Nudge Marketing: What it is, How it Works, and Examples
There is a better way than discounts and giveaways to attract and retain customers.
Nudge marketing has become the preferred psychological hack encouraging customers to take specific actions.
What is nudge marketing?
Nudge marketing is a strategy that uses psychological biases, and subtle or direct prompts to encourage people to purchase.
A nudge influences a buyer’s decision by leveraging psychological biases, making their choice seem more natural.
Nudge marketing, when done correctly, helps businesses of all sizes, from behemoths like Amazon to mom-and-pop operations, grow their revenues and profits. So be sure to incorporate nudge marketing in your marketing plan and strategy.
Over the past fifteen years, our marketing team has frequently used nudge marketing in campaigns. And we’ve mentored and helped thousands of entrepreneurs, small business owners, and agencies improve their marketing with high-quality design that leverages marketing psychology to influence buying decisions. This guide shares our experience, learnings, actionable insights, and best practices.
How does nudge marketing work?
Nudge marketing helps people make less stressful decisions.
Remember the last time you bought coffee? You could probably choose a small, medium, or large size. The small price difference between the medium and large servings is intentional.
The marginal cost to the coffee shop between selling you a medium versus large size is tiny. But you pay more for a large size.
Because the difference is minor, people often choose the large size, believing they decided independently.
This is nudge marketing at its finest. The coffee shop nudged you to pick the most expensive option because it appeared to offer the best value.
You’re happy because you made a good choice. The coffee shop is satisfied because they earn more money.
Why does nudge marketing work?
People are often irrational when making decisions.
This is normal.
Our subconscious mind uses our experiences and information to influence decisions.
Nudges speed up this process.
A nudge is an intentional, subtle prod that reduces the perceived difficulty or danger associated with a specific action or decision. It’s like a fast route for our minds, and we only notice that we’re less anxious.
Our brain uses visual and mental signals to make judgments automatically in pursuit of efficiency. We strive to make judgments as quickly and efficiently as possible but never want to look back and second-guess ourselves.
If people didn’t “rush to conclusions,” they’d never make any decisions. Most people want to make quick choices they won’t regret.
Nudging makes choices more intuitive and effortless, ultimately improving the purchasing experience.
But nobody likes being coerced or tricked into making a choice. That’s why nudging must be subtle. Small nudges in someone’s best interest help make decisions feel organic and effortless.
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Six nudge marketing examples
FOMO (Fear of missing out)
Remember when you failed to take advantage of a valuable opportunity like a 50% discount on a jacket or a chance to attend a concert because you couldn’t get tickets in time?
Subconsciously, people remember their disappointment the next time they encounter another time-sensitive offer.
So, they buy on the spur of the moment because they don’t want to risk missing out on good deals.
The FOMO phenomenon is well known to marketers, who employ it efficiently to generate more sales.
People always want more of what we can’t have.
The scarcity principle plays on these behavioral triggers.
“Scarcity marketing” plays on customers’ fears of being unable to participate in the hottest trend or latest promotion.
Brands use scarcity strategies to boost product value and sales by intentionally limiting the perceived supply or availability.
The brand on the right encourages customers’ immediate purchase by notifying them that others have purchased a dress at a discounted price during the last 48 hours.
Frequently bought together
The term “Frequently bought together” (or “FBT”) is commonly used to describe a curated list of items that have been chosen to increase revenue.
Instead of just listing random items alongside a customer’s selected product, the FBT feature showcases other complementary products.
This nudge tactic is commonly utilized to promote upsells and cross-sells. By suggesting complementary products, you’re increasing sales and providing more value to the user.
With the help of nudge marketing, Nerdwax can upsell a high-value bundle on its product pages right before the checkout.
Nerdwax specifies what the high-value pack includes and how much money you may save by purchasing it.
A big, bold, yellow call to action makes adding this merchandise to the shopping cart easy.
You may use this tactic in your online shop by including a suggested-buy overlay on the product detail page or the shopping cart before the final checkout screen.
- Try not to be overly aggressive with your upsell tactics, such as displaying a pop-up shortly after the visitor lands on your website.
- Ensure the upsells are tailor-made to the specific item they want.
- Keep your upsell price within an acceptable range.
- Consider offering a discount or other perk to emphasize the value of purchasing the upsell.
To urge customers in the direction of making a purchase, SkinnyMe uses the price anchor nudge. They display the before and after price reductions for this item.
Customers will be more likely to buy after seeing how much they can save.
This strategy can be used on certain items during clearance sales and other price reductions.
Pro-tips: If you’re going to use a price anchor nudge, here are a few things to bear in mind:
- Make sure the two prices are displayed next to one another.
- The higher price anchor should be crossed out to help clients see the difference between the reduced price and the full price.
- Don’t keep using the same nudge for the same item repeatedly.
- The value of a discount is diminished if it is continuously being offered.
- Give your customers an idea of when regular rates will be reinstated.
Directional cues direct visitors to specific sections of your site, such as a crucial call to action.
Directional cues include an arrow, a model’s gaze, or lines.
IKEA employs a subtle nudge marketing tactic by including a directing arrow on the site, which prompts buyers to click a specific location on the screen.
- All signs should point to your call to action, so make sure it shines out.
- Don’t get carried away; they are only hints, so keep things basic.
This strategy plays on people’s inclination to follow the crowd.
People are more inclined to follow if they observe others engaging in similar behavior.
When we are uncertain, in a new or unfamiliar setting, or when there is room for interpretation, we often seek others for behavioral advice. Generally, a person will attribute more validity to a proposition if others agree it is accurate.
Social proof encourages shoppers to purchase.
- Use trust symbols.
- Add numbers or data to demonstrate the success of your brand at every opportunity.
- Showcase positive reviews to illustrate the benefits of your product or service.
The best nudges are subtle. So, when creating them for your business, ensure they’re not distracting or intrusive.
Nudge marketing can help improve your customer’s experience, make it easier for them to purchase, and grow your revenues faster.
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