Cowry's 2 Minute Digest - Avoid the Sludge

Azim Arsiwala • 2 min read

 

 

Think Behavioural Science - Think Nudge.

For most people, behavioural science IS nudging (It’s not). Since 2008, and the meteoric rise in behavioural science, helpful nudges have been everywhere. Examples of good nudges include helpful text reminders, prompts during call-centre conversation, and changes in defaults to increase consumer welfare.

Nudging is a wonderful tool, that enables fantastic results with thoughtful intervention practises, and it might seem to not have much of a downside. I mean, how much of a difference can getting a reminder wrong make, right?

This is a fatal assumption that a lot of companies make - there has been a recent trend of converting existing practitioners into behaviouralists without adequate training. What this creates is a hot-bed for the anti-nudge, the sludge. And a sludge can be genuinely dreadful.

 

Sludges, and Misbehaving's.

Now, while sludges can be intentionally planned, and used to intentionally harm consumer behaviour, it's been well established that these sludges generally cause more consumer frustration & ill-will than it is worth.

We assume that our well-intentioned audience are not engaging in such sludges. The problem we are discussing today is the inadvertent sludge, and how companies, behavioural science based ones or not, can avoid them.

So what is a sludge? And what’s an example of a sludge that starts off as well intentioned?

A sludge is any form of a nudge that makes it harder to make a choice that is in a person’s best interest, or it can be one that encourages behaviour that is not in someone’s best interest. You might go, “Well that sounds terrible, there is no way some company could possibly do that”.

Okay, fair enough. Let’s discuss a story.

 

The Billing Error

Your company made a billing error on a new software or product release. Existing customers were overcharged £10 - £20 pounds per year on the new software, which was supposed to be discounted for existing users.

As you don’t want your customers to be upset, you immediately set up a hotline for the product, and ask customers to call in to verify their existing user details and you refund them the cost plus an additional 5% discount for the inconvenience.

You have just created the finest example of an unintentional sludge. Psychologically, most people are unlikely to call and take their refund, it’s called the status-quo bias.

What is the correct nudge then? Identify existing customers through I.P/ data tracking software, who purchased the product, and issuing an automatic refund. Companies must strive to make it as easy to buy the product, as it’s easy to refund or cancel, that is honest behavioural science.

Designing products that harmfully exploit psychologically biases, whether intentional or not, are how sludges are created, and now you know how they can be done so without even trying.

“We can be blind to the obvious, and we are also blind to our blindness.”― Daniel Kahneman, Thinking Fast and Slow

 

How does a company ensure that it doesn't sludge?

First, ensure those that you entrust behavioural science techniques to are qualified in spotting, designing and developing nudges.

Even those who are qualified must keep a checklist for themselves. The one that we like to use, is the famous “New York Times Test.”

Ask yourself, if my solution is displayed on the front page of the New York times, would I be okay with that? If not, you have sludge on your hands.

At Cowry, we take these principles to heart, we are constantly reviewing our nudges, to ensure they are ethical, transparent and fair to our clients and their customers. As Richard Thaler, the Nobel prize winning behavioural economist said, “Nudge for Good”, and that is what we do.

 

 

Want to find out more?

We’d love to chat to you about how to start applying behavioural science - book a slot below to catch up with Jez and find out more.

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