Regardless of the industry or sector in which your business has a presence, true consumer engagement can sometimes be a tricky proposition. Or at least it was until nudge theory came along and eased the burden for a wide range of businesses.
Matthew Adam, chief executive of financial and digital inclusion education provider We Are Digital, outlines some key lessons to take from this approach.
Businesses are finding it increasingly difficult to engage with and influence consumers in our ever-busy digital landscape. You may have created the best product or app in the world, for example.
But how will you grab the attention of consumers long enough for them to use or download it, let alone mindfully engage with your business’ proposition?
Engagement is a challenge for both the public and private sectors. It is one that we battle daily in our business. We Are Digital runs a number of courses designed to help housing association tenants to manage their finances and to earn money online.
Our Earn it, don’t burn it course equips attendees with the skills to earn money before they hit an income crisis point – a far more exciting proposition for them than saving or budgeting.
The challenge, however, is getting residents, who often feel disengaged and disenfranchised before they’ve even heard about the training, to attend in the first place.
Ending the poverty premium
Half of UK adults are not in control of their finances and 16 million people in the UK have less than £100 in the bank. These same people are also struggling with the poverty premium, having to pay more for essential services like credit, utility bills and food.
This is because poor credit ratings, or a lack of access to ready cash, make things more expensive than they would be for other consumers.
But the social housing sector has struggled for years with engaging tenants to improve their financial wellbeing. We believe this is because terms such as budgeting and saving are off-putting and disengaging for those living in poverty.
Our training pivots away from this concept, reframing the focus from saving to earning cash online to drive engagement levels and interest.
Nudge theory is central to our work. This school of thought is rooted in behavioural economics and uses small cues and positive reinforcement, rather than issuing instructions, to help improve decision-making.
Its central belief is that people are more likely to make beneficial decisions if they deem themselves incentivised rather than penalised.
Nudge theory has been part of government policy since David Cameron created the behavioural insights team (Bit), colloquially known as the Whitehall nudge unit, in 2010. Its latest work has shown that Brits are making healthier drinks choices, driving on safer roads and achieving higher exam scores, all thanks to a bit of a nudge in the right direction.
In three hospital stores in Liverpool, for example, ‘stop’ signs were added to shelves next to sugary drinks, which reduced sales by a not insubstantial 7.3%.
Our training shows attendees how to use sites such as eBay and online rewards programme Swagbucks to earn extra income, as well teaching them how to navigate price comparison websites to lower their bills, sometimes achieving reductions as high as 50%. The language we use throughout our training is wholly positive, and we avoid terms such as money and debt.
When marketing our courses among their tenant base, our clients report significant spikes in attendance when they offer a small but easy-to-use incentive, such as a free cinema ticket or family outing in their local area for attendees. This gentle type of nudge can deliver as much as a 100% increase in sign-up numbers.
Training workshops can certainly be daunting for first-time users, so giving people a real reason to go along is essential to raising and keeping interest levels high. We’re aware that some of our course attendees won’t see the immediate worth of raising their online or financial literacy, so it’s essential that our training reinforces the positives where possible.
Integrating nudge theory into customer communications
Consumer engagement is notoriously tricky, and applying nudge theory in this area can leave brands open to criticism and accusations of manipulation.
Waitrose, for example, recently announced that it is exploring a new technology to encourage people to buy or avoid certain products according to their DNA, nudging overweight shoppers, for example, away from sugary products.
The move has met with some scepticism, with a leading geneticist noting that it should not take an app to teach people to choose less sugary biscuits.*
Moving into less controversial marketing methods, localised incentives are certainly an effective tool to nudging consumers in the digital space, if you are able to target your customers regionally, for example. Offering vouchers to local restaurants or cinema tickets are tools our clients find to be very effective.
Remarketing campaigns are a key area to put the power of nudge theory into practice, particularly in the field of events. Email updates reminding interested or registered attendees to come to an event your business is running, for example, could feel like spam or overkill to recipients.
But staggering available information about the event, confirmed speakers or new features, or for a voucher for a free drink at the venue, can be far more effective.
Keep it clear
We have raised registration rates for our group courses by a third just by sending ‘warm-up’ texts notifying residents of the free training taking place, which is followed by a personalised reminder text.
We’ve found that messages sent at the weekend also elicit more engagement, as people are more likely to read their texts while they’re at home.
Clear, jargon-free language in consumer communications is vital. The brain tends to seek the path of least resistance, and brands that keep their messages simple but warm and make their call to action the default choice will nudge consumers towards a preferred action.
We’ve honed our approach to suit our audience. As the majority of our attendees use pay-as-you-go mobiles, we found that keeping it simple is key. Text-based SMS is ideal for this audience, while picture-based messaging isolates those without smartphones and can require more data to download.
We’ve recently introduced a ‘nudge learning log’, which compiles all our ideas in one place, with analysis on approaches that have been successful and those that haven’t worked so well.
We recommend regular analysis to businesses of any type working with nudge theory, as continuous improvement of all communications methods is key to raising engagement levels.