• by Sarah Mahoney , Staff Writer @mahoney_sarah, July 15, 2019

Life is complicated. And many D2C brands — and increasingly, more traditional companies trying to keep up with digital natives — succeed because they help eliminate the pain points or friction that behavioral economists simply call sludge. (Remember how tedious e-shopping was before one-click ordering? Or when you had to buy the whole CD?)

But Cass Sunstein, now the Robert Walmsley University Professor at Harvard Law School, says Americans are still buried under billions of hours of time-wasting annoyances. 

Sunstein, a former White House paperwork reduction reformer, recommends companies conduct regular sludge audits to make sure they’re eliminating as many pain points — and as much friction — as possible. 

Still, such a task isn’t easy. He tells D2C FYI why simplifying is so complicated.

D2C FYI: First, why do companies have sludge?

Cass Sunstein: They introduce administrative burdens they think are easier to navigate than they actually are. We lawyers don't think sufficiently about what the experience is going to be like. 

And sometimes, it’s in a company’s economic self- interest. For example, if you offer a $15 rebate for mailing in a form, the company knows that a lot of people are going to lose the form, or that people won’t cancel subscriptions. Sludge can be a fiendish but smart strategy.

D2C FYI: Even smart companies do this, right? Apple, famous for ease of use, has those ridiculous user agreements.

Sunstein: Definitely sludge. It’s material you have to navigate. For many users, it’s useless.

D2C FYI: I know you were the administrator of the White House Office of Information and Regulatory Affairs from 2009 to 2012. What kind of sludge were you tackling there?

Sunstein: I was overseeing the Paperwork Reduction Act, so we were trying to simplify things like the FAFSA, which is how students apply for financial aid. The idea is that reduction can save time and reduce psychological harm. And it's also getting people access to something.

D2C FYI: But some industries rely on keeping things complicated, right? Financial services people, for example, need the rest of us to think we couldn’t possibly invest on our own.

Sunstein: Completely. So the IRS, for example, has taken steps to simplify tax returns. Not as much as it should…but still, that’s not good for Turbo Tax. People who can profit from saying “We'll help you through it” aren't so interested in taking sludge away.

D2C FYI: Can you give us some sense of sludge magnitude?

Sunstein: Americans spend billions of hours on information collection requests. The IRS is a major offender, but we did regular audits on all departments, from corrections to education to transportation, and eliminated hundreds of millions of hours in paperwork burdens. 

Here’s one: Truck drivers used to be required to inspect trucks at the end of the day, and then again in the morning. That's ridiculous. So that was really helpful for truck drivers. 

D2C FYI: Don’t we need some sludge?

Sunstein: In some case, there's a necessity for a degree of sludge, like determining eligibility for private and public sector benefits. But the magnitude is often higher than it needs to be.

D2C FYI: How can companies start a sludge audit?

Sunstein: They can start asking, “What is deterring business? What’s making our customers struggle when they don’t need to?  What kind of experiences are our workers facing?” 

The idea is to remove administrative burdens. You can ask a random sample of customers or employees to get informal qualitative answers. You can also do it with numbers, and find out how many hours are spent [with unnecessary sludge].

D2C FYI: When do you think sludge audits will enter the business mainstream?

Sunstein: It's very early. The term sludge, in this context, has only been around for about a year, and credit goes to my colleague, Richard Thaler. We wrote “Nudge: Improving Decisions About Health, Wealth, and Happiness” together, and we’ve been talking about these issues for 20 years. But yes, interest in sludge reduction is growing by leaps and bounds.

D2C FYI: Got T-shirts yet? Or bumper stickers?

Sunstein: No, but that’s an excellent idea.

D2C FYI: Other tips? 

Sunstein: First, life is short. Second, stepping back and reevaluating practices, especially if they've been going on a long time, is often not welcome. But it can be a phenomenal driver of customer and employee satisfaction and business growth.