We’ve all heard about nudge theory, the art of creating choice architecture that uses tactics based on behavioural science to guide customers towards a better option. Now we need to deal with the sludge!
So what is sludge? The originators of nudge theory, Professor Richard Thaler and Professor Cass Sunstein proposed that ‘good’ nudges be transparent, retain the original choices, provide easy opt-outs and encourage behaviour in the user’s best interests, for instance making long-term savings or healthier food choices. A nudge that fails any of these criteria or that includes off-putting barriers to achieving a goal is a ‘sludge’. Instead of benefitting the user alongside the other parties, it benefits only a business, organisation or the government, by increasing profits and reducing successful claims for benefits.
Here are some examples. Making it difficult to cancel subscriptions. Hiding the cheapest option so a customer pays more than they need to. Ignoring customers trying to get refunds, by ghosting their emails or leaving them hanging on the phone. Yes, sludge is everywhere and a lot of it isn’t the result of bad intentions, just bad processes. What is heartening is that the digital revolution gives us all chance to do away with sludge by creating positive experiences that benefit users.
A lot of sludge isn’t intentional, it builds up over time, like limescale in a kettle. It happens because customer journeys aren’t thought through or because a business only has time to think of a quick fix to a sudden problem, without thinking of how laborious the resulting process is for customers.
Sludge takes time and resources to fix – think of the back-end systems involved in automating refunds rather than making customers apply for them. But in the same way that every now and then you need to descale a kettle, businesses should examine their customer experiences periodically to rid them of any incremental sludge. It’s the kind of thing that is always on the backburner for businesses, but sooner or later as the sludge builds up, competitors offering sludge-free experiences that are built around the customer will will start stealing their market share.
Some sludge is deliberate. It’s there to drive profits or stop people getting what is due to them. For instance, the monthly subscription that in order to cancel you have to phone a barely functioning helpline during work hours or send a written letter by a certain date. Gym memberships are notorious for this, sometimes insisting that people pay for months of service that they can no longer use, for instance because they’ve moved house. A YouGov survey found that 47% of respondents had accidently signed up for an annual subscription and one in eight people kept paying for over 4 months before getting round to cancelling.
Pressure selling – ‘only 1 room left at this price’ – can also be sludge if it’s disingenuous. Which? found that Booking.com (and no doubt others) leverage rarity to encourage the user to buy, which seems a fair tactic when it’s true, but when it isn’t: not so much.
Then there’s the ‘Save xx’ sludge, where a price has been substantially cut, but customers might not be aware that it was only at that price for a very short time, or when demand was very high and supply was low. And ‘additional charges’ sludge, where for instance, having bagged your barginous flight, you then have to add on various extra costs, and suddenly the cost has jumped by 30% but at this stage it’s too much hassle to scope out other airlines. It’s true that a huge number of businesses and organisations use these tactics because they work, but sooner or later challenger brands will appear who steal market share precisely because they don’t.
Covid cancellation sludge
A lot of sludge has been created due to the restrictions and cancellations of the pandemic. It’s not surprising that many travel companies faced a backlog in refunding customers, given the high volumes they were dealing with, but some weren’t just slow they were obstructive.
German broadcaster Deutsche Welle cites the case of the Kliese family who used Opodo to book Swiss Air flights for a holiday in Thailand in July 2020. When the flights were cancelled shortly before their trip, they decided not to travel at all, but Opodo offered only rebooking or vouchers even though customers were entitled to get their money back. Misleading information and unanswered emails meant that the Klieses had to resort to their own legal insurance and Flightright, a customer rights portal, to be reimbursed. Many other customers will have given up on seeing their money again.
In December 2020 Eurostar were sternly ticked off by the train regulator for not making it clear to customers with cancelled trains that they were entitled to a full refund, instead channelling them towards e-vouchers or rebooking. In a letter from the Office of Rail and Road’s Head of Consumer Policy, Marcus Clements, he noted ‘The cancellation email still omits clear and prominent reference to a passenger’s contractual entitlement to a cash refund…The consequence of this is likely to be passengers not accessing the refunds to which they are entitled.”
Sludge has also dripped into office space and event bookings. New York based magazine Slate reported in May 2020 that WeWork were stalling on requests by businesses to move out of office space. Nexus Academics were already planning a move but found it impossible to give notice because they couldn’t get through to WeWork. They then missed the deadline for notice by a few days and were told they would have to stay an extra month. Meanwhile ticket resale company Viagogo refused to refund music fans for yearly festivals that they deemed ‘postponed’, even if the festival itself wouldn’t be taking place until the following year, and the festival organisers deemed it ‘cancelled’. Again, eventually they paid up to some fans, but many wouldn’t have pursed it to this point, instead taking Viagogo’s suggested option of selling on their ticket via the website, allowing Viagogo themselves to gain a 24% commission.
How can we stop the sludge?
Policymakers sometimes legislate against the very worst sludges, but it would be impossible to deal with all of them this way, but there’s work all of us can do. Businesses and organisations who want to be truly customer-centric should aim to be simple and transparent in their customer journeys, set their own anti-sludge policies and carry out ‘sludge audits’ periodically to ensure that they are providing the best experiences.
Consumers can help themselves by wising up to the worst sludge tactics and either ignoring them or pushing back with the help of consumer groups. And as practitioners of user centred design, agencies can also help lead the charge against sludge and deliver a business advantage to our clients. By creating better customer experiences, we can both improve NPS scores and ensure businesses hold on to and increase their market share by giving people what they want in simple, easy, transparent ways.
So the next time you’re considering, or going on, a customer journey, look out for sludge. Just like picking up rubbish when you’re out for a walk, we can all make small changes that together make a big difference – and leave the world a better, less sludgy place than we found it.
The BIO Agency work with clients to create exceptional experiences that have impact because they’re based on real human behaviour. To talk to us about your business challenges, contact us here