Friday March 20, 2015
Nudge: The Persuasive Power Of Whispers
This week on Under The Influence, we look at the subtle art of "nudging."
Schools, marketers and even governments are now using small nudges to gently steer people toward making more positive decisions in their lives. Those nudges included sending people a handwritten note when they are behind on their taxes because a handwritten note gets their attention, or putting the image of a housefly in urinals so men had something to aim at, thereby eliminating overspray by 80%. Or the simple act of getting high school kids to fill out a college application before they graduated was the nudge that changed the course of their lives.
Nudges are small, almost invisible, and often controversial. It's a fascinating new aspect of influence.
Back in 1974, George Foreman was aptly named.
Because he was the undisputed boss of the heavyweight boxing division.
George wasn't the smiling pitchman we see today selling cooking grills - he was a menacing, dangerous, 6 foot 3, 220 pound machine that struck terror in the hearts of men who fought for a living.
Foreman in his prime.
Ali loses to Frazier.
Ali loses to Norton.
When George Foreman met champion Joe Frazier - the man who beat Ali - Foreman knocked him down six times before the referee stopped the fight in the second round.
Foreman destroys the heavyweight champion who beat Ali.
So when The Rumble in the Jungle was announced, it was to be an epic battle for the ages - George Foreman versus Muhammad Ali.
The fight was held in Zaire, Africa.
When the night of the fight finally arrived, the boxing world was on edge. Most felt Ali would take a savage beating. Even the atmosphere in Ali's dressing room was quiet as a funeral, provoking Ali to ask everyone there why they were all so quiet.
But the reason was clear, they feared for Ali's life.
The rumble in the jungle.
Then the most remarkable thing happens. Ali goes to his corner, but doesn't sit down. He just stares across the ring at Foreman. You can see his mind racing.
Ali stares across the ring and decides to completely change his fight plan.
He has to win another way.
And in that moment, Ali changes his entire fight plan.
When the second round starts, Ali just leans against the ropes and lets Foreman do all the punching.
He just lets Foreman pound his body, round after round. But - people at ringside start to notice Ali is whispering in Foreman's ear. As writer Norman Mailer later said, it was almost intimate.
What nobody knew was that Ali was asking Foreman why he was doing most of his punching with his right hand. He taunted Foreman, saying he must not have much of a left.
After rounds of whispering to Foreman, Foreman changed hands. He began punching Ali with his left.
It was genius, because Ali's left side was starting to go numb from Foreman's right punches. But nudging Foreman to change sides, Ali bought the time to get the feeling back in his left arm again.
Meanwhile, Foreman was getting exhausted punching Ali. Then, in the 8th round, Ali saw a sliver of opportunity:
Ali does the impossible.
I remember watching that fight as a teenager, and thinking it was boring, because of Ali's "rope-a-dope" strategy.
But now I consider it one of the best fights ever. Because Ali didn't beat Foreman with his fists, he beat him with his mind.
And the final punch.
The world of marketing has started to use the power of whispers.
It's called "nudging" - and it's the study of giving people a subtle nudge to influence their decisions. To steer them to positive outcomes.
It's a fascinating area of persuasion, and it can generate huge results.
And the art of the nudge has been adopted by schools, charities, marketers... and even governments.
The field of behavioural economics is a relatively new area of study.
While influencing behaviour has been intensely studied by the advertising industry for decades, the subtle motivation now being employed has taken a big leap forward.
The classic definition of behavioural economics is to gently steer people toward decisions that improve their lives - while still leaving them free to choose.
To get them to take a little step in order to undertake a bigger one.
That gentle ushering is based on both the social and emotional factors behind decision-making.
In other words, the concept resides at the intersection of economics and psychology.
In a recent episode, I talked about how colours gently influence purchasing decisions. In another show titled Speed Bumps, I explored how slowing the buying process down by adding additional steps can be influential.
But using a nudge is different.
Consumers are not always rational in their decisions, and will many times make a poor decision even when provided good options. And in many instances, the way a question is framed can influence a decision for the better.
That's why behavioural economics has also been referred to as "choice architecture."
It is the deliberate designing of choices in order to steer someone to a positive outcome.
The term "nudge" was first put forth in a fascinating book of the same name by behavioural science professors Richard Thaler and Cass Sunstein.
Thaler and Sunstein's "Nudge."
In Britain, the government tried to encourage homeowners to insulate their attics to save energy costs and prevent heat loss.
As part of that campaign, the government put forth compelling economic arguments to persuade the public to insulate.
On top of that, generous monetary incentives and subsidies were offered.
Yet, nothing seemed to work. The public appeared to have no interest in insulating their attics and saving money in heating costs.
Which puzzled the government.
But when they dug further, they stumbled upon the reason for the resistance.
Apparently, UK homeowners simply didn't want to clear the junk out of their attics.
