How should we be talking to people about Behavioural Science?

A panel discussion at the MRS Behavioural Science Summit, September 22-23 2021

In the past 15 years behavioural science – a new discipline, still mapping its boundaries – has emboldened researchers. They have realised that research through a behavioural lens is better because it closes the “say-do” gap. It gets us to the truth, ensuring organisations make better decisions and are more profitable. 

However, Behavioural Science can come across as a complex discipline requiring a new vocabulary.

How should practitioners communicate Behavioural Science in an accessible manner? How do we convey its benefits without dumbing it down or scaring people off?

I am delighted to be discussing these issues with a brilliant panel (Anthony Tasgal, Elina Halonen, Cameron Belton, Juliet Hodges) who have over 50 years combined experience applying Behavioural Science both client and agency side, in public, private and healthcare settings.

Our discussion covers:

  • How do you approach your first project with someone new to BeSci?
  • How much should you simplify?
  • Are all behaviour change models equally valid?
  • How do clients “sell it in” to their stakeholders and how could their agencies assist?
  • “An ounce of action is worth a ton of theory”  

Ever curious – the group have been learning from other disciplines, codifying new approaches and moving research forwards. It feels like our industry is at an inflection point; primed and full of possibility.  

The conference takes place in a couple of weeks and you can get your tickets here.

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Loss aversion as a customer retention tactic

Chances are you’ve got a few subscriptions on the go. Definitely a phone, probably a streaming service and maybe even a food delivery box.

Chances are you’ve questioned the value of one of these when your circumstances changed.

Chances are when you’ve come to cancel, in the moment you’ve had second thoughts.

This was the situation I found myself in. Our household had two TV subscriptions we weren’t really using one of them. I was adamant that I was going to cancel. I sat down to get on with it.

Login details? Check. Account screen? Found. Review membership: clicked through. Cancel membership! But they had got in there first.

‘Simon, you’re only half way through that box-set. How about a special offer, just for you? Get a monthly discount: £5 per month for 6 months (normally £9.99).’

My mind flashed to cosy evenings on the sofa contemplating Tony Soprano’s many troubles.

‘Sure, we’d not watched it in a while, but what would my wife say if it disappeared from the TV menu? Half price is pretty good, after all…’

Before I know it I’ve clicked on the offer and I’m signed up.

Loss aversion

Lots of decisions in life are like this. What you expected to be clear and obvious can end up fuzzy and ambiguous in the moment. When faced with making a decision it’s often easier to put it off: keeping your options open is tempting.

In my case the pre-allocated offer meant I’d be losing out if I left. It made me question my decision to cancel – I’d no longer have the TV content, and I’d have missed out on having it half price.

That feeling of loss is uncomfortable. Nobel Prize winners Kahneman and Tversky showed how people avoid it at all costs: it’s a real motivator for our behaviour. Through a series of clever experiments they proved the pain of losing is twice as powerful as the pleasure of gaining. What’s more, this “loss aversion” is a stable, observable pattern in human behaviour – a cognitive bias. We feel it so strongly because of its evolutionary origins, passed down to us by our ancestors preoccupied with collecting enough food to survive the winter.

What impact does it have on customer retention?

Once you notice one brand using loss aversion as a retention strategy, you start noticing it everywhere. But does it make a measurable difference?

To answer this question, my colleagues at Trinity McQueen and I undertook a controlled experiment. Using two independent nationally representative samples of 1000 UK adults. Each saw a different message designed for customers at the end of their phone contract. We asked a simple question:

Imagine your smartphone contract is coming to an end this month. Your network provider sends you a letter asking you to sign up for another 12 months at the same price, with the offer shown adjacent.

The messages had an identical benefit (an extra 5GB of data): one was expressed as a pre-allocated gain which people would forgo if they didn’t renew (“We have already credited your account”), the other as a traditional formulation (“If you sign up you will receive”).

What we found

  • People are more likely to stay when they the benefit is framed around a pre-allocated gain
  • This magnitude of the increase was significant: there was a 10 percentage point uplift

The lesson?

