You’re Spending Too Much Cognitive Currency

The realm of behavioral economics is an ocean of fascinating insights, full of profound implications (and confusing thoughts) for product managers — especially for those of us in the wacky world of SaaS. At the intersection of psychology and economics, it offers an understanding of why people make the decisions they do, shaping patterns of purchasing, upgrading, returning, or even canceling a product or subscription… but only from a logical standpoint.As humans, we know that behavioral economics only represent part of the equations for how humans decide to buy or do something.  One concept that I’ve extended from the Cognitive Load Theory is the idea of “Cognitive Currency”. This idea is centered around how users engage with a product or service, and how their mental resources are “spent” as they onboard and use the product. Many product managers assume the goal should always be to reduce friction aka cognitive load aka cognitive spend as much as possible, but it’s a bit more nuanced than that.

Understanding Cognitive Load and Friction

When we talk about the cognitive load in product design, we’re talking about the mental effort required by the user to interact with a product. It’s a subtle yet significant distinction from friction. Friction typically refers to steps or elements in a user’s journey that slow them down or prevent progress, like a confusing form or a long loading time. Cognitive load, on the other hand, relates to how much mental processing power is required for a user to complete a task, and sometimes more complex and rewarding tasks are more expensive. An example of friction is asking for information that you really don’t need or already have. I’ve seen tons of examples where the user is asked to provide an address and then asked again to select a country from a massive drop down menu. I’ve also seen instances where country is asked for, but type/search isn’t enabled so the user has to scroll and read every country name to ensure they find the correct choice. In these situations you’re spending way more than you should for no reason at all. An example of a higher cognitive spend for a more rewarding and complex task might be a designer setting breakpoints for multiple screen sizes. They need full control over each component on the screen as well as the space that surrounds it. This isn’t the fun and creative part of designing for most, but it’s critical part of the process. Figma and Webflow both offer great options for handling this specific step, neither of which are “cheap” in cognitive currency — at least at first.

The Cost of Onboarding

Your first interaction with a user is almost always the most expensive. Many businesses struggle to find a balance between getting the information they feel is necessary to give the user the best experience and  delivering simple and delightful onboarding experiences. Slack’s onboarding process is a prime example of this. They’ve cut down the process to just a few easy steps, making the process intuitive and less cognitively taxing. The simplified process allows users to keep more of their cognitive currency to spend inside the product — where it’s ultimately more rewarding.

Aside: So why not skip onboarding?

Dropping new users directly into your product is a fantastic way to reduce cognitive load but it’s a risky strategy for companies with a traditional model of capturing leads and converting them into customers.  For this strategy to work, the product needs to prove itself by:

• Doing what the user needs it to do.

• Being intuitive and easy to understand.

• Being delightful and objectively better than its competitors.

Canva does this superbly, taking users straight to the canvas to start designing. They ask the user to create an account after they have already accomplished something meaningful and want to use it or share it.

Leveraging Visual Hierarchy for Subconscious Processing and Prioritization

Understanding and employing visual hierarchy can make a user’s journey significantly smoother. By emphasizing key elements, you can guide the user’s attention towards what’s most important, reducing the cognitive load. Airbnb does a stellar job with this, using size, contrast, and placement to intuitively guide users’ actions. This also applies to experience like app/site navigation and search filtering. See how they use simple inputs while communicating what those mean in a visual way. Less reading, and more subconscious processing to reduce that cognitive spend.

Other Ways to Reduce Cognitive Spend

Use of Familiar Design Patterns

Familiar design patterns can significantly reduce cognitive load as users don’t need to learn new ways of doing things. This is why digital products tend to adopt consistent keyboard shportcuts or functional commands used in similar contexts. Examples:

• In WordPress, Notion, Coda, and other text-based content editors you can type / to choose a block or command.

• In Slack and other chat/social channels you can use :slug: to add emojis.

• In almost every app, page, browser, etc. you can right click on an element to get more information, options, etc.

Guided Actions with Tooltips

When users interact with a new product, tooltips can be helpful in guiding them through the functions. By providing in-context help, they reduce the mental effort required to understand the application and prevent the user from having to ask someone else for help — something that can make them feel self-conscious and spend cognitive and social currency. Notion does an excellent job with this by using tooltips during the onboarding process to familiarize users with their platform.

Reusing the Information You Already Have

We tend to think about products in terms of how they are built or how we manage them. A recent example for me was with Woo Express. A merchant doesn’t care if the tool that handles sales tax is disconnected from the one that handles payment processing. To them it’s all part of running a store, and the cohesive platform we promised them. This is why we took their address from onboarding and repopulated it throughout the product to accelerate their onboarding and give them an immediate sense of progress.

Showing Users Their Progress

Progress indicators during onboarding serve as psychological incentives and also reduce cognitive load. Duolingo’s progress bar is an excellent case in point, and they introduce it as soon as a user starts the signup process. This makes it a consistent tool that helps users keep track of their journey, reducing the mental effort required to understand where they are in the process, another $10 expense, resulting in a balance of $50 of cognitive currency.

In the end, what matters is that product managers are intentional about how they ask users to “spend” their cognitive currency. I’l follow up this post with some thoughts on how you “repay” users with outcomes, results, delightful experiences, and progress. Ultimately it’s a constant balancing act to ensure that your customers feel like they receive true value from your product.