At the end of 2017, the Nobel Memorial Prize in Economic Sciences was awarded to economist and University of Chicago Booth School of Business Professor of Behavioral Science and Economics Richard Thaler for his research in behavioral economics.
The term “nudge,” coined by Thaler and legal scholar Cass Sunstein in their book, Nudge, refers to the ability to alter someone’s behavior without canceling out any of their options or changing their economic incentives. One of Thaler’s favorite examples is an Amsterdam airport that reduced urinal “spillage” by 80%, simply by placing an image of a fly in the urinals, thus encouraging men to improve their aim.
Some marketers claim Thaler’s nudge theory isn’t new, but something they’ve been doing for years. Others, like Yale School of Management Professor of Ravi Dhar say marketing has missed the boat by not constructing a “uniform framework that embeds behavioral science into the marketing framework.”
Okay, that’s enough theory. How does this apply to electrical distribution and, specifically, to marketing for electrical distributors?
What if we applied the nudge to our digital marketing?
This is exactly what email, content marketing, and digital marketing are best at. Here are a few ways nudge theory could be applied in everyday marketing tactics.
- Suppose someone visits the “About us,” “Locations,” and “Service” pages on your website. This might indicate that they’re a potential customer considering doing business with you. You might want to send an email asking if they’d like a salesman to call.
- Assume someone visits a specific product page on your website several times but does not place an order. Clearly, they’re interested in the product. You might want to have a chat box appear asking if they need help or have questions.
- When customers place an order for a specific item like electrical switches, they might receive an email offering matching wall plates.
- If customer data indicates that a contractor orders a large number of traditional power outlets and also a large number of USB charger wall outlets, an automatic email might be generated suggesting a charging center with USB ports.
To enable some of these responses, you’ll likely need a CRM system and marketing automation tool, supported by a robust ERP system. Throw in an e-commerce platform and the possibilities for “nudging” your customers are virtually unlimited.
“But my customers are businesspeople; they’re rational buyers.”
We tend to believe (as do our customers) that our customers make rational decisions based on price, benefits, and brand preferences, but the research doesn’t necessarily bear this out. One of Dhar’s studies found that placing a snack bar 6.5 feet from a beverage station made employees 50% more likely to grab a snack than employees whose beverage station was 17.5 feet from a snack bar. In other words, those who were “nudged” by the convenience of the snack bar were more likely to buy a snack—and gained an average of one pound of fat per year!
How many times have you hosted golf outings for customers, held contests with prizes like Yeti coolers or trips, or simply taken customers to lunch to encourage sales or build relationships? These were “nudges” that had nothing to do with rational decision-making. For the customer, the decision was based on spending time with friends, the chance to win or earn a prize, or getting a free lunch and spending time with an associate. They weren’t based on rational buying criteria like product quality, price, availability, order accuracy, or delivery time.
In 2016, Viking Electric Supply submitted an entry in the print category of tED magazine’s Best of the Best competition, called “Would you like fuses with that?” Taking a cue from McDonald’s, Viking designed an 18” x 24” poster to remind internal sales staff and customers to remember to buy fuses for ongoing maintenance needs. Viking simultaneously partnered with Siemens on a (fusible) safety switch promotion, resulting in a 17% increase in sales for the month.
Today, this concept could be adapted to work with an e-commerce system so that every time a customer ordered a fusible safety switch, a prompt would appear that asked, “Would you like fuses with that?” This practice could be repeated for hundreds if not thousands of products across a distributor’s inventory to cross-sell or upsell, alert customers about products being discontinued, or inform them about compatible or replacement products.
Have you nudged your customers lately?
Change is hard. We tend to do things the way we’ve always done them. That’s especially true when it comes to adopting new practices or technologies. Nudging your customers doesn’t necessarily require new technology as evidenced by the Viking Electric example, but it helps. Tools like website analytics, CRM, and marketing automation combined with practices like persona development, customer journey mapping, and content marketing can nudge your customers automatically once you set the wheels in motion.
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