mistakes, they get emotional.” But so what? Green footprints on the ground aren’t logical, and yet a 2011 Copenhagen study showed a 46% decrease in littering where the green footprints were in use. That’s not just a nudge, that’s a major behavioural change, and a very effective one at that.
Sometimes nudging is about simplifying processes, including the decision-making process. In a 2013 Cornell University study, they found that simply placing junk food on higher shelves and healthy food at eye level immediately helped high school students make healthier choices. They were 13% more likely to choose fruits and 23% more likely to choose vegetables in their school cafeteria. It was that easy.
What’s really interesting is that influencing behaviour in this way isn’t just an academic study. Every organization, public and private, is in the business of changing behaviour, from getting customers to switch from a competitor, getting people to be more honest when filing their taxes or applying for insurance, or even getting patients to take their medicine and treatment as directed.
Despite this being a universal constant across the board, many organizations are not particularly good at managing behaviour change. Without the right tools and information, the actions of your customers and clients can seem irrational, unpredictable, and difficult to measure.
Rotman now offers a new Behavioural Economics at Work program based on proven research out of BEAR, providing hands-on experience so you can start applying these techniques immediately upon returning to work. Seats are limited and class starts April 19. Apply now