Nudge Your Customers Toward Better Choices

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Table of Contents

Introduction
Main Purpose
Objectives
Summary
Justification of Considering the Defaults Design
Mass Defaults
Personalized Defaults
Algorithm for Choosing Defaults
Conclusion
References

Introduction

Businesses are always seeking ways of improving their offer to facilitate benefit for the company. One such tool is suggested in the article by Goldstein et al. (2008), which gives an overview of the possible default parameters of products. Defaults are the properties of products that are chosen by the company and which are accepted as a client’s choice unless they actively change these parameters. The article states that managers should pay the defaults design more attention. It reviews the benefits and risks connected to defaults and suggests a taxonomy of defaults. This taxonomy classifies the common types of defaults in order to help the companies choose the most optimal one according to their products, customers, and aims. The current work summarizes the main ideas of the article and discusses how the suggested solutions may help businesses.

Main Purpose

The purpose of the article is to provide a useful tool for optimizing defaults design. This tool should facilitate reasonable decisions considering the interests of the company and its clients.

Objectives

There are several objectives to consider in the analyzed article. First, it presents notable cases of defaults design in different companies, such as Dell, Audi, Daimler, and AT&T. Second, the article justifies the rationale to design defaults properly. Third, it suggests a division on mass and individual default depending on the primary type of clients. Moreover, the authors describe several types of defaults, mentioning profits and risks for each one. They also discuss the case when the suggested type does not reflect the company’s situation. Finally, the article presents an algorithm for choosing a suitable default according to the company’s features.

Summary

The Article Reviews Cases of Defaults Design

There were numerous cases of defaults used in different companies, and the article lists some of them. For example, it discusses a program that violated clients’ privacy. Although this mistake was probably unintentional, the company had to spend many resources to dispose of the matter, not to mention that it was demanding to return customers’ trust. Furthermore, examples of successful practices are also provided in the paper. For instance, AT&T changed the default from printed bills to electronic versions and could reduce expenses, along with meeting customers’ needs. Thus, the article demonstrates that defaults design brings about differences in the functioning of the business.

Justification of Considering the Defaults Design

The author’s highlight that defaults design should be reasonable. They argue that little attention seems to be paid to the problem and that the highest levels of organizations should consider the issue properly. It is also stated that it is not sufficient to give a final choice to programmers and designers because they have a specific point of view, which is unlikely to reflect the view of customers. In other words, defaults should be explicitly addressed by managers who are aware of the influence of defaults.

Mass Defaults

Furthermore, the article assumes that defaults can be chosen depending on the type of clients that the company has. If the business deals with large numbers of similar customers, it is more likely that such a company may choose mass defaults. Such defaults are oriented on an average customer and usually satisfy the needs of the majority. If the company can accurately guess what the customers’ main interests are, they may use benign defaults. However, the company may also rely on random defaults in the absence of any information on its customers. Although mass defaults do not satisfy some customers, they are useful when the business focuses on the majority rather than on individuals.

Personalized Defaults

The companies working with customers having high variability of requests should think about personalized defaults. This type demands using the personal data of customers, and that is why it is more likely to put customers at risk. Therefore, companies using personalized defaults must constantly monitor data safety. Nevertheless, as soon as the security measures are taken, the company can adjust default for individual preferences, thus enhancing client satisfaction. Some personalized defaults imply constant updates to the customer’s profile, while others assume that the characteristics are stable.

Algorithm for Choosing Defaults

Based on the investigation of risks and benefits of each type of default, the authors suggest an algorithm helping to find out which defaults variant suits the company’s current situation. This algorithm consists of yes-no questions about the products, customers, and data available. Going through all the questions should not be demanding because the whole process takes from two to four questions. However, the authors note that this model is a generalization, and it does not give conclusive suggestions because implications for profits, customer loyalty, and social welfare should be considered as well.

Conclusion

To conclude, the article provides a comprehensive overview of using defaults in business. Overall, it shows how an educated approach to defaults design benefits businesses, promoting clients’ satisfaction, lowering risks, and enhancing profits. The authors conduct thorough research and introduce a helpful model that guides the choice of the optimal defaults for specific products. The model assumes that the first question to ask is whether the product targets average needs or it is to satisfy individual interests. Therefore, the article suggests a simple yet useful tool to improve business quality.

References

Goldstein, D. G., Johnson, E. J., Herrmann, A., & Heitmann, M. (2008). Nudge your customers toward better choices. Harvard Business Review, 86(12), 99-105.

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