Nudges are a key behavioral science technique—simple prompts that encourage people to take certain actions without limiting their choices. Nudges use behavioral economics and psychology to influence user behavior in a way that feels natural. By subtly influencing the decision making process, nudges help make more informed choices.
The idea of nudging originally gained prominence in economics and public policy, championed by Nobel laureate Richard Thaler and Cass Sunstein in their 2008 book, Nudge: Improving Decisions about Health, Wealth, and Happiness.
Since then nudge theory become a powerful tool in marketing. It has helped brands influence consumer choices in ways that feel organic and non-intrusive.
Nudges help shape consumer choices. They can remind users to finish purchases or show useful features without being pushy. As commerce shifted online, nudges evolved from manual strategies to AI-powered tools.
Artificial Intelligence has taken nudging to a new level by personalizing prompts in real time. It uses data like browsing history, past purchases, and behavioral signals. These are not just AI-driven nudges. They are evidence-based cues or suggestions specific to each individual’s needs and preferences.
With AI, nudging have become more precise, scalable, and efficient. They not only drive sales but also generate more personalized customer experiences. As AI continues to advance, these nudges will only become more powerful, enhancing both conversions and customer satisfaction.
The Current State of Nudges in Business
Why Are Dynamic Experiences Gaining Importance?
Saturation of Traditional Channels
In the past ten years, B2C companies have relied on push notifications, SMS, and emails. They bring users back to their apps with these communication channels. However, as these channels have become oversaturated with nearly every business adopting them, their effectiveness has drastically diminished.
On average, a consumer receives 46 push notifications per day, leading to an overwhelming flood of marketing messages. As a result, the impact of these channels has significantly declined, losing much of their earlier effectiveness.
Growth of Super Apps
Super apps—platforms that combine multiple services into one application—are now dominating the market. While convenient for users, they present new challenges for companies:
- Complex Onboarding: As apps add more features and services, new users often feel confused during their first experiences. Navigating and discovering the full potential of a super app can become daunting.
- Habit Formation: Once users know a part of the app, they usually stay in that part. They rarely explore new offerings or updates, making it difficult for businesses to drive engagement with newer features.
Performance vs. Other Channels
CTR Comparison: In-app, Push, SMS, and Email
- In-app: Dynamic experiences like floaters, walkthroughs, and media elements typically achieve ~25% CTR.
- Push Notifications: Average CTR of 5%.
- Email: Average CTR of 2.5%.
- SMS: Average CTR of 5%.
What Are the Most Common Use Cases?
Use Case Breakdown
- Feature Adoption & Cross-Sell: Over 40% of apps focus on this to enhance user experience.
- Onboarding: Accounts for 31% of use cases.
- Quick Experimentation: 18% of use cases focus on this to refine offerings.
- ARPU/LTV Increase: 16% aimed at driving average revenue per user and lifetime value.
As we move further into 2024, the landscape of customer engagement and nudges is undergoing significant change. More dynamic, in-app experiences are increasingly eclipsing traditional channels like email and SMS.
In-app engagement features like tooltips, spotlights, walkthroughs, and DIY nudges (both audio and visual) are effective. They have a click-through rate of about 25%. This is much higher than the average click-through rates for push notifications, which are 5%.
SMS messages also have a 5% click-through rate, while emails have a rate of only 2.5%. This rate is much higher than the average CTRs for push notifications (5%), SMS (5%), and email (2.5%).
This change shows that users prefer non-intrusive and relevant engagement in the app. It signals a shift in what users expect and how they behave.
In 2024, interactive nudges will focus on specific user actions and stages in the customer journey. This approach will mainly improve customer engagement.
Users are becoming increasingly desensitized to traditional push channels like email and SMS, gravitating instead toward immersive and contextual in-app experiences.
The trend shows that B2C brands need to focus on a more detailed, experience-based strategy. This will help them keep and convert users better.
Evidence of This Shift
Use Case Focus: The most common use cases for in-app engagement have evolved:
1. Feature Adoption & Cross-Sell (40%): Successful brands use in-app nudges to show new features. They also promote extra services during the user journey.
2. Onboarding (31%): Interactive app walkthroughs and floaters are crucial for educating users and ensuring a smooth onboarding process.
3. Quick Experimentation (18%): Brands use in-app prompts to test new features. They gather user feedback and improve their offerings quickly.
4. ARPU/LTV Increase (16%): We use personalized nudges to boost average revenue per user and lifetime value. This encourages repeat transactions.
Industry-Specific Preferences:
1. Financial Services: Rely heavily on widgets (35%) and streaks/milestones (28%) to keep users engaged across various services.
