Nudge marketing is becoming a powerful conversion tool for ecommerce brands. No more ugly, brazen, 'in your face' offers and urgency tactics. Nudges use simple psychology to subtly guide store browsers into making a purchase - and they're massively effective. Easier said than done? Not anymore. This post gives a complete rundown of what nudges are and examples of how the best ecommerce stores are using them. Armed with these marketing psychology insights, you can start optimizing your store and increasing conversion rates one nudge at a time.
Table of Contents
- 1. What exactly is nudge marketing?
- 2. Why does nudge marketing work?
- 3. Nudge marketing in ecommerce
- 4. Nudge marketing examples
- 5. Nudge marketing final thoughts
What exactly is nudge marketing?
“Nudge Theory” was pioneered by Richard Thaler and basically applies psychological insights to explain decision-making. In fact, Thaler prefers to call these “prompts”. For marketing: Nudges apply Thaler’s theory to softly push people in the right direction in terms of driving purchase behavior. Starbucks, for example, use what's called the 'decoy effect' with drink sizes: With the middle “Grande” option, the “Venti” price doesn’t seem too high. This decoy effect is a nudge that helps decision-making. So nudge marketing makes the shopping experience more streamlined and less stressful. It’s not about tricking your customers, but helping them decide with less stress. In ecommerce, nudging could look like:
- Dynamic product labels.
- Browser notifications.
- Interactive overlays.
- Unique checkout features.
It's also important to note that nudges ARE NOT:
Why does nudge marketing work?
Consumers are irrational. But our behavior actually relies on this “irrationality” to make purchase decisions. In order to make better decisions, we use shortcuts (called heuristics). Meaning we draw on past experiences and knowledge to effectively make decisions subconsciously - and nudges help us make those connections faster. This is a good thing. If we didn’t "jump to conclusions", we would probably never make those conclusions in the first place and be overloaded by choice anxiety. Making fast, efficient decisions that we don’t regret is the crux of any great shopping experience. This is because humans prefer convenience over rationality. And nudging capitalizes on this by making decisions feel more natural and automatic to increase the convenience of shopping.
Nudge marketing in ecommerce
Nudges can be used to optimize the entire ecommerce customer journey. Helping to:
- Speed up the customer journey.
- Personalize the customer journey.
- Make connections between other products.
- Alleviate the pain of paying at checkout.
But the key thing to always remember? Your customers need to be at the forefront of this operation - not your desire for more sales. Otherwise, your nudges will (paradoxically) fail to resonate and this may actually cause resistance to buying.
Understanding the psychology of your shoppers
Nudge marketing is only effective if you understand your customers’ psychology to their very core. This means understanding their psychographic profiles. So their:
- values; and
- psychological inclinations.
- If your customers respond to Social Proof messaging, this means they tend to look towards other people’s behavior in times of uncertainty.
- If your customers respond to Authority messaging, this means they seek validation from experts and influencers.
Understanding these psychological motivations will help inform your nudge marketing, and optimize your messages - more on how below.
Nudge marketing examples
Now that you understand customer psychology a little better, it's time to start using nudges to optimize your online store. Here's a look at how some of the best ecommerce brands are doing it.
1) Labeling products
Labeling products on your store can be a great nudge marketing tool: These are implicit nudges that either boost the credibility of a product or make it easier for customers to find what they want (nudging your shoppers in the right direction). In this way, we can break product labels down into:
- Functional benefits.
- Psychological triggers.
ASOS do a great job on the functional side by adding labels that help customers look for jeans correlating to their body shape: More than this, the labels will also be exposed to search engines so that customers looking for those defining jeans-features will find the products easier. IKEA make great use of psychological triggers with their labeling: “Family price” will appeal to a certain deal-hungry segment of family shoppers, whereas “New” (the red tag) will appeal to consumers who like novelty products. The “design door: IKEA” suggests an innovative style from IKEA leveraging both authority and innovation. IKEA will likely be constantly testing which tags convert so they can create micro-segments based on psychological profiles.
2) Smart notifications leveraging scarcity
Another way to nudge shoppers in the right direction is by using smart notifications - specifically incorporating scarcity: Why is this the case, you ask? Scarcity boosts purchase-intent by showing things that are limited or exclusive. This means that smart notifications using scarcity are usually:
- Foster a sense of urgency.
- Appeal to “FOMO” (fear of missing out).