Losses carry an emotional sting: they tap into our pre-programmed instincts. We are driven to avoid them wherever possible.

Applying these learnings

  • Spend some time with customers understanding the value they are not ready to give up
  • Frame your retention offers with care: try brainstorming a long list of messages then test your shortlist – either in research (monadically) or in a live environment (A/B test)
  • When the time is right remind customers what they value most

Originally published in the Drum, May 2021

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Are we returning to normality or to something else?

Originally published in the AQR’s In Brief magazine, July 2021

As I write, it looks like the covid pendulum is on it’s backwards swing. People are starting to contemplate a return to normality. But what will that normality look like?

The pandemic created an accidental experiment in behaviour change. Our work, rest and play look different now. What new habits will we retain? What behaviours will taper-off? What good intentions will be cast aside as restrictions are loosened?

Rewind 12 months and my overriding memory was how quickly we all habituated to the huge changes foisted upon us. Did we really used to fly 2 hours for a 1 hour meeting? God, why didn’t we just Zoom it? Sometimes you need to be jolted by external events in order to re-evaluate. 

Unintended consequences abound

Online moderation has gifted researchers geographic freedom: qual is better for it. Jaded zone 1-ers can share airspace alongside chirpy Geordies breaking down unspoken assumptions. Many clients now see online groups interchangeably with in person sessions. It’s not hard to imagine hybrid fieldwork becoming the norm – meaning half as many fieldwork trips?  

That word hybrid is cropping up a lot. Many are moving to a model where their brainstorming, teamwork and coaching is done in the office and their concentrated work is done at home. For researchers this is intuitive, mirroring our dualistic natures and the ebb and flow of project work.

The pandemic has been hard for colleagues at the start of their careers, who cannot get the help they need to grow. It’s difficult to develop relationships on a video call. The ties that bind us are better served by spending time together. 

And finally there’s the question of identity. As any self-help book on habits will tell you, to change yourself, first change the context in which you create yourself. Putting on your smart clothes and having a centre of gravity outside the home can make you feel like a different person. We could all benefit from that.


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Nudgestock 2021: celebrating the science of human behaviour

25,000 attended Nudgestock on Friday, Ogilvy Consulting’s festival of behavioural science and creativity.

The festival has blossomed over the years, gaining in popularity and profile. This year saw the best line-up yet, headlined by the godfather of Behavioural Science Daniel Kahneman, and supported by industry luminaries like Dan Ariely & Michael Hallsworth, alongside practitioners, academics and even a few well known names like John Cleese popping in. Why so varied? In Rory’s Sutherland’s view “The best ideas do not emerge within disciplines, they emerge at the intersections between them.”  

It’s a hard event to sum up because of its scope and ambition. The 12 hours included talks, discussions and workshops. The production values were impressive; Rory Sutherland, Sam Tatam and Tara Austin hosted from a TV studio at Ogilvy HQ. They were in their element, and their joie de vivre and sense of fun kept things moving along at pace.

Indeed, this trio ably represent a discipline with increasing momentum. Behavioural science is developing its evidence base as more practitioners across the world start applying its principles. And judging from the attendance many, many people are interested in the science of human behaviour.

I want to pick up on two themes from the day.  

Creativity

Standing back from it all, creativity feels like the golden thread. Finding counter-intuitive solutions to organisational challenges is never easy. Sometimes the pressure of budgets, timescales and expectations makes it feel nigh on impossible. 

So it’s inspiring when people embrace challenges far beyond our own. Professor David Nutt, ably assisted by Tara Austin, asked the question what if we could create a substitute for alcohol with all the upside and none of the downside?. You can check out the answer here.

Rory Sutherland and John Cleese’s conversation on the theme of creativity had many highlights. Cleese described creativity as “decisiveness at the right time”. He spent years working for TV executives whom “want to know what they are getting before it has been created.” His view? Great ideas emerge from your unconscious. Play – not logic – is the way you get in touch with them. His advice was to postpone the decision until the right time, even if it makes you anxious. Go for a walk, or sleep on it. Your unconscious is unruly and you cannot control it.