2. Media & Entertainment: Use audio, video, and other elements to create a sense of achievement and build user loyalty.
3. eCommerce: Utilize DIY nudges (28%) and recommendation grids (25%) to boost conversions without disrupting the shopping experience.
Traits of High-Performing Experiences:
1. Value Proposition Communication (42%): Clear in-app nudges show users the value of new features, content, or offers.
2. Short Walkthroughs: Walkthroughs with 3-4 steps have a 12% conversion rate for goal events. This shows that users like clear guidance. They want help to quickly reach their goals.
Nudging Techniques for B2C Brands to Leverage In-App Nudges in 2024
1. Prioritize Contextual Relevance: Implement nudges that are contextual to the user’s current action or location within the app. For instance, trigger a walkthrough when a user accesses a new feature for the first time or highlight a special offer on the checkout page.
2. Leverage Micro-Experiences: Use short, interactive elements like stories, floaters, and widgets to engage users. These micro-experiences can deliver information quickly without overwhelming the user, leading to higher engagement and conversion rates.
3. Personalize Based on User Journey: Segment users based on their behavior and stage in the customer journey. Tailor nudges for new users to focus on user onboarding. While existing users might receive cross-sell prompts or notifications about new features that align with their usage patterns.
4. Experiment and Iterate: Use quick experimentation with in-app nudges to test different approaches and measure their effectiveness. A/B testing various nudges will help identify what resonates most with your audience.
5. Focus on Seamless Onboarding: Create engaging and intuitive onboarding experiences using walkthroughs and tutorials. The first few interactions are crucial for setting the tone of the user’s relationship with the app.
6. Highlight Value Proposition: Ensure that nudges consistently communicate the app’s value. Whether it’s through new features, content, or deals, users should understand the benefit of engaging with the nudge immediately.
7. Adopt Industry-Specific Strategies: Tailor your nudge strategy based on your industry. For example, eCommerce apps/websites should focus on nudge marketing through DIY nudges, Alert nudges, and FOMO tags and recommendation grids. While financial services apps might benefit more from widgets and milestones.
8. Utilize Data to Refine Engagement: Analyze user engagement data to understand which nudges are driving the most value. Use this data to continuously optimize the timing, messaging, and format of your nudges.
9. Avoid Intrusiveness: Ensure that nudges enhance the user experience rather than interrupt it. Subtle prompts that guide users without being overly aggressive are more likely to be well-received.
10. Emphasize Clear Calls to Action: Each type of nudge should have a clear and concise call to action (CTA) that guides the user toward the next step, whether it’s exploring a new feature, completing a purchase, or engaging with content.
Future of AI in Nudges
When it comes to customer behavior, a one-size-fits-all approach doesn’t work. You need to tailor each interaction to individual preferences and behaviors.
AI and machine learning are revolutionizing this by engage customers based on their individual preferences and behaviors, and turning static nudges into dynamic, real-time interactions.
Instead of fixed, rule-based prompts, AI is creating personalized experiences that adapt to users in the moment, based on their actions, preferences, and even moods. This marks the beginning of a new era, where AI fine-tunes each nudge to drive deeper engagement and more conversions.
Dynamic, AI-Powered Nudges
Traditional nudges, like cart abandonment emails or discount notifications, follow preset rules. While useful, they lack the adaptability today’s consumers expect. AI changes this by making nudges more responsive.
For example, if a customer hesitates on a purchase, AI can instantly suggest a more relevant product or offer a time-sensitive discount based on their browsing behavior. This real-time adjustment makes the interaction feel more natural and less forced, boosting success rates.
Machine Learning and Predictive Analytics
The true power behind AI nudges comes from machine learning and predictive analytics. These technologies allow businesses to create detailed customer profiles and predict future actions based on past behavior. Leverage AI algorithms to suggest products or content before the user even searches for them, and over time, the AI learns and refines its strategy, becoming more precise with each interaction.
This capability is especially impactful in e-commerce and entertainment. Predictive models nudge users with the perfect product or content at the right moment—like recommending a show just as a user finishes another, keeping them engaged longer.
Personalized Nudges via Voice Assistants and Chatbots
The future of AI nudging isn’t limited to apps or screens. Voice assistants like Alexa and Google Assistant, as well as chatbots, are becoming smarter and more attuned to user preferences.
Soon, these AI-driven tools will deliver real-time nudges across various touchpoints, whether it’s suggesting a recipe while you’re cooking or reminding you to take advantage of a sale.
As these technologies evolve, nudges will become even more contextual, blending seamlessly into everyday tasks.
Example: Spotify’s AI Recommendations
Spotify shows how AI can help by looking at users’ listening habits. It suggests songs or playlists that match their tastes. For instance, if a user starts the day with mellow music, Spotify might recommend a “Morning Chill” playlist.