In the UK, attics are storage spaces. And just the thought of having to clear out their attics was enough for people to forgo the energy savings of insulating.
Once the government had isolated that reason, they got to work on an interesting solution. They teamed up with a local home improvement company and offered an attic-cleaning service.
The company that partnered with the UK government.
The attic cleaning offer was the "nudge" to get people to do the bigger thing - which was to insulate.
The British government soon began to experiment with other nudges.
For example, they discovered that people who were behind in paying their taxes responded to handwritten notes far better than computer-generated ones.
Did a handwritten note suggest that a real person was monitoring them - or was it the mere courtesy of a handwritten note that made people react?
It was hard to say - but writing a note was the nudge that worked.
People who were behind in paying their road tax in the UK were found to be more likely to respond when presented with a letter that included a picture of their car.
The photo was the nudge.
When British Prime Minister David Cameron saw the remarkable effect of "nudges" - he embraced the concept and set up an official "Nudge Unit" - making Britain the first country to adopt nudging as a mainstream strategy on a national level.
British Prime Minister David Cameron.
As one minister said, imagine if the government could improve what it did by 5, 10 or 15% ever year using nudges. The resulting revenue or savings could almost fix problems of budget and austerity.
Sensing a vast opportunity, Cameron doubled the size of his nudge unit, and now has a waiting list of other government departments eager to work with it. Not only that, other countries have expressed interest in tapping the department.
Even the American government has set up its own nudge squad.
A supermarket in El Paso, Texas, tried their own nudge experiment to see if they could steer people toward healthier foods.
It placed a mirror on the inside front of grocery carts, allowing people to see themselves as they shopped. So when people reached for junk food and turned back towards their cart, they saw an image of their double chins in the mirror.
When people saw themselves reflected in a mirror while shopping, it led to fewer junk food purchases.
The mirror was the nudge.
In a Virginia store, each shopping cart had a line of yellow tape that divided the cart in half. A sign in the cart asked shoppers to put fruit and veggies in the front half of the cart, and everything else in the back half.
The divider that shows consumers how little produce they're buying.
Produce sales shot up by 102%.
The visual of the dividing line was the nudge.
In another grocery store, big green arrows were put on the floor that directed shoppers right to the produce aisle. Nine out of every ten shoppers followed the arrows.
In another nudge experiment, a glossy card was attached to carts that told shoppers which produce most other shoppers were buying - and which five fruits or vegetables were the biggest sellers.
Because people are social animals and like to conform, produce sales jumped 10% by the second week.
The store was so amazed by the results that they began duplicating the nudge in the rest of their 146 locations.
Interestingly, the grocery store found that their total sales remained the same, even though produce sales went up.
In other words, people shifted their preferences to the other side of the store - but still spent the same amount of money. So the store didn't lose revenue by nudging people, it just steered their customers to buy healthier.
A healthy nudge.
The card was one nudge too many.
The airport in Amsterdam, Holland, wanted to solve a persistent problem in the men's washrooms.
So they etched the image of a housefly into the urinals near the drain.
The housefly in the urinal that nudges men to aim.
The housefly was a nudge - because men just love to aim at things.
In his fascinating book titled, "The Victory Lab," author Sasha Issenberg talks about how nudging is used in elections.
"The Victory Lab" by Sasha Issenberg.
That goes against a lot of conventional thinking in politics. In much of the election advertising I've been involved with, a big effort is expended to sway undecided voters.
But Issenberg states that the real key to winning an election is to mobilize your existing supporters. A large percentage of people are infrequent voters - meaning they support a candidate, but don't make the effort to get to the voting booth on election day.
But certain nudges have had great success in overcoming this inertia.
In 1998, voters in Connecticut were assigned to get one of three different "Get Out The Vote" reminders.
"Get Out The Vote" cards.
25% got a phone call from a call centre.
25% got a knock on the door from a volunteer.
And 25% got nothing, as a control group.
The phone calls had no impact, the postcards got a small reaction, but there was a massive response from the live door knocking.
Having a real person ask if you planned to vote was the nudge that got people to commit to voting - proving the ground game is essential in elections.
In another experiment, people were sent a formal letter from a politician saying, "I see you voted three years ago, I hope we can count on your civic duty again, and I hope I can send you another letter thanking you after this election."
It, too, got a substantial amount of people out to the polling stations.
In another election, the strategy of shame was used. People were sent a letter saying here's your voting history, and here's your neighbour's voting history. Do you plan to vote in this current election?
Voter report cards to nudge consumers toward voting.
It also resulted in a few death threats. Sometimes you can be too effective.
Team Obama understood the importance of getting his supporters to the voting booths, and put up billboards that asked three questions:
1. Do you know when polls open?
2. Do you know where to vote?
3. Do you know how you'll get there?
The signs ended with the line: barackobama.com/make a plan.
