How can you get your customers or employees to do what you’d like them to, without “telling them what to do”? The latest research and management theories favor a technique called nudging. It attempts to affect how people think, instead of what they think by using subtle, indirect methods.
Nudging strategies have recently become more common in business circles as researchers continue to learn about behavioral psychology. Nudging has been an established and studies behavior theory since the book Nudge: Improving Decisions about Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein was published in 2008. Since its release, nudging has been put to the test and its effects are highly successful thus far. Even the smallest tweaks to your normal processes, following nudging tactics, can make a big impact when it comes to influencing your customers’ or employees’ decisions. Below are some effective examples of nudging, as demonstrated by actual employees and organizations!
Until recently, England’s government had a Behavioral Insights Team (B.I.T.), also known as the “Nudge Unit.” The B.I.T. suggested altering language in a letter to nudge citizens delinquent in their vehicle taxes. The simplified language got the point across more succinctly: “Pay your tax or lose your car.”
Around the word, many hotels have now placed signs in their rooms asking guests to help them “save the environment” or “save the earth”, by reusing their towels or by conserving water. They are small, simple signs, with a simple, gentle message. Can you guess how effective it is? It’s helped hotels to save on average 2,300 liters of water and 150 liters of detergent each month.
A great way to nudge customers is with website optimization.
Google nudges their employees to make healthier choices in their day-to-day lives. The company rearranged vending machines so that bottled water is at eye level and sodas are at the bottom. By doing this, Google has increased water intake by 47% and decreased calories from drinks by 7%. They’ve allowed their employees to make the choice by affecting the context in which they see the water. They’ve nudged them in the healthier direction.
Employees who are pushed into a rigid structure with little room for growth or change are notably less satisfied than employees who are empowered to make decisions themselves. This empowerment is a nudge from the employer that indirectly instills a trust between the two parties. This trustworthiness allows for employees to take ownership of their actions and for employers maintain a healthy relationship with their staffs.
How can nudges be utilized to improve your business’ receivables management?
1. Easy-to-follow directives. Use transparent and straightforward language to outline your payment policy. Make it easy for them to pay you.
2. Ongoing communication. Correspond with your client more often than just when bills are due, even if its just checking in. With continued correspondence an invoice is just another message in need of response, not a dreaded occurrence.
3. Personalized messaging. Be sure your client knows that they are communicating with another individual. It will nudge their thought process when it comes time for payment.
The word “nudge” implies encouragement, subtlety, and gentleness, all of which are refreshing for employees and clients alike. Sometimes a nudge is all someone needs!