As the user’s mood shifts, so do the recommendations. These adaptive nudges keep users engaged by continuously aligning with their changing preferences, making the listening experience more personalized and enjoyable.
AI-powered nudges are shaping the future of customer engagement, making interactions more personal, timely, and impactful.
Benefits of AI Nudging: Unlocking Behavioral Insights
AI-powered nudges give businesses the ability to create more precise, personalized, and perfectly timed interactions with customers. These advantages can dramatically boost engagement and conversions by delivering what the user needs exactly when they need it. Here are some key benefits of AI-driven nudging:
1. Hyper-Personalization
AI allows for deep, individual-level personalization by analyzing data like browsing history, purchase patterns, and behavioral signals. This goes far beyond traditional demographic-based targeting.
With AI, businesses can offer tailored prompts that match each user’s preferences and behaviors, making interactions more relevant and engaging, which leads to higher satisfaction and conversions.
2. Scalability
Personalizing prompts for millions of users at once is where AI truly shines. Human-driven personalization has limits, especially for large audiences with diverse behaviors. AI processes vast amounts of data in real time, delivering personalized nudges at scale without compromising quality.
This scalability ensures that businesses, whether small or global, can engage their entire user base with relevant nudges—no matter how many users they have.
3. Perfect Timing
AI optimizes the timing of nudges to ensure they’re delivered when users are most likely to act. By analyzing patterns like user activity and purchase timing, AI sends cues at just the right moment, making them feel natural instead of disruptive.
A nudge sent at the wrong time can be ineffective or even annoying. AI ensures that nudges are both personalized and perfectly timed to align with user behavior, increasing the chances of conversion.
5 Practical Ways to Use AI Nudges
AI-powered nudges are changing the game, offering timely and relevant prompts that influence customer decisions. Here are five effective ways businesses can use AI-driven nudges to boost engagement, increase conversions, and drive revenue:
1. Personalized Product Recommendations
AI analyzes user behavior and purchase patterns to offer tailored product suggestions. These real-time, relevant recommendations encourage customers to explore items they might not have considered.
Example: Amazon’s “Frequently Bought Together” feature suggests related products based on buying trends. If a customer is purchasing a camera, Amazon might nudge them to add accessories like a lens or tripod, increasing the overall purchase value.
2. Cart Abandonment Nudges
AI can help recover abandoned carts by sending automatic reminders via email or SMS. Personalized nudges with product images or time-sensitive offers encourage customers to complete their purchase.
Example: Shopify’s AI-based cart recovery tool tracks customer behavior and sends targeted messages, sometimes offering discounts or free shipping to boost conversion rates.
3. Behavior-Triggered Emails
AI tracks user interactions and sends timely, personalized emails based on their behavior. Whether it’s hesitation at checkout or indecision during a free trial, these nudges address the friction points directly.
Example: HubSpot’s AI triggers follow-up emails when a lead repeatedly visits a pricing page. A nudge offering support or a limited-time promotion can help move the lead down the funnel.
4. Nudges over In-App Messaging for B2C Apps
For B2C apps/platforms, AI nudges have replaced in-app messages in the form of tooltips or spotlights, audio-visual nudges, to prompt users to explore in-app purchases and features they haven’t tried or to engage more deeply with the platform, improving satisfaction and retention.
Example: Shadowfax used nudges to encourage their users to adopt the “One Click” feature, achieving a 69% increase in feature adoption. By leveraging behavioral psychology, they nudged users to provide feedback and pick up their first orders, streamlining their operations and enhancing engagement.
This approach not only boosted feature adoption but also optimized their rider onboarding and feedback processes, driving significant impact on their workflow.
5. Dynamic Pricing Nudges
AI dynamically adjusts prices based on demand, user behavior, or competitor activity. Pricing nudges inform customers of price drops or alert them that prices will rise, creating urgency.
Example: Uber’s surge pricing uses AI to nudge users when demand is high, warning them that fares might increase if they wait. This encourages immediate bookings while optimizing revenue during peak times.
AI-driven prompts are revolutionizing the way businesses engage with their customers. They deliver enhanced precision, customization, and impeccable timing. AI-driven prompts are altering how businesses communicate with customers. They ensure superior accuracy, customization, and timing.
For instance, they can recommend the appropriate product or assist in retrieving deserted shopping carts. AI is reshaping how businesses comprehend customer requirements and sway their decisions.
As AI in sales keeps growing, its power to drive success will get stronger. Businesses that use AI nudges now will increase conversions and build customer loyalty. These nudges are no longer just a bonus; they are essential for staying competitive in today’s digital world.
The future of sales is clear: AI-powered nudges will be key to improving customer satisfaction and driving revenue. If you’re not using them yet, now’s the time to start unlocking their full potential.
