An Overview of the Various Types of Nudges
Nudge theory was popularized by behavioral economists Richard Thaler and Cass Sunstein in their seminal book, Nudge: Improving Decisions about Health, Wealth, and Happiness. The foundational premise of a nudge involves designing or arranging the decision-making context in ways that promote behaviors that are in the interest of individuals as well as that of society.
Nudging is a behavioral science approach that uses subtle interventions to help people make better decisions. To be effective, a nudge must follow a two-step process: First, the target behavior needs to be identified. Second, a choice architecture (the context in which people make decisions) must be created or modified to make it easier for individuals to choose a better solution.
One way to think about a nudge is to isolate a particular aspect of the choice architecture (e.g., the admission options displayed when a visitor first enters the museum) and consider how that element could be modified or controlled to guide an individual toward taking a desired action (e.g., changing the order of options for admission to present membership in the first position).
When designing a nudge within an existing decision environment, the choice architect (that’s you!) makes changes by adding, removing, or adjusting elements that affect the decision-making process. In some cases, you may have the opportunity to create a decision environment from scratch such as building a new website or designing a new museum lobby. Whatever the situation, it’s important to remember that there is no such thing as a neutral design—everything has the potential to influence decisions, for better or worse. And even a seemingly small tweak to the choice architecture can have a profound effect on outcomes.
Nudges can be transparent (obvious) to the individual such as user reviews or “supersizing.” Or, they can be non-transparent (hidden from the individual) such as the use of framing or priming. While some non-transparent nudges fall into the realm of being manipulative, just because a nudge is hidden does not mean that it is inherently bad. In fact, in the cultural sector, some non-transparent nudges can be a very good thing for both the organization and the individual.
Let’s look at the various types of nudges and their associated level of transparency. As you explore the following examples, think about how you might leverage one or more nudges to increase membership uptake, improve renewal rates, and boost giving at your museum.
Nudges By Type
Transparent Nudges
Social proof: When in doubt, we tend to follow the crowd. Social proof is a form of informational influence that tells us how others behave in the same situation. This type of information or visual cue can help steer an individual’s decision toward a specific selection. Customer reviews and star ratings are examples of social proof as they build a visible sense of crowd consensus. Encouraging members to rate their experience on review sites can help confirm to others that joining is a safe and positive choice.
Order effects: The way that we receive information has proven to be a critical factor in the decision-making process. This is why the order in which information is presented can have a significant affect on the choices we make. For example, research shows that candidates placed at the top of the ballot enjoy a small but significant advantage over those whose name appears lower on the list. Consider the opportunity to present membership in first position at the box office followed by daily admission rates.
Simplifying messaging: Reducing the overall amount of text, highlighting important information, and ensuring that key messages are placed where the eye naturally tracks can all help to decrease cognitive burden and improve decision making. The typical museum website is flooded with competing and complex messaging that often leaves users feeling overwhelmed and confused. By simplifying messaging, museums can facilitate a better experience and help users to accomplish their goals.
Removing friction: The easier you can make a task, the greater the likelihood someone will complete it. By removing obstacles that can get in the way of an individual’s best intentions, organizations can encourage better choices and help individuals to act on their desired behaviors. For example, displaying the threshold amount required for free delivery has been shown to increase website conversions by providing customers with delivery information before checkout. In membership, there is an immense opportunity to reduce the friction of joining, including decreasing the quantity of information required up front to join and implementing automatic renewals.
Upselling: Through upselling (also known as suggestive selling), customers can be nudged to make a decision in the spur of the moment. In one study, “verbal prompting” was used as a nudge to encourage selection of healthier food options at a cafeteria. Consider how a museum might design an intervention to encourage visitors to upgrade to membership during the admission process.
Commitment devices: The implementation of a voluntary restriction can help to improve the likelihood of achieving a goal by linking rewards or punishments to desired behaviors. Commitment devices are a way for your “present self” to reinforce some future action so that your “future self” is more likely to follow through. Installing an app on your mobile device to limit screen time is an example of a commitment device. In membership, there is an opportunity to employ a commitment device to boost renewal rates, gift membership, or upgrades.
Social norms: A powerful influence for decision-making is social norms (aka “peer pressure”). Studies find that people will actually adapt their behavior to align with a norm out of fear of non-conformity and from feelings of social pressure. For example, seeing other dog owners carrying plastic bags encourages others to do so as well. If a museum has a strong membership and giving program, there is an opportunity to leverage the power of social norms by drawing attention to the percentage of visitors who become members or the percentage of members who give to the annual fund.
Just-in-time prompts: Notifications that are timed to be pushed or displayed based on certain activity or inactivity can encourage action. An example of a just-in-time prompt is an automated email that alerts a member when their membership is about to expire.
The Endowment Effect: Generating a sense of ownership can happen within a few seconds of touching a product or putting an item in a virtual shopping cart. The Endowment Effect is a highly effective nudge technique that can produce heightened feelings of loss aversion. This is because people are unwilling to part with something they own once they’ve fostered a sense of attachment and belonging to it. Consider how a free trial might encourage uptake in membership.
Visual cues: Graphics, highlights, callouts, signage, and other design elements can serve as a visual cue, guiding the eye toward a particular area or encouraging a specific behavior. Examples of visual cues include a members’ only entrance, a chart that highlights certain membership benefits, or a prominently displayed “Join” button.
Rewards and punishments: Incentives and penalties can be used as a nudge to either encourage or discourage certain behaviors. For instance, a member may be incentivized to renew by offering an “early renewal” discount (reward) or disincentivized to let their membership lapse by instituting a reinstatement fee (punishment).
