Thursday, November 18, 2010

Nudging (Part 1) : A Preface to Michaelnomics

 "Nudging" is a term used to describe certain ways of laying out webpages to push the webpage user in a desirable direction. It is sort of like the mother elephant nudging along the baby elephant. She does it delicately but with brute force, all that is at her disposal to influence her child. Perhaps this is similar to the mother bird nudging her chicks to the edge of the nest and giving that one small tiny push that makes all the difference. In the hands of family and friends nudging can lead to a desireable outcome that is good for all. In the hands of society, nudging has a fairly good reputation as well. In the business model moral values while in existence are really superceded by the value of profit.

The first time I noticed nudging was on a site owned by the company RealNetworks. In the early days of the Internet, this company's product "RealPlayer" was the bee's knees. Some people said if you had enough speed (we now call it bandwidth) you could even stream music. Perhaps there would be a day when you might even stream video, but that seemed quite a longshot on our dial up connections, as slow as they were in the beginning.

Real "Audio" Player (video being a pipedream) was a freebie program. RealNetworks knew there was a limited number of people who would purchase things on the Internet, so the question was how to make that profit? Later versions of RealPlayer eventually included extra features that carried a price tag. However, people being like they are mostly chose the free version. Then came a nudge or two. When someone clicked on "download the free version"  they got a page telling all about the non-free version with extra features. The page talked all about these features and had a large button to download it. Somewhere down in the corner was a very small "download the free version."  Later another page was added, are you sure you don't want the Real Player Deluxerooski, and again, now in a different place on the page was the nondescript and small "download the free version." Customers must have mostly included people who weren't very good at the Internet and thought they must pay and clicked on the Deluxerooski Switcherooski button which was the only one they could find after being promised something free.

Another company that did the same thing was WinZip. This program and RealPlayer have competition with Microsoft and their great dreams of extreme profitability are toast. When confronted with a monopoly, most companies can't compete effectively. RealPlayer had the right idea in the beginning. Expand your Internet customer base by offering something free that they learn to depend on.  Once your name is widely known, then you can look into the profits. Timing was critical here. Perhaps they nudged a bit too soon or too hard, but Windows Media Player and Adobe Flash have basically taken over.

Nudging, while being effective and much more prevelant, is usually very subtle. Nudging as a concept is really quite expansive as I'll point out sometime later. But don't often see major companies using the obvious old fashioned nudge. But one major company that I often use shines out as three card monte on the boardwalk nudger: PayPal. Friendly little PayPal is an "e-commerce business" now owned by E-Bay, that friendly little company that arranges contracts between buyers and sellers of used and new items. Here we find our friend "Mr. Nudge" hard at work deciding whether we should pay through a bank draft (which I had to set up to get an account) or a credit card. PayPal nudges in a hard way towards my bank account. They don't have a familial concern over their customer's use of credit, they are concerned that PayPal must pay extra for this type of transaction.

So the nudging starts. First they use defaults carefully. Everytime I pay for an item I must remember that the PayPal will default to my bank account, no matter what my last choice was. Paypal does not give me a choice of a "preferred method of payment" they choose my preferred method of payment for me. After I choose "another payment method" and choose "credit card" a screen pops up that tells me of the wonders of using my bank account. Until about a year or two ago, these advantages included a statement that my transaction would be guarenteed by PayPal (PayPal's main draw). It was worded in such a way that it did not exclude the possibility that my transaction might also be guarenteed if one used a credit card. It just hinted. I see that while the nudging has continued this particularly egregious nudge has changed and the statement now says the transaction is guaranteed either way. (Actually it seems that it would be doubly guaranteed using a credit card because of the ability to dispute charges through this second company.)

While they took away this fudgy nudgy statement about guarantees, they substituted button colors. A button color that is universally known to be nonfunctional is gray, especially when next to a button that is blue or bright. The phrase "grayed out" is used to describe buttons that are non-functioning. Usually a button is grayed out if you have previously done something to disable the choice. For example, you choose pickup truck earlier so "sedan" is now grayed out below. Or you choose "none of the above" so the other buttons above are grayed out so you cannot now choose them. You must have guessed by now, "pay with credit card" is grayed out on the final choice menu as if it is for some reason, not an option. However, clicking on the button will indeed make it work.

Other techniques, these used by charties, described:
Nudge Your Users in the Right Direction