When Barack Obama was elected many within the marketing discipline were left awestruck by his innovative marketing approach. There wasn’t a new business pitch presentation given that didn’t feature his image. Clients cried, “Please can you do an Obama on our brand”. They commented on his use of Twitter and Facebook quite rightly as a break from the convention of broadcasting political messages to the masses. Obama’s team used grassroots initiatives to create a powerful bottom-up approach that drove out millions of messages via millions of fans. The effect was felt far and wide. In fact, even in some of the world’s most remote places such was the force of his message.

However, what is less well known is that even before the Obama team set about planning his election campaign they engaged (somewhat covertly) a group of highly influential, behavioural economists. What they realised was that to fulfil Obama’s vision they would need to influence behaviour not just in the run up to the election but for the following 4 years. What they struck upon was a strand of economic theory that will go on to change the world.

At the heart of behavioural economics is an important insight into human behaviour. And that is that most economic theory is built on the premise that people act in consistent ways in respect of the decisions they make around money or in fact any decision. However, what economists like Richard Thaler, author of Nudge, observed was that the context around a decision can affect behaviour.

A good example of this comes surprisingly from the urinals in Schipol Airport in Amsterdam. What the airport planners realised was that most men act in a pretty consistent way when it comes to using a urinal especially when rushing to catch a plane i.e. they tend to deposit some in the urinal, some on the floor and some down the front of their trousers (although this deterrent is not sufficient to ensure most goes into the urinal). The impact of this behaviour on operations at the airport is that the toilets need to be cleaned regularly putting a strain on resources.
Their solution was to etch the image of a small black fly at the base of the urinal (the eagle-eyed amongst you will have noticed similar ones at the IPA). The effect of this simple intervention was that ‘simple-brained’ man thinks “let’s try and hit the fly”. This simple idea apparently reduced spillage by 80%. This intervention is called a ‘nudge’.

Everyday all of us ‘nudge’ in lots of different ways to influence the behaviour of others. Sometimes we know when we are being nudged and sometimes we don’t.

The Obama team nudged on a massive scale.

For example, one key behavioral finding is that people often fail to set aside money for retirement even when their employers offer generous plans. If, on the other hand, you automatically enroll workers in the plans but allow them to opt out, most stick with it. Obama’s savings plan exploits this so-called “status quo” bias. In other words, nudge people in the direction that you want them to go in, exploiting a person’s natural inertia on issues such as pensions, and crucially give them a choice to opt out. However, most do not opt out and everybody wins.

Nudge theory is evident in Obama’s attitude towards everything from climate change to bringing together unity as this excerpt shows in a speech he gave in June 2009 demonstrates, “All of us share this world for but a brief moment in time. The question is whether we spend that time focused on what pushes us apart or whether we commit ourselves to an effort, a sustained effort to find common ground, to focus on the future we seek for our children and to respect the dignity of all human beings.”

The nudge is that whatever our background or views, unity for the sake of our children is more likely to effect change than trying to change the planet for the benefit of people I have never met.

Nudge theory has its detractors. However, I believe that the addition of human insight and cognitive psychology into the models we build around economics and even marketing will have a profound impact on how we approach problem solving.

Think about how we approach user experience. We are always looking for nudges that can influence behaviour. We may not call them nudges but we are aware of the influence of certain features of a page. How do we know this? Well we can measure them. So imagine a medium that is infinitely measurable combined with the overlay of behavioural economic theory and you may well have the answer to marketing’s eternal problem which is, “I know marketing works but I’m not exactly sure how it works.”

Nudge theory enables us to build in the nudges and measure the influence that they have. A good example of the theory is in Amazon’s use of aggregated ‘purchase intent’ where we are able to see what other customers bought when considering a certain product. This is based on the behavioural insight that, “People want to do what they think others will do”, which lies at the heart of Robert Cialdini’s book, Influence, The Psychology of Persuasion”.

There is no silver bullet solution to the world’s problems whether they are financial or climatic. Look at the government’s recent intervention in bank bonuses to understand that a bullet won’t work. Government seeks to curb bonuses at RBS to appease the electorate, RBS investment bankers resign on mass. Here is a nudge having the opposite effect and making RBS less competitive. Far better to have nudged the bankers into a voluntary scheme that benefits themselves and the electorate i.e. asking them to elect how they would like their ‘windfall tax spent’ either to charity or directly into a local scheme. Banker gets bonus and RBS remains competitive and the public get a sense of justice.

So happy nudging & a happy new year.