Nudge Marketing: How to Increase Sales Using Nudge Theory
Nudge marketing is an important approach to influencing consumer behavior. It can guide shoppers to make decisions using prompts and signals that are likely to be of interest to them. If you run an ecommerce store, website, or retail store, nudge marketing can be a useful tool to guide customers to make specific decisions.
What is nudge marketing?
Nudge marketing is a strategy that uses indirect or direct prompts to influence customer behavior and choices. Nudge marketing techniques act as suggestions, guiding consumers toward a desired outcome while making them feel in control.
Nudge marketing comes from the behavioral economics concept of nudge theory, which suggests that subtle changes in the environment and design can lead people to make certain decisions. This theory was popularized by economists Richard H. Thaler and Cass R. Sunstein and has become part of marketing psychology. Retailers use nudge marketing techniques extensively to induce consumers to take desired actions. You can apply nudge marketing to your e-commerce store design using tools such as simple sales promotions or loyalty programs. These marketing techniques nudge consumers to make purchases, which increases sales and provides a smooth shopping experience for customers.
How does nudge marketing work?
Nudge marketing often uses visual cues to get customers to spend more time and money than they normally would. As economists Richard H. Thaler and Cass R. Sunstein explain in their book Nudge, “To be considered a nudge, the intervention must be easy to avoid and cheap. A nudge is not a command. Placing fruit at eye level is a nudge, but banning junk food is not.”
Nudge marketing works by using knowledge of consumer behavior to create a sales environment that facilitates the decision-making process. Behavioral economics research shows that most people behave predictably when faced with a choice. Research on purchasing behavior shows that people generally prefer to choose simple, default options. When faced with too many unfamiliar options, consumers may be overwhelmed by the cognitive burden and be unable to make a decision.
Nudge Marketing Techniques
Nudge marketing techniques can encourage consumers to take action, change people’s behavior, increase sales, and improve the shopping experience. The main techniques used to do this are:
Price anchoring
A price anchor is a contrast between the original high price and the new low price (the customer sees the original price with a strikethrough and the new low price next to it). A high price anchor uses a long-term psychological insight to influence customer behavior: People like to compare prices before a discount. The difference between the original price and the new price serves as a reference point for people to know they are getting a good deal.
Pop-up
Pop-ups in online stores are another type of marketing nudge. While marketers sometimes overuse them, pop-ups can help when customers are confused or about to leave your website.
A popular type of pop-up is the “exit intent overlay,” which appears when a customer indicates they are about to leave your website (usually determined by mouse movement). The exit intent overlay pops up at the moment the customer is about to leave, often offering a financial incentive such as a free trial, free shipping, or a temporary discount to entice them to continue shopping.
social proof
Nudge marketing often relies on the desire of customers to follow what others are doing. By placing product reviews alongside product images, businesses can demonstrate the popularity of a product and show real users describing its attributes. You can also add badges such as “Most Popular” or “Best Sellers” to let users know what’s trending.
Social proof can also take the form of smart notifications. For example, when someone adds an item to their cart, a notification saying “Trending item!” or “Selling out fast!” can make the customer feel like they are buying a product that is in high demand. This can encourage them to complete their purchase before it sells out.
Product Packaging and Bundling
Creating high-value product packs can be a great way to encourage customers to save money. Graphics that clearly explain the functional benefits and product features of a product help customers understand how the product is useful when bundled with related products.
Examples of nudge marketing
There are many tools in your nudge marketing toolbox, and you probably use them every day without even realizing it. A great nudge marketing example is Maimoda Jewelry , an Oahu-based handmade jewelry store. The brand uses several nudge marketing techniques, including prominently featuring their flagship products on their website, offering free shipping, and adding a “related products” list to each product page. These subtle influences can help customers make decisions and find what they want without being overwhelmed.
Nudge Marketing Best Practices
- Maintain a positive and encouraging attitude.
- Minimize nudges
- Don't sound desperate
- Understand your target audience
- Analyze and adjust tactics as needed
A powerful nudge marketing campaign is positive and helps customers connect with your product and company with minimal intrusion. Here are some best practices:
Maintain a positive and encouraging attitude.
Nudge marketing is effective when you want to get consumers excited about a purchase. For example, when using social proof, show positive reviews so customers can see how other people’s lives have been improved by your product.
Minimize nudges
Nudges should make the shopping experience easier, without making the customer feel pressured. Pop-ups should be infrequent, unobtrusive, easy to close, and don’t try to hide the “X” button. Screens that are overloaded with reviews, badges, recommendations, and pop-ups run the risk of overwhelming rather than helping the consumer.
Don't sound desperate
Avoid phrases like “must have” or “overstock” as they can make your product sound unappealing. Even if you are encouraging the desired behavior, frame the purchase in a way that makes the customer feel like they are getting a better deal.
Understand your target audience
Depending on your product and target audience, the type of nudge you use may vary. For example, if you’re selling to environmentally conscious customers, it may be helpful to provide site visitors with relevant information about the sustainability of your product. Some companies use trust symbols to show that their products are good for the environment. For example, Patagonia’s product pages feature the Fair Trade Certified symbol, which reassures customers that the company has reviewed their factories.
Analyze and adjust tactics as needed
After you’ve implemented nudge marketing techniques on your site, track them to see what’s working and what’s driving visitors away. Be prepared to change your approach if the data shows that nudges aren’t working.
Nudge Marketing FAQs
What is the goal of nudge marketing?
The goal of nudge marketing is to subtly influence behavior and decision-making without consumers’ knowledge in a way that benefits both the consumer and the business. Examples include offering a limited-time discount, using social proof such as customer reviews, and streamlining the checkout process to encourage purchases.
What is basic nudge theory?
What metrics should you track to measure the effectiveness of your nudge marketing efforts?
One good metric for measuring the success of nudge marketing is conversion rate (usually sales). To measure this, you first need to decide what target behavior you want to increase. Then, design a nudge that will encourage that behavior and A/B test it against the standard shopping experience. If the nudged users have a higher conversion rate, you can be confident that the nudge is effective.