I see two implications for us all. Firstly, don’t over-diarise: leave yourself some chance of inspiration. As Amos Tversky observed “The secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours.”  

Secondly, fight for the right to explore wacky, different or counter-intuitive ideas. You never know what might capture the imagination of your audience.

The theme built through the day, as we were given a crash course in creative brainstorming a solution to a live client brief for NanoSalad. This combined rigorous process to harness the wisdom of our crowd (COM-B analysis, lateral, divergent and convergent ideation, prioritisation and instant artworking) with a side helping of fun.

Complexity

As a practitioner the most valuable talk of the day came from the Behavioural Insight Team’s Michael Hallsworth. His manifesto for Behavioural Science contained 9 proposals to ensure the discipline fulfils its potential and was immediately useful.

The second struck me as the most profound. We should see the system. The world is full of people reducing problems to simple, linear solutions. As Sutherland put it in his introduction “Organisations often make solutions based on a model of reality, rather than the complexity of lived experience… It is easier to reduce everything into a two body problem which you can solve with a simplistic model..”

Unfortunately this leads to false precision and solutions too brittle to bloom in the wild. Complex adaptive systems involve feedback loops, many of which we are unaware of or are too difficult to model.

The lesson? It comes back to the audacity of giving your solution a go – intertwined with the humility of its evaluating its effectiveness in the real world without prejudice.    

Hallsworth also had a great deal to say about the future of the discipline. In his view we should move beyond lists of unconnected biases to higher level frameworks. He also touched on the symbiotic relationship between data and behavioural science, and the potential for increasing fairness. The evidence of which findings are reliable and how effects vary (e.g. which behavioural interventions work for whom and when) will be greatly helped by big data and predictive analytics. The emerging field of hypernudging feels relevant here.  

Are you ready for even more complexity?

We’ve not even got to Daniel Kahneman. Most famous for lifting the lid on human decision-making in his bestseller Thinking Fast and Slow and holding the Nobel Prize in Economics. Kahneman discussed his new book Noise with Sutherland. I would hate to estimate their combined I.Q.

The book examines decision making at a group, rather than an individual level. “Noise” is when people faced with similar issues make different decisions – “unwanted variability in judgments that should ideally be identical”. The justice system provides many of the case studies in his book – as the sentencing outcomes provide an ideal data set for examination. Criminal sentencing by Judges can be viewed in 4 (!) dimensions:

  • Differences between judges;
  • Inconsistent differences for individual judges e.g. dependent on their mood that day;
  • Consistent differences for individual judges e.g. some perceive certain crimes as more serious;
  • Normative differences at a societal level e.g. USA vs Norway.

These dimensions of noise compound: one example for cheque fraud in the 1970s showed that jail sentences varied from 30 days to 15 years.

It’s a reminder that we all see the world though a unique lens, despite the widespread assumption we see the world objectively.

The takeaway? Where there are humans, there are emotions and there will be inconsistency in decision making. Kahneman is bullish on the use of algorithms to remove bias as a result of his research. He also recommends what he calls “decision hygiene” to mitigate bias.

Too many ideas to mention

The festival of ideas was inspirational and fun in equal measure. Let’s face it, you’ve got Nobel Prize winners talking to marketers here: in the wrong hands this intellectual firepower could be intimidating. But the lightness of touch and the warmth of the contributors truly engaged the audience. Kudos to the team at Ogilvy for pulling it off.

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Behavioural economics for business: the Williams behaviour change model

“An ounce of action is worth a ton of theory” Ralph Waldo Emerson

Applying behavioural science to your daily practice isn’t always straightforward.

Academic writers can be strong on the evidence, but weak on the application. The distance from ivory tower to supermarket shelf is all too often vast.

Business writers can be strong on the application, but weak on the evidence. You’d be right to question how generalisable of some of their models and case histories are.

