“Sludge”: the cognitive barrier harming consumers

At Nudgestock 2020, the leading event for cognitive marketing, the topic of “sludge” was discussed by Dilip Soman, Founder of Behavioral Economics at the Rotman School of Management. Haven’t heard this term before? Let’s break it down:

What is sludge?

Sludge is anything in a process that hinders users. It prevents people from doing the things they want to do and eventually reduces the consumer’s welfare.

Richard Thaler, a professor of Behavioral Science and Economics at the University of Chicago, coined the term.

You can think of sludge as something that clogs pipes in a city’s water system. While the infrastructure (pipes) might run throughout the city, not every person is necessarily receiving water. It might look like they are, but the pipes to some houses will be clogged or leaking.

Sludge can exist in three forms:

• Clunky processes
• Poor communication
• Processes that create negative emotions (embarrassment, shame)

Sludge vs Nudge

You may have heard of “nudge” in a marketing context before. it was also coined by Richard Thaler and describes the act of encouraging people to take action without limiting their choices.

“A nudge is any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives” – Richard Thaler & Cass Sunstein, Nudge: Improving Decisions About Health, Wealth and Happiness.

Nudging is such an effective tool that there are 13 governments around the world with dedicated nudge units, including Japan and Canada.

You can visualize nudges as gates in a fence. If they’re there, people will walk through them. Sludge, on the other hand, is the creation of more fences.

“You can think of sludge as the evil cousin of nudge,” Soman says. “It’s like erecting psychological fences.”

An example of sludge

During his presentation at Nudgestock, Soman described an experience he went through which perfectly summarizes sludge.

Years ago, he purchased a book from a website. In the process, he didn’t notice the small print that was signing him up to a newspaper subscription. When he eventually realized his mistake, he went back to their website and was relieved to see the copy: “Cancel Anytime”.

However, the cancellation process involved:

• A paper letter with a handwritten signature asking to cancel
• Waiting six weeks to have the letter processed
• A subsequent form he had to fill in and return (by fax!)
• A deduction from his bank account for the processing fee

Even though the company made it sound like a simple process, they’d created a series of inconveniences and barriers to discourage him from unsubscribing. This is sludge.

Why do companies create sludge?

The example given above is clearly a terrible customer experience. It can be hard to imagine a case where you would want to make things this difficult for your customers.

Although there are definitely many companies out there intentionally adding sludge to their processes in a grab for higher profits, the majority of sludge is unintentional.

“Sludge is insidious because it’s difficult to see,” Soman argues. “It’s a bit like weeds in your garden. You don’t plant them there, but without continuous monitoring and maintenance, they build up.”

Sludge commonly affects marginalized and poorer people disproportionally. We ask people to take many steps in the belief that they’re in a position to do so, but if you don’t have the time, resources, or opportunities to do so, these steps can become huge cognitive barriers.

“As practitioners, it’s difficult for us to empathize with the context as well as the cognitive and emotional baggage that our end users experience,” Soman explains. Therefore, we must take a systematic approach to continuously prevent and measure sludge. Without clearing out these pipelines, we create the illusion of reach without actually reaching everyone.”

Is sludge always bad?

Extra steps added to a process are not always in bad faith.

For example, contract negotiations go on for a very long time. The many steps involved allow both parties to be completely sure in their decision before they make a legal commitment.

As Soman says: “If divorce was as easy as Amazon’s one-click purchase button, I suspect our world would be dramatically different today.”

In 2020, Twitter tested a new feature to limit the spread of misinformation following the discovery that 59% of tweeted links are never clicked. Twitter said it was to ‘help promote informed discussion’. If launched full time, Twitter users would need to physically confirm they had read an article, before being able to share a link with their followers. While this is technically an extra step that inconveniences the user, it should ultimately do more good than harm.

The first step in making sure your processes are sludge-free (or filled with only the good sludge) is to be aware of it. Hopefully, this article has given you a better understanding of what sludge is and where it might be hiding in your pipelines.
If you’re still interested in learning about persuasive patterns, check out the guide below: 

Click to read Persuasive patterns: designing for the brain