Magazine

Bridge the gap between behavioural economics and customer experience

Most managers would die for initiatives that offer quick financial gains without putting pressure on the organisation. An approach combining behavioural economics with service design allows them to create initiatives exactly like that.

Take aways
  • Applying the right nudges requires a thorough understanding of customer context.
  • Combining nudges and service design with customer experience generates quick financial gains.
  • Nudges are small changes that don’t put much pressure on an organisation’s resources.

From theory to application

When an organisation tries to achieve financial returns by targeting its customer interface, it likely requires minimal investment in internal processes such as IT systems. Behavioural science offers a wide range of validated tools, which are called “nudges”, to facilitate customers to be more confident in making decisions, to be more honest, and not to over-value the present over the future. Nudges are based on robust theories, and have been successfully translated into fantastic customer experience and boosted business performance. 

Small but powerful

Nudges are small but disproportionately powerful. They are building on fundamental premises of human psychology: the desire to return favours, to be included by peers and to be trusted. They are universal human traits that apply across customer segments regardless of age, gender, culture or socioeconomic class. Businesses should be aware of what behavioural mechanisms are influencing their customers, and address those behaviours with the right nudges.

Quick and impactful

Behavioural economics has been validated in laboratories, and yet it is still not the mainstream practice in businesses. This means there is space for companies to gain competitive advantage from applying nudges, because they can be quickly implemented as long as there is the right expertise. Small changes in the design of an online form, a call centre script or a retail environment could make a huge difference in how your customers respond. Nudges sometimes are very hard to copy because their effectiveness hinges on the specific context in which the customers behave. The gist is to apply the right theory in the right customer context. This enables you to design the right customer experience, and see immediate financial impact.

Cocktail for business success

Customer journey is a structured framework to understand the context in which customers make choices. That helps you decide which nudges should be most effective in a certain context, and design the experience that benefits both customers and the business. Nudges are not rocket science, but require considerable skills to craft the language, presentation and interaction. These are the “details” that most businesses often underestimate, but a combination of nudges, qualitative customer insights and good design skills is the cocktail for business success.

Measure and optimise

The impact of nudges is measurable, which makes this tool more appealing to businesses. You can always measure the outcomes between the group that is nudged and another group that isn’t. The difference can always be attributed to the nudges. Although the difference oftentimes is only a few percent, the financial impact could be huge if the nudges are applied on a massive scale. Due to measurability, designs based on nudges can be measured and modified to reach optimal results. 

Minimal demand on the organisation

An approach that combines service design with behavioural economics is disproportionately powerful in improving financial results. Subtle changes in customer interactions don’t always require changes in internal processes or substantial attention from managers. The financial impact is immediate and measurable. Not enough companies are capitalising on these insights, therefore, those who are can easily outperform their peers.

In this edition

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