Bri William’s self-published book Behavioural Economics For Business is less polished than most behavioural science books; the second half of the book is essentially a collection of blogposts. But I like her behaviour change model. It is simple: you can put to work immediately. For me that’s enough to justify the purchase price.

1) Defining the behaviour change: from A-B

We want to change an existing behaviour (e.g. a non-buyer) to a desired behaviour (e.g. becoming a buyer). This is point A to point B.

2) Barriers

Williams describes three reasons people don’t take action:

  1. Apathy – they can’t be bothered  
  2. Paralysis – they are overwhelmed  
  3. Anxiety – they are worried about proceeding  

A combination of factors may be in play, for example when buying a car you may have far too much choice and be scared of committing to such a large purchase.

3) Enablers

Address each barrier using behavioural principles.

  1. Apathy – reduce effort and maximise reward (e.g. we’ll drop the car off at your home for a test drive).
  2. Paralysis – clarify choices (e.g. narrowing their options within a budget, or having a default options)
  3. Anxiety – reducing concerns about taking action – addressing the potential fear of loss (e.g. Cazoo offers a money back guarantee).
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The UK savings ratio is at a record high – but it only tells us half of the story

The pandemic has transformed the personal finances of UK households.

ONS data shows the UK savings ratio is now touching 30%, meaning the average UK household is saving around £1 in every £3 they take home.

This has skyrocketed from £1 in every £14 last year, and is double the previous record high.

Locked down consumers can’t drop a few quid on a whim. Many are paying down debt and building in a margin of safety. 

Two questions occurred to me from this data.

Firstly, will a savings habit persist?

Is the pandemic retraining our habits for permanent change? Lots will be getting a kick out of their new found savings-pot prudence. Feels good, doesn’t it?

Secondly, how much is this UK average hiding from us?

For every white collar worker smugly squirreling cash into their ISA, there’s another household having much harder time.The IFS report that poorest households have taken a hit of £170 a month

The debt charity StepChange today report that 1.2 million people face severe problem debt, having to borrow to meet debt repayments.

Younger people are far more likely to work in hardest hit parts of the economy like hospitality and retail. Shockingly, data from the Resolution Foundation show the majority of the under 25s had been furloughed or made redundant by June.

One average: a multitude of stories. 

…..

Postscript

Differential in savings rates between US homeowners vs. renters Q3 2020; Source: @urbaninstitute, h/t @adam_tooze

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Book review: Good habits, bad habits by Wendy Wood

Wendy Wood is the world’s leading expert on habits. Her book “Good Habits, Bad Habits: The Science of Making Positive Changes that Stick” is a high quality overview relevant to anyone who is interested in behaviour change. Here’s a quick rundown of the parts which resonated with me.

1) If you repeat something and get rewarded for it, you’re learning a habit

Her shorthand definition of a habit is something that makes behaviour automatic without conscious motivation. Your situation triggers a response from memory – you act without having to think about it.   

2) Habits are the mental equivalent of admin-only files on your computer

They free our minds to do more pressing tasks, because brainpower is a limited, depletable resource. Wood quotes A.N. Whiteheard here:

“Operations of thought are like cavalry charges in battle – they are strictly limited in number, they require fresh horses, and must only be made at decisive moments”

But day to day, we are not aware of this. We are unduly confident in our own thoughts. She writes: “…we often don’t realise what our habits are doing. It is as if they are operating parallel to us, just outside our consciousness.”  

3) We spend nearly half our day on autopilot – and overestimate the strength of conscious thought  

How much? That sounds a lot. Her research into the daily experience of habit shows on average 43% of our day we are doing things without thinking about them: repeating actions in the same context, responding automatically.

One example is eating, which has three components of habit formation: frequent, performed in similar contexts and provides immediate reward.

