A concept in behavioral sciences, the Nudge Theory was named and popularized by the 2008 book “Nudge: Improving Decisions About Health, Wealth, and Happiness”, written by American academics Richard H Thaler and Cass R Sunstein. The theory is mainly concerned with the design of the environment in which people make choices. The framework is about understanding how people think, behave and make decisions.
At Capillary, we’ve been building on the Nudge theory in the context of a Loyalty Marketer. Pioneering the use of the Nudge Framework in the context of loyalty marketing, using the platform gives you an upper hand against the competition when looking to improve customer engagement and deliver a great experience.
How the Nudge Framework helps a Loyalty Marketer
Working with 250+ brands and touching 800 million+ end customers globally, Capillary’s system is extremely rich in data which helps the Nudge engine to come up with some really incisive insights. We’ve devised a product-led way to help loyalty marketers, CXOs, and practitioners improve the performance of their marketing programs with the least friction. One of the layers across the Capillary suite of products, the nudges can be broadly categorized into three kinds:
Type 1 (Data-led Nudges): Know how your program is doing, and potential disruptions to watch out for
Type 2 (Platform best practices): Low-hanging fruits to leverage product features
Type 3 (Proactive Nudges): New initiatives that can boost program performance to the next level
Now, let’s dive deeper into these three kinds of nudges and the benefits they can reap for a brand.
Type 1 Nudges from Data Trends (Data-led Nudges)
It can be a tedious affair to keep track of tens of metrics on a regular basis and particularly without context from the industry. The aim of this category is to proactively serve key insights on what’s working and what can be made better and how you are doing compared to peers in the industry. For instance, if the system detects the following:
- % customers redeemed points is low: The recommended suggestion could be to set up reminders- Points Redemption push or to initiate a points top-up campaign.
- % expiry is high: If there are a lot of customers with a points balance below the 25th percentile of average redemption, the nudge would be to improve generosity.
- Churn rate is high: The nudge would suggest measures like setting up a recurring campaign using the “about to lapse AI filter” and winning back repeat customers through strong offers.
- % repeat customers are low: The system nudge would be to set up welcome or registration bonus, “We miss you” campaigns for one-timers who are on the verge of lapsing, and other such recommendations.
Type 2 Nudges to use the product to its full capability (Platform best practices)
Over the years, we’ve built an extremely comprehensive platform with loads of intelligence inbuilt. Sometimes, it can become overwhelming and you may miss out on some of the features that a loyalty marketer can leverage. To ensure this doesn’t happen, here are some of the nudges:
- Upgrade Communication not setup: This nudge means that the user hasn’t set up any upgrade communication for the ‘Default Program’. Upgrade communication can be quite useful for talking about the benefits of the new tier that the end customer has now earned.
- In case of Points Expiry Reminder is not set up: Points Expiry Reminders tend to increase customers who redeem points by x% and your redeemers contribute y% more to the brand – leverage this impact through simple reminders.
- Demographic data is not captured/low: The nudge would be to set up a “Welcome bonus on filling in details”. This would incentivize end users to provide their data with consent, and your demographic data would now be richer.
Type 3 Nudges to take up the program engagement a notch higher (Proactive Nudges)
Apart from the above two types of nudges, these are nudges that look at doubling down on the engagement and loyalty game. These are add-ons that help loyalty marketers further refine their engagement program.
- Low DVS (Dynamic Vouchering System) issues: Capillary’s DVS enables a marketer to send personalized vouchers to its customers in real-time. Through the data, if it is found that the issues are low, the nudge would be to set up bounce-back campaigns to create aha moments for your customer. Such experiences help maximize in-store spending at that moment or encourage the next visit.
- No/Low amount of promotion points issued: Using data, we can gauge this metric and the nudge would be to set up a loyalty-based promotion to create “surprise and delight” moments for your customers.
- In case the Birthday Campaign is not set up: The nudge would be to issue bonus points 15-30 days prior to the birthday valid till 5-7 days after their birthday. This will increase the chances of a shopper buying from you around their birthday.
Get Seamless Suggestions – The Capillary Advantage
Many times nudges are ignored by a loyalty marketer or a user in general because the workflow isn’t optimal. A system may be giving the right nudges but at the wrong times! This results in subpar effectiveness. To avoid this, Capillary’s Nudge Framework undergoes continuous feedback cycles and AI learning to ensure the nudges are smoothly integrated into the workflow for a loyalty marketer.
Data Analytics plays a huge role in helping us deliver the right nudges to help you achieve your business goals. As we strengthen our position as a leader when it comes to innovation in the field of Nudge for Loyalty Marketers, we see tremendous benefits for our clients in delivering value and a great customer experience.
Talk to a loyalty and engagement expert to learn more about the Nudge framework and see how it can help improve your program performance.