the fine art of "nudging"
By
Merit Smith
Vice President and Director, Health Care Practice
A topic much
discussed in recent months—especially
around health care reform—is
the “nudge.” What is a nudge? Many organizations state their rules
for their customers with detail and clarity. Other organizations
give default options; an organization can communicate clear and
concise rules or nudge their customers in the hoped-for direction.
Once you know about the nudge concept, you become aware that it is
everywhere. You’ll see that we are swimming in a sea of subtle (and
not-so subtle) nudges. Some are honest nudges; some, not so much.
An industry that represents some of the best and worst of services
are airline providers. A good example of a nudge in the airline
industry is the check-in process. You can stand in line at the
airport and interact with a random human and receive a random
service experience, then stand in another line to receive a random
security and transportation experience. Or utilize one of two nudges
provided as an alternative:
In this case, the choices allow the customer to match their needs—such
as an extra bag or resolving an issue with a connecting flight—with
the airline’s service capability.
Another less-known nudge the airline hopes their customers will take
is a somewhat dishonest one. If you would like to change your
assigned seat, you may select the kiosk over human intervention.
However, the kiosk is programmed to offer an opportunity to buy an
upgrade before it offers one of the 16 open seats. You may end up
paying more for a better seat that would have been free at the
ticket counter.
Insurance companies are fertile ground for nudge observation. They
offer products to the public with bewildering and complex rules to
accommodate a wide range of demographic and personal issues. This
complexity contributes to service failure and distrust. Some
insurers have become clever about nudging and call it “product
design.” In most cases, it helps reduce product complexity and
buyers make a more rational, understandable purchase.
Unfortunately, not all insurance company nudging is good, and so we
arrive at “Hobson’s Choice.” I don’t know who Hobson was, but you
encounter him when in a situation where no option is offered,
however the proposal can be refused. But many of us have experienced
the health care equivalent of Hobson’s Choice without an option or
any practical way to refuse what is offered. (We will be seeing
fewer of these situations now that the national public policy has
changed.)
Overall, nudging is good. I believe service organizations should
think about and include the tactic in their design of service. Four
useful key points are:
