11th Jan 2016
Nudge theory is a concept that argues positive reinforcement and indirect suggestions can influence decision making. Dubbed ‘the new third way’, it quickly caught the attention of David Cameron and Barack Obama as a way of garnering votes, and continues to underpin public policy on both sides of the Atlantic today.
A report published last year by the UK’s Behavioural Insights Team (BIT) outlines how the theory, together with other behavioural science approaches, is benefiting British citizens. Using low-cost, low-key measures, such as text and email messages, in the last two years the team has increased charity donations, got more people into employment, reduced prescription errors by doctors and improved diversity in the police force.
With so much evidence pointing to the theory’s value, it’s easy to see why customer-facing organisations may also wish to harness the power of nudge. But how should they go about it?
Ultimately, organisations should empower their customers to make decisions that work for them – and nudge theory can help them achieve this. Sometimes, a simple prompt is all it takes. If customers had access to data on their past energy use, for example, they would find it easier to switch to cheaper tariffs – potentially increasing trust in the whole sector.
Ensuring staff are happy is another effective way to indirectly influence the quality of customer service. David MacLeod, co-chairman of Engage for Success – the employee engagement task force launched by the Government in 2011 – is a firm believer that organisations taking steps to engage staff will also improve their relationship with customers.
The statistics speak for themselves. MacLeod’s eponymous report, published in 2009, cites research by Towers Perrin (now Towers Watson), which claims 75% of highly-engaged staff believe they could positively affect costs, quality and customer service. In contrast, a mere 25% of disengaged staff believe they could have the same impact.
Simon Ruda, BIT’s head of home affairs, security and international development, explains that the team’s work is about “thinking beyond the classical economic approach of cost versus benefits”– something that the Institute of Customer Service has long advised customer-facing businesses.
Instead, nudge theory forces you to use emotional intelligence to understand significant behaviours and relationships. “You want to feel, as a customer, that the people selling to you understand you and the products that would be right for you,” MacLeod affirms. “You want a sense of people being authentically on your side.”