Marketers have been using behavioral economics to understand and exploit the irrationality of consumers long before the golden age of advertising. By employing simple marketing tactics such as “buy now, pay later,” inflated value pricing, or decoy alternatives, marketers have been able to effectively steer or, in some cases, manipulate customers to buy products or services they may not need or otherwise want. We are seeing broad evidence that a behavioral science movement is beginning to flourish, however, with more and more educated professionals taking up customer experience (CX) roles in behavioral economics. This presents an altruistic opportunity for companies to apply behavioral principles or choice architecture to positively nudge customers toward making better life decisions that benefit their customers and ultimately their employees and the company.
Some behavioral science concepts have clear relevance for CX. Let’s look at a few examples.
Framing: Present Choices In Positive, Approachable Language
The way choices are presented influences decision making. For example, a study showed that people prefer the taste of a steak if it’s labeled “75% lean” rather than “25% fat.” While the qualities of the product are the same, the way the value proposition is presented or “framed” is different — effectively nudging the customer in a preferred direction.
Reframing directives aimed at changing user behavior offers the opportunity for playful signature moments that increase engagement with the brand. Fitbit’s Alta, for example, encourages users to get up and walk with playful language like “Feed me steps.”
Anchoring: Create A Reference Point For Subsequent Decisions
Anchoring “primes” customers by giving them an initial point of reference. For example, public utility companies often use anchoring to help their customers conserve water or power usage by informing them where they stand relative to others. Xcel Energy provides its customers with a “my energy usage” tool to assess and compare their consumption with their neighbors.
Loss Aversion: Connect Bad Decisions To Bad Consequences
People dislike losses far more than they like gains. Unfortunately, customers don’t always think of the possible bad consequences when they make decisions, leading them to do things they would otherwise avoid.
Microsoft Outlook and Waze address this concept by offering users the option to receive a reminder when they need to leave if they want to arrive on time to their destination. Betterment, an online financial advisor, makes loss aversion work for its customers through a feature called Tax Impact Preview. The company highlights future tax losses from an investment and shares that information with the investor before they execute a trade.
Defaults: Start The Customer Off With A Beneficial, Effortless Decision
Defaults are predetermined choices made for customers who must then take deliberate actions if they want to change them. Setting defaults helps influence behaviors when there is inertia or uncertainty on the part of customers.
To improve CX with defaults, start by reducing cognitive load. A recent Apple iOS update, for example, makes a safety-minded choice for customers: Instead of asking customers if they are driving, it sets the mobile phone default to “do not disturb” when it detects that the user may be driving.
To align better futures for both the customer and the organization, take a look at my report with Sam Stern, “Guide Your Customers To Better Experiences With Behavioral Science,” for more applications, best practices, and guidance around designing effective and responsible nudges.