This week we want to talk about a book called Nudge. The main concept of Nudge is this idea called “Choice Architecture” which basically says that you can create the choices and decisions processes that your customers go through in a way that enables them to make the right choice for them. Now some people are going to think that this type of sales tactic is evil, but the fact of the matter is that if you have a really good quality product or service it is almost an obligation to sell it, and to sell it to the right people.
One of the main things that we picked up from this book is that there are two types of choices that customers make.
A choice or decision that has an immediate feedback loop.
i.e. Buying ice cream – You go out and buy the ice cream and give it a try. If you like it, you instantly know that is the case.
A choice or decision that does not have an immediate feedback loop.
i.e. Life insurance or another once in a lifetime big ticket item.
Now say your business falls in to the first category and you are the ice cream seller. Your customer has an immediate feedback loop, your main goal will be to improve your product or service and in doing so you will increase customer satisfaction, repeat business and ultimately your business will be successful off of the back of it. If however your business falls in to the second category, your main aim and goal is to close this feedback loop for them.
Lets take for instance a car sales man. The first time you go to buy your Aston Martin, Porsche or Ferrari a big ticket item, a once in a life time purchase, you’re not going to know if it is right for you. You’re not going to know if the seat gives you a bit of back ache, if its going to be a pain to reverse it in to your drive way or getting it in to your garage. Maybe it would be more sensible to drive a Smart Car in central London or New York. By giving you an extended test drive, the sales man is able to give you a more immediate feedback loop and ultimately lets you make the decision that is right for you. That is a really, really helpful thing. It will enable him to make more sales to the right customers. So if you fall in to category two, you need to find a way to close this feedback loop.
Nudge covers loads more stuff like “Availability Heuristics”, “Status-Quo Biases”, “Anchoring” , “Herd Mentality” and loads of other great stuff. There’s too much to cover in this post but we will hopefully be covering it our book-club at some point soon.
We have an Amazon Affiliates link here if you want to read Nudge by Richard Thaler and Cass Sunstein.