And when voters clicked on that URL, the site helped them do just that. It's estimated that Obama generated 10% more votes with that nudge.
In India, luxury hotels were having trouble renting their high-end rooms during the economic slowdown.
And like airline seats and broadcast advertising, hotel rooms are a perishable commodity at the end of every day.
So one hotel decided to add a few nudges: They began to offer extra hours to the check-out time, luxury car-pick ups at the airport, free internet and white-gloved butler service.
Each of these tiny benefits cost the hotel next to nothing to provide. But - they sold 35,000 more rooms than the same period the year before.
More importantly, while revenues grew 10%, net profit zoomed 145%.
Small nudges yield big returns.
Recently, several retailers and some New York City cabs have added a digital tipping feature to their tablet and mobile apps.
Calculating a tip is frustrating for many people. And research has shown that if you can lessen the amount of mental effort required to work out a tip - the greater the chance of leaving one.
So many companies are giving customers three digital options:
The first is called "Basic" and leaves 15%.
The second is called "Better" and leaves an automatic 18%.
The third is called "Best" and leaves a nice, fat 20% tip.
The presence of those three nudges has not only resulted in more people leaving tips - but the resulting amounts have been greater.
One of the critical aspects of nudging has to do with getting the wording or imagery just right.
An Italian telecom company began offering 100 free phone calls to customers who called to cancel their service, in the hope they would change their minds.
The response was tepid at best.
So the company changed the wording of the nudge to instead say: "We have already credited your account with 100 free calls - how will you use those?"
That small verbal change persuaded a large percentage of people to change their minds and stay. The addition of "already credited your account" made people feel they "owned" the free talk time - and they didn't want to give it up.
In Thaler and Sunstein's book, Nudge, they tell the story of a city in California that gave its residents an accurate reading on the average energy consumption of households in their neighbourhood. The hope was that when people saw they were using more energy than their neighbours, they would scale back.
It worked - except an unintended problem appeared.
The above-average energy users dramatically decreased their energy consumption, but the below-average energy users significantly
The solution was to use emoticons instead of numerical averages.
So if you used more than an average amount of energy, you got a frowning emoticon. If you used an average amount of energy - or if you used less than average - you received a smiling emoticon.
Smileys that nudge.
The smiling/frowning emoticons were the perfect nudge.
One of the truisms of choice architecture is that the higher the decision stakes, the more nudge-able people are.
In other words, we're all really good at making grocery decisions, because we make them every week. But we're not so great at mortgage decisions, because we don't get to practise those choices often enough.
The same goes for education. We usually make the decision to go to university or college only once in our lives.
The authors of Nudge tell a story about a school in Texas that wanted to increase the number of students that went on to college - as two-thirds of high schoolers there never experience a higher education.
But the school didn't have any outside funding to help with the problem. So they decided to nudge from within.
First, the teachers talked to the students in terms they would understand. They didn't try to sell the high-mindedness of college education - instead - they hooked them with the universal symbol of teenage freedom:
They talked about how much money college grads earned compared to high school grads - explaining it as the difference between a Mercedes and a Kia.
But - the brilliant nudge they employed was yet to come and yet is was so simple, so powerful.
In order to graduate from the high school, students were told they had to complete an application to a nearby college.
Filling out applications nudges students to apply to college. A simple and effective strategy.
All that was required to gain acceptance to the community college was a high school degree and a record of having taken a standardized test. Filling out the application was almost a guarantee of acceptance.
So teachers helped them with the test, and made sure everyone filled out a college application.
In the end, that application nudge produced remarkable results:
From 2004 to 2005, the percentage of high school students who went on to college rose from 11% to 45%.
News of the success of that simple nudge spread to schools all over the U.S., and dozens have adopted it since.
Just the act of filling out an application convinced 34% more students to pursue a college education.
A small nudge that would affect the entire course of their lives.
There is a lot to be said for the power of a nudge.
It can make people choose healthier foods, it can help them save money, and just the right nudge can even influence someone to pursue a college education.
And when nudges scale up, they have the potential to save governments billions of dollars.
While there are many supporters of nudging, there are critics, too. Many are against the practice, saying they are uneasy when the government influences any decisions with an invisible hand.
Asking: When does a nudge become a shove?
But - proponents of choice architecture point out that a nudge is a gentle push, and people still have the freedom to choose in the end.
Even George Foreman didn't have to listen to Muhammad Ali's whispers.
One thing is for certain - nudges are everywhere, even if we don't see them.
As the Nudge authors point out, most of us are so busy in a complex world, we can't afford to spend time and think deeply about a subject - and that makes us candidates for nudges.
And the higher the stakes, the more nudge-able you are.
So, the next time you're faced with a big decision, it might be a good idea to sniff out the nudge...
...when you're under the influence.