Carragee Consulting

Continuing on with re-reading Nudge, by Cass Sunstein and Richard Thaler I got to their chapters on Sludge — the Nudges that go against consumer interests, that would not exist in the author’s Libertarian Paternalist ideal state.

Sludge includes all unhelpful nudges in place which create friction and time sucks in processes, make price comparisons opaque and prey on our natural tenancies to stick with defaults.

A big focus in the Sludge section is on auto-renewal policies, opt-out language and all the ways companies try to prevent customer churn by means other than delighting them.

With the rise of SaaS and monthly subscription pricing for seemingly anything “loyalty programs” seem less a test of customer satisfaction and more of their organizational skills — did you set a calendar reminder to cancel that free trial?

Many banks are competing for new deposits with high rates or even cash rewards. My credit union is offering 11 month Certificate of Deposits at 5.25% APY with the catch that you have only a 10 day grace period at the term end to move your money out before it’s subject to an automatic renewal at the then current rates and an early withdrawal penalty that negates the prior year interest.

Companies (and employers) have trained us that “loyalty discounts” are available only to those who threaten to terminate services or get better offers from competitors.

Consumers are being trained to be price buyers and either suffer the hassle of swapping phone carriers, credit cards and insurance plans annually for the best deals or pay a premium to maintain the simplicity and consistency associated with the incumbent service.

Employees are provided with raises below inflation and below the rates of new employees coming into the company and so they learn to maximize lifetime earnings by switching jobs and seeking advancement with competitors.

It’s tempting to think these companies are as calculating and insidious as the insurance company Tyler Durden works for in Fight Club, but I very much doubt they’ve run the math on the churn drivers and the various sludgy terms and conditions of their contracts.

Thanks to David McCandless – who showed me the quote from Tableau that only “83% of CEOs want their business to be data driven” —
framing the curious question of how many maddening policies are set by people who are cleverly maximizing some desired outcome by charging a Convince Premium vs blithely ignorant of the long term damage of the Loyalty Penalties.

Link to Fight Club Movie Clip:
https://lnkd.in/g4MB7Bwk

Value of life insurance quote:
https://lnkd.in/gPWfcqFb