4) Many activities – like driving – blend conscious thought and habitual response

Most of us will have experienced a time where we’ve been driving home on our commute – then suddenly realised we can’t remember driving for the past 5 minutes. You can drive the same route so frequently you’re able to respond to it automatically. Here driving is a trade-off “between reacting to the unexpected (conscious thought e.g. cut up) and habit (context-triggered responding when driving a familiar route)”

Expanding on the theme, she describes how 1 in 3 US drivers admit to texting behind the wheel. This:

“…showcases the extraordinary potential inherent in habit. It can take one of the most dangerous things we do everyday and seamlessly transform it in the background of our lives. Only new drivers, relying on their conscious decisions, feel the adrenaline rush of fear that all of us rationally should experience on the road. As driving habits form, the wide range of skills required to operate an incredibly complex machine become a background hum behind what we are thinking about. Good or bad, habits emerge with practice, and conscious-decision making recedes”

5) We rely on one part of our brain to make initial decisions and another to persist

Our brains evolved in a piecemeal fashion over thousands of years. Newer mental functions – which joined the party relatively recently in evolutionary time – work alongside pre-evolved ones.   

When we learn a task we rely on prefrontal & hippocampal regions, brain areas associated with decision-making and executive control. When we repeat them the putamen & basal ganglia are at work.

“Habits live in resilient, deep seated neural structurers – ones that are fundamental to mammalian life. Our core mental competencies have as much to do with making habits as to making plans… Our goal directed and habit neural systems are interconnected, and they often work together”

The upshot? We should focus on the right strategy to change our habits.

“Imagine if we “made the decision” to go to gym every time: you’d be forcing your mind to go through same exhausting process of engaging with the reasons you felt you should be going in the first place. Because our minds are adversarial you’d be running through the reasons not to go too…. We should skip the debate chamber and get to work”

6) Let your habits take the strain  

We should not rely on willpower if we are trying to change our ways. It’s about situational self-control rather thanself-control. It’s about changing the context rather than conscious effort.

“…our habitual selves can take on much of the drudgery needed to achieve the goals set by our conscious selves. It is a more efficient and a happier way to live… It is when you stop and think that you might stray away from your goals”

The proof comes from experiments with people who rate highly for self-control. When you look at how they achieve their goals it is about exerting less effort rather than more:  

“The good effects we ascribe to self control are it seems more accurately captured by situational control… High self-controllers achieved desired outcomes by streamlining not struggling”

Changing your own habits is thus more about controlling your situation so that you don’t need to exert self-control. Make the default choice the right choice:

  • Choose what you want to change (e.g. run 4 times per week)
  • Create a routine – regular times, places, and pattern of action (e.g. going at 5pm Monday to Thursday when you finish work)
  • Make it easy to repeat – consider the context & your surroundings (e.g. buying 4 sets of running gear so there’s always some clean, finding shorter & longer running routes from your doorstep which you can choose depending on how you feel etc.)
  • You can also be opportunistic with timing – transitional moments / life events disrupt your routine (e.g. moving house) – plan to derail the bad and create the new.

7) Better habits lead to a better life

We should think of our “habit selves” as second selves that we need to train.  

Wood describes how we start to prefer the things we experience regularly: repeating actions changes what we desire. It’s a feedback loop. Thus we can “hack” our habit selves here so that they become aligned with our desired selves: before long they will be dragging us out for a run.

“If you know how to form a habit, then beneficial actions can become your default choices. Your best self, your habit, is uppermost when you are not thinking.”

In summary? A challenging reminder that we don’t think the way we think we think.

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Is the easy to measure, but less effective, favoured over the hard to measure but more effective?

Is the easy to measure, but less effective, favoured over the hard to measure but more effective?

A fascinating article from Faris Yakob on the lessons we can learn from Adidas’ admission they over-invested in digital & performance marketing, and under-invested in brand.

Relying on attribution modelling from Google and Facebook but with no brand tracking in place they fell prey to “McNamara fallacy” – ignoring what they didn’t measure.

“When Adidas brought in econometric measurement they learned that 65% of sales were being driven by brand activity, performance online was driving sales offline, and that it needed to invest more in tv, outdoor and cinema to create a balanced communication strategy”

Financial imperatives can lead to a short term focus.

You can’t just pick the apples, you need to water the tree.

