Nudge Framework, a catalyst to drive Loyalty program

Intuitiveness is the hallmark of good software products. Good software products are not only user-friendly but also interactive. Nudge Framework is a paradigm that has evolved and provides much value to software development.

Nudge Framework can be summarized in technical jargon as subtle interventions by the software to elicit a wholesome response from the user. Nudge is just a gentle prod in the form of an important heads-up and there is nothing ulterior.

Software supporting the loyalty campaigns must be diligently handled. We will study how nudging can help personnel handling loyalty software to execute better campaigns.

Nudge Framework — an introduction and its forms

Nudge Framework revolves around the nudge theory which seeks to understand how people think and make decisions. The framework attempts to improve the decisions while trying to modify unproductive influences such as setting up a promotion but not activating it.

Designing digital nudges is a very complex process and a lot of thought is required on each of its aspects. For instance, proper nudges should be designed where the user needs to make choices either discrete (Multiple choice) or binary (Yes/No choice)

Some of the common digital nudges that we came across are -

• A well-timed prompt (micro-nudge) that reminds users if we have missed something and urges us to take necessary action.
• An optimal heads-up in the form of notifications to users based on their usage pattern.
• An incentive that fosters users to use a service.

Nudge Framework in loyalty campaigns

Managing loyalty campaigns is an arduous task and requires the dedicated effort of many stakeholders. Customers reach out to Capillary to be their trusted advisors and steer them to success.

Although strategic initiatives, deep-dives, and new long-term engagements are the current approach adopted by Capillary, Nudge is the answer to streamline the processes. Nudge Framework empowers customers to be independent and mitigates turnaround clarifications.

The following study highlights the actors associated with the management of a loyalty program and their interactions with a loyalty manager.

Marketing Head/Decision Maker: As an individual who steers the company’s fortunes and evaluates the key performance indicators (KPIs), this persona could ask -

• How is my program performing over the long term?
• Is my program doing better than my peers?

Marketing/Loyalty Program Manager: A person who is responsible for the loyalty plan and marketing calendar exercises caution regarding -

• Have all the basic hygiene features of the Loyalty program been set up?
• Are there any potential anomalies in the program like, for instance, registrations dipping?
• Can I be empowered to continue past successful promotions, follow my schedule, or make periodic updates?

As a marketing/delivery executive (individual contributor) who helps set up the promotions in Loyalty+, the following could be the actor’s concerns -

• Conflicting rules, clashes, or mistakes
• Set up trackers, strategies, or tiers but not used in rules, or untriggered rules

A nudge proves valuable to the actors by guiding their choices. Loyalty+ could induce productivity by ensuring program hygiene, keeping track of key metrics, and actively managing the program.

Best practices for a better nudge

Nudge must be a gentle suggestion and must avoid being overbearing. We can summarize a few best practices when designing nudge frameworks in the following discussion.

• Be proactive: Nudge aims to help the program managers by assisting in choice-making and alerting on misconfiguration. Nudge eases mental bandwidth while also saving time.
• Organizational Contextualisation: Brands could be at different levels of maturity in their loyalty programs and also have different types of customer behaviors, buying cycles, and margin plays. The nudges need to be personalized to fit this context.
• Provide simple and actionable insights: A common reason for perfectly good suggestions to get ignored is if they are too difficult or tedious to follow. Keeping nudges simple makes them effective.
• Keep me in control: The nudge has to be a gentle suggestion and not an overbearing instruction. Although the marketing managers are thankful for the ideas, they would still like to make their tweaks and take the final call.
• Keep artificial intelligence (AI) adaptive: Providing AI suggestions may not always work and AI suggestions must improve over time.

Conclusion

Based on the business impact, key decision-makers must be involved when designing nudges. Nudge Framework could be initially implemented with a pilot application having a few nudges and customers. These nudges could be delivered primarily through email and also through placeholders in the product to show basic information.

Nudges can also be measured with metrics such as the number of overall nudges delivered, the open/click rate on the nudges, and the conversion rate of the nudges. A healthy amalgamation of behavioral science and emerging technology would add another feather in the cap for Capillary’s loyalty manager.

Nudge Framework for Capillary’s Loyalty program was facilitated by Divya Kulshrestha, Kiran Babu and Barath Jegan Ganesan.