4 Examples of How to Use Nudge Marketing

While most people understood the importance of saving for retirement, enrollment in pension plans wasn’t keeping pace. How could countries encourage individuals to take action and secure their financial futures? Globally, pension assets reached a record USD 58.5 trillion in 2024², highlighting the importance of these funds.

The answer was surprisingly simple: behavioral economics. This fascinating field, a hybrid of economics and social psychology, has redefined our understanding of how humans make decisions. And for most governments, instead of resorting to costly welfare reforms or advertising campaigns, a subtle shift in approach proved remarkably effective.

What is a nudge in marketing? 

A “nudge in marketing” is a small psychological technique that can make a big impact on people and society. It's a subtle design choice that a business incorporates into the retail experience to encourage a consumer toward a particular action by providing visual cues, notifications, and other incentives. Think of them as gentle prompts that guide our choices without restricting our freedom.

There are countless nudge marketing examples all around us. Remember the etched fly in the urinals at Amsterdam's Schiphol Airport? That simple nudge reduced cleaning costs significantly. Or consider how social proof, like displaying customer reviews, encourages us to try new products. In the field of public policy alone there are nearly 200 separate behavioral insight teams around the world.

Even some of the biggest tech companies use nudges: YouTube’s autoplay feature keeps viewers engaged, Slack’s reminders prompt users to respond to messages, and Amazon’s “Customers who bought this item also bought” section suggests additional purchase. These are all examples of nudging marketing in action.

And nudges aren’t just for governments or tech giants; they can be applied in all sorts of situations, from marketing campaigns to boosting internal productivity.
 

Why do nudges work?

We all love to think that we make rational decisions. And we do try to be rational – our intentions are good. But, quite simply, we often aren’t rational at all. Classical economics paints everyone as perfectly rational, data-driven decision-makers who always serve their own self-interests.

But we’re human and we make mistakes. We think with our hearts as much as our heads. We often make decisions on autopilot, without even realizing it. In other words, economics has got it all wrong: humans hardly ever make 100% rational decisions. This is where the concept of "nudges" comes into play.

Nudge theory, rooted in behavioral economics, acknowledges that small changes in how choices are presented can significantly influence our decisions. By understanding these psychological mechanisms, we can design nudges that encourage behavioral changes without restricting choice or using coercion.

So how do we make decisions?

We have two decision-making processes operating in our brains. We have a ‘fast’ process and a ‘slow’ process. The fast process, known as System 1 thinking, makes quick decisions based on emotions and instinct – it’s automatic and unconscious (but it can solve pretty complex problems). System 2 thinking (‘slow’ thinking) is cerebral and logical, and usually requires more effort. If you need to concentrate, you’re probably using System 2 thinking.

Here are some examples: System 1 (fast) thinking helps you complete tasks like catching a ball. If a ball is flying towards you, you could calculate all the variables: weight of the ball, wind speed, your reaction times, etc. But of course the ball will hit the ground long before you even pick up a pencil. So we automatically use our System 1 thinking to coordinate our limbs and successfully catch the ball.

It is this Nobel Prize-winning theory, proposed by psychologists Daniel Kahneman and Amos Tversky, that has transformed our understanding of individual behavior. When it comes to behavioral economics, nudges and changing someone’s behavior, System 1 is the most interesting. In fact, our intuitive System 1 thinking can, under the right conditions, be tricked.

These tricks work like visual illusions. Take a look at the Müller-Lyer illusion, the hollow head illusion, and the checker shadow illusion for a few mind-bending examples.

Our mental decision-making processes are open to similar illusions. Although of the logical – not visual – variety. We call these illusions ‘cognitive biases’. 
 

Examples of nudges in marketing

Nudge marketing is a powerful tool for subtly influencing consumer behavior. It leverages psychological principles to guide customers towards desired actions, such as making a purchase or signing up for a newsletter.

By understanding how people make decisions, businesses can create effective nudges that improve the customer experience and drive conversions. Let's explore some compelling examples of nudge marketing in action.

Using social proof

Websites often display customer testimonials or reviews to reassure potential buyers. This nudge marketing strategy shows that others have had positive experiences, making potential customers more likely to make a purchase. For example, one study found that displaying customer testimonials on a product page can increase conversions by up to 34%³.

Creating a sense of urgency

Limited-time offers or countdown timers encourage customers to act quickly. This taps into our fear of missing out (FOMO) and can be very effective for promoting sales or special offers.

Simplifying the decision-making process

Too many choices can be overwhelming. By offering a limited number of options or presenting them in a clear and organized way, businesses can make it easier for customers to decide. This is especially important in e-commerce, where customers can easily get lost in a sea of products.

Using defaults

Setting a preferred option as the default choice can significantly influence customer behavior. For example, automatically enrolling customers in a loyalty program or pre-selecting a donation amount during checkout can increase participation rates.

These are just a few examples of how businesses can use nudges to influence customer behavior in a positive and ethical way. By understanding the psychology of decision-making, marketers can create subtle cues and suggestions that guide customers towards desired actions without limiting their freedom of choice.
 

Are nudges always for good?

While nudges and behavioral economics might be relatively new concepts to economists, politicians and even psychologists, the marketing world has long suspected there's something going on when it comes to persuasion and cognitive biases. Of course, the real-world applications of nudge marketing have always been there. The work of Kahneman, Thaler, Sunstein and others has simply formalized and codified the ideas behind it.

Is it manipulation? Frankly, yes to some extent. But that doesn’t necessarily mean it’s a bad thing. Nudges are no more persuasive than a Pixar film manipulating you to care about the adventures of Woody and Buzz Lightyear. Someone who doesn’t want to buy a product will still not want to buy a product, no matter how many nudge marketing tactics are used. But those who are undecided or in the consideration phase? That’s different. Ethical nudge marketing focuses on guiding choices and making the customer journey easier, not forcing decisions.

Nudge marketing best practices

If you're thinking about using nudges in your marketing, here are a few best practices to keep in mind:

Applying nudges in marketing to influence customer behaviors

If you’re still thinking 'behavioral economics sounds like some kind of subliminal mind control', you’re not alone. But Nudge co-author Richard Thaler is clear that nudges are only nudges if they’re politically agnostic. They’re not left or right. “We believe nudges must offer options. A penalty or a single-option nudge isn’t a nudge at all. Nudges are perhaps best described as being libertarian.” It’s no surprise that Thaler often signs copies of Nudge with his name followed by ‘nudge for good’.

Nudge marketing offers businesses a way to communicate more effectively. It also gives them a reason to make life as easy as possible for customers.

Nudges have emerged as a powerful tool for businesses to subtly influence customer behavior and enhance their overall experience. By understanding the psychology of decision-making, marketers can design nudges that encourage desired actions, such as completing a purchase, signing up for a newsletter, or choosing a specific product. Effective nudges can lead to increased conversions, improved customer satisfaction, and stronger brand loyalty.

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