Non-Transparent Nudges
Opt-out default: In contrast to a process that requires stated permission for something to take effect, an “opt-out default” requires that an action be taken to prevent enrollment. In museum membership, the predominate default is an opt-in whereby visitors are encouraged to take an action (i.e., expressly state an interest in joining) to become a member. An alternative approach using an opt-out default would be to automatically enroll visitors in membership unless they take a specific action to expressly opt-out.
Limiting the number of options: Reducing the number of alternatives also helps to avoid choice overload—that paralyzing feeling we all experience when there are too many choices or if we are unfamiliar with certain options, such as which membership level is best for you. Research also shows that an abundance of options leads to people feeling less satisfied with their final decision than they would be if they were originally presented with fewer options. By removing certain options from the choice set entirely, the choice architect can influence the decision-making process in a way that benefits both the museum and the individual. One way to limit the number of options is to introduce a series of questions aimed at better understanding the individual’s specific needs that helps to narrow down available alternatives based on responses. For example, a visitor may be asked “How often do you plan to visit?” A follow-up question might be “How many people would you like to bring with you when you visit?” The answers to these questions can help guide an individual toward the membership level that will best meet their needs.
Framing: The way in which a choice is presented can influence how we feel about it. Choices can be framed as either gains (e.g., “Become a member and receive great benefits!”) or losses (e.g., “Don’t miss out on your chance to see it first!”).
Creating friction: Friction is usually described as being the opposite of easy. In most cases, choice architects seek ways to reduce friction to improve the user experience. However, friction isn’t always a bad thing to be avoided. In fact, intentionally slowing down the decision-making process or designing interventions that force people to pause and think about their decision can help them to make better choices. For example, asking for extra confirmation and clearly communicating the consequences of their action may help to reduce the number of membership cancellations. Or consider how friction might be used to identify the most committed and valuable member prospects by requiring a form with extra fields and specific questions aimed at filtering out people who are not philanthropically minded.
Anchoring: In behavioral economics, the term “anchor” is used to describe a reference point from which we make adjustments when evaluating price. When we are exposed to a price by way of a price tag or an ad, and purchase (or merely contemplate purchasing) the product at that specific price, an anchor is imprinted in our mind. From that point forward, the anchor shapes not only what we are willing to pay for that particular product, but also how much we are willing to pay for other goods and services. The Manufacturer’s Suggested Retail Price (MSRP) is a good example of an anchor. In fundraising, suggested donation amounts with a range such as $50, $100, $250, $500, and $1,000 can anchor prospective donors into a higher gift amount. One of the greatest opportunities for membership is to combat the challenges of anchoring. Consider how the price of a zoo membership can create an anchor for membership to a history museum within the same market. Similarly, the cost of admission creates an anchor because visitors will use the ticket price as a reference point when evaluating the cost of becoming a member.
FOMO: Fear of missing out (FOMO) is a real thing. However, if an organization uses FOMO artificially in an attempt to trick customers into doing something (e.g., buying tickets or a membership), this tactic can become overused and ultimately ineffective. If limitations for capacity and time are real (not an invented construct by the organization), then it’s important to communicate this to members and audiences. FOMO is a type of framing as it can be used to negatively frame the opportunity of membership as a loss. An example of using FOMO in membership marketing is a call-to-action such as “Don’t miss out on the limited-time exhibition—join today and see it first!”
Priming: Priming happens when an individual is exposed to a subliminal stimulus that affects how they respond in a subsequent situation. For example, exposure to seemingly unrelated words can prompt people to act in a certain way. In one study, students who were asked to recite the Ten Commandments before a test exhibited fewer incidents of cheating. In membership and fundraising, priming can be introduced to induce a more adventerous or philanthropic mindset.
Reciprocity: If you do something nice for someone first, they are more likely to return the favor. Reciprocity is different than a transaction—it is not a quid pro quo. Instead, reciprocity occurs when someone responds to a positive action with an equivalent positive action. Museums can promote reciprocity by giving visitors something for free or doing something above and beyond the expected benefits of membership that makes a member feel special.
Activating social identities: “Identity” (how an individual regards themselves as a certain kind of person) is a powerful influencer. For example, the “Don't Mess with Texas” campaign sought to reduce littering on highways in Texas by activating the social identity of an authentic Texan who has a strong sense of state pride. The campaign’s slogan became a rallying cry for the very demographic that was most prone to littering (young men), reducing litter on Texas highways by 29% during its first year and 72% within six years. In the museum sector, there is an opportunity to activate and shape the social identity of a what it means to be a member by helping to define the expected behaviors associated with the kind of person who joins.
The decoy effect: The “decoy effect” occurs when consumers change their preference between two options when a third option (the decoy) that is asymmetrically dominated is introduced to the choice set. The term asymmetric domination refers to the strategic positioning of the decoy that makes one of the other options appear more attractive in terms of perceived value. The decoy is often an irrelevant alternative that is not intended to be a desirable option. Rather, the decoy is included to create contrast between the original two options thereby nudging the individual toward the upper end of the choice set. For example, the structure of membership categories can be designed to leverage the decoy effect by including a decoy that helps to nudge prospective members to select a higher level of membership.
Sources:
Richard Thaler and Cass Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness, New York, NY: Penguin Group, 2008.
Anna Güntner, Konstantin Lucks, and Julia Sperling-Magro, “Lessons from the front line of corporate nudging,” January 24, 2019, McKinsey.com.
Erwann Michel-Kerjan and Paul Slovic, eds., The Irrational Economist: Making Decisions in a Dangerous World, New York, NY: PublicAffairs, 2010.
Dan Ariely, The Honest Truth about Dishonesty, London: Harper Collins Publishers, 2012.