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The Background

The Economist faced the task of getting its subscribers to renew their subscriptions on time. Having customers renew their subscriptions before the expiry date was a challenge indeed. The subscriber, who would renew post an expiry date, would have a gap in his/her subscription and which in return would have a negative effect on sales. So the task was to get more renewals to happen before customers' subscription expired.

Before implementing our Behavioural Design solutions, The Economist would run a series of efforts largely via Direct Mail and E-mail, informing customers that it was time for them to renew their subscription. Along with informing customers, The Economist would offer an expensive gift and a flat 10% discount to customers, to lure them to renew on time.

Behavioural Design Solution

Nudge #1 - Loss Aversion
We applied the principle of Loss Aversion to the discount being offered to customers. So instead of communicating that we were offering a 10% discount upon renewal, we communicated to customers that they would lose the 10% discount if they didn't renew before the due date.

Loss Aversion is our tendency to be more sensitive to possible losses than to possible gains. Loss Aversion happens to be one of the most researched and supported principles of Behavioural Science. It proves that we humans are more motivated to avoid losses than we are to acquire gains. Simply put, we hate losing more than we love gaining.

Source: Daniel Kahneman and Nathan Novemsky - The Boundaries of Loss Aversion - Journal of Marketing Research 42 (2005):119-128.

Nudge #2 - Making the Deadline Salient
We kept the due date 3 weeks prior to the actual subscription expiry, because that's the time we needed to ensure that payments were received, and that there was no gap in the customer's subscription. The due date created a focal point and a sense of urgency to renew. Instead of just mentioning the due date, it was made salient by showing how close the due date was when viewing the communication on renewal. So the due date became the date the customer would lose the 10% renewal discount.


The Behavioural Design solution achieved the same percentage of on-time renewals as the existing marketing effort, but without offering customers the expensive gift. That led to a 20% savings in cost, for The Economist.

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