The Ntwrk do this well when pushing their time-sensitive product drops: In this example: The scarcity of the countdown in the banner image (early promotion driving sales) is mirrored by the smart notification above. The nudge creates a sense of urgency with a clear benefit: you can get notified when the new line “drops”. Threadless are another brand using nudges to push scarcity. They have a notification bar that shows limited designs by exclusive artists: Here, scarcity is leveraged in line with their brand and serves as a nudge for shoppers looking for custom-designed products (“one-of-a-kind”). Note: Make sure to use a quality inventory management system to keep your stock levels accurate in real-time if you're running scarcity campaigns based on amount of inventory available.
3) Exit-intent overlays
Exit-intent overlays are pop-ups that appear as a user is about to leave a page. And can be huge when it comes to nudge marketing. If you’re not already playing with exit-intent overlays (which would be a shame), here’s a few ways you can use them:
- Offer a discount code.
- Alert customers to your new line or products.
- Offer newsletters or promotions if they sign up with you (good for hyper-targeted email marketing campaigns).
- Hook your visitors back to complete their transaction.
- Have a branding image that shows why they should shop with you. If you have an eco-brand, for example, showing the conscious nature of your supply chain in your exit-intent might recapture a user's attention.
Whatever you choose, exit-intent overlays are the nudges that will either give your customers a glimpse of your brand identity, influence them to stay longer on your store or get them to sign up for more information. By the way, here’s how you should not use exit-intent overlays:
- Continuous pop-ups with the same information - best practice is to set your overlay to only appear once per browsing session.
- If a customer has no intention of bouncing (i.e. they're scrolling and browsing, or on the checkout page) = this will interrupt the journey and cause friction.
Koala’s exit-intent overlay offers a big discount on their mattresses and sofas in exchange for your email: Which nudges two types of behavior:
- Cross-selling purchase (on mattresses and sofas).
- Loyalty (providing an email means your customers can stay updated post-purchase).
Jewellery retailer Kinsley Armelle go a step further by leveraging scarcity with a limited-time discount: They also anchor the previous price with the new discounted price to give their customers a better idea of how much they would save, nudging them to continue shopping for sales.
4) Social proof on product page
Reviews (both good and bad) help shoppers evaluate products better. And are thus convenient nudges to enhance the buying experience:
Amazon does this well by prioritizing product reviews (the bad and good) and “answered questions” on their product pages. The more reviews = the more popular the product: But Amazon does a lot well, so this shouldn’t surprise you. Inkbox is an example of a smaller retailer nudging their shoppers with reviews: These are anchored in a trust symbol “Trustpilot”, which is a nudge that suggests the reliability of the product. Trust symbols generally drive purchase behavior. And another good way to use these would be on your checkout page when customers have to give their sensitive data away. Speaking of your checkout page...
5) Checkout nudges
Cart abandonment can be one of your biggest pain points as an ecommerce brand. As much as nudges help drive purchase-intent from your regular site pages, checkout is the most important stage to consolidate your shopper’s journey. This means that at checkout your nudges should show customers:
- Reliability (trust symbols).
- Offers (free shipping or returns).
- Upsell and cross-sell offers (product recommendations).
- Loyalty options (subscription, email).
Like Amazon’s one-click-checkout, you want to alleviate the pain of paying to make it easier and stress-free for shoppers to checkout. Oliver Bonas do a great job with this by nudging their free shipping options: The cart nudges you towards buying more by showing how much extra is needed to qualify for free shipping. Then nudges you towards making the purchase by reinforcing that you have free shipping on your order - all live and in real-time. Alternatively, Gymshark wants to make checkout as quick as possible. They have a Goal Gradient that shows how far you are in the checkout process: Goal gradients influence people to speed up the closer they get to the end. Gymshark also incorporates an express checkout option with a recognized payment platform, PayPal. This instils trust, as well as providing an option for faster (express) payment. All these nudges eventually lead to speedier checkouts and higher conversion rates, making both you and your customers happy. Nudge, Nudge, Win-Win.
Nudge marketing final thoughts
Consumers these days are savvy when it comes to forced, brash marketing cues. Enter: nudges, your store's subtler alternative. As we’ve discussed, nudges are those implicit prompts that will drive purchase behavior to help customers have more positive shopping experiences. Use the nudge marketing concepts and ideas in this post to get started. Then watch your conversions rise as more people are guided into completing their purchases. If you are interested in this article, you may also be interested in reading about the greatest challenges ecommerce retailers face right now.