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Consumers Are Becoming Wise to Your Nudge

I know exactly how the conversation will go.

I’m interviewing Chris, a 52-year-old man living a small coastal town, for the second time. We’ve been exploring the new checkout process for a client’s redesigned website. The new site isn’t performing as well as the company thought it would, so I’m exploring why and seeing what we can learn from competitors.

“Only 2 rooms left? They don’t expect me to believe that do they? You see that everywhere.”

I leave with a wry smile. The client won’t be happy, but at least the project findings are becoming clear. Companies in certain sectors use the same behavioral interventions repeatedly. Hotel booking websites are one example. Their sustained, repetitive use of scarcity (e.g., “Only two rooms left!”) and social proof (“16 other people viewed this room”) messaging is apparent even to a casual browser.

For Chris the implication was clear: this “scarcity” was just a sales ploy, not to be taken seriously.

My colleagues and I at Trinity McQueen, an insight consultancy, wondered, was Chris’s reaction exceptional, or would the general public spot a pattern in the way that marketers are using behavioral interventions to influence their behavior? Are scarcity and social proof messages so overused in travel websites that the average person does not believe them? Do they undermine brand trust?

The broader question, one essential to both academics and practitioners, is how a world saturated with behavioral interventions might no longer resemble the one in which those interventions were first studied. Are we aiming at a moving target?

This was the basis for a research project we completed in February 2019 examining reactions of the British public to a range of behavioral interventions. We took a nationally representative sample of 2,102 British adults, and undertook an experimental evaluation of some of marketers’ most commonly used tactics.

We started by asking participants to consider a hypothetical scenario: using a hotel booking website to find a room to stay in the following week. We then showed a series of nine real-world scarcity and social proof claims made by an unnamed hotel booking website.

Two thirds of the British public (65 percent) interpreted examples of scarcity and social proof claims used by hotel booking websites as sales pressure. Half said they were likely to distrust the company as a result of seeing them (49 percent). Just one in six (16 percent) said they believed the claims.

The results surprised us. We had expected there to be cynicism among a subgroup—perhaps people who booked hotels regularly, for example. The verbatim commentary from participants showed people see scarcity and social proof claims frequently online, most commonly in the travel, retail, and fashion sectors. They questioned truth of these ads, but were resigned to their use:

“It’s what I’ve seen often on hotel websites—it’s what they do to tempt you.”

“Have seen many websites do this kind of thing so don’t really feel differently when I do see it.”

In a follow up question, a third (34 percent) expressed a negative emotional reaction to these messages, choosing words like contempt and disgust from a precoded list. Crucially, this was because they ascribed bad intentions to the website. The messages were, in their view, designed to induce anxiety:

 “… almost certainly fake to try and panic you into buying without thinking.”

“I think this type of thing is to pressure you into booking for fear of losing out and not necessarily true.”

For these people, not only are these behavioral interventions not working but they’re having the reverse effect. We hypothesize psychological reactance is at play: people kick back when they feel they are being coerced. Several measures in our study support this. A large minority (40 percent) of the British public agreed that that“when someone forces me to do something, I feel like doing the opposite.” This is even more pronounced in the commercial domain: seven in ten agreed that “when I see a big company dominating a market I want to use a competitor.” Perhaps we Brits are a cynical bunch, but any behavioral intervention can backfire if people think it is a cynical ploy.

Heuristics are dynamic, not static

Stepping back from hotel booking websites, this is a reminder that heuristics are not fixed, unchanging. The context for any behavioral intervention is dynamic, operating in “a coadapting loop between mind and world.” Repeated exposure to any tactic over time educates you about its likely veracity in that context. Certain tactics (e.g., scarcity claims) in certain situations (e.g., in hotel booking websites) have been overused. Our evidence suggests their power is now diminished in these contexts.

Two questions for the future

In our study, we focused on a narrow commercial domain. It would be unwise to make blanket generalizations about the efficacy of all behavioral interventions based on this evidence alone. And yet nagging doubts remain.

#1: Like antibiotic resistance, could overuse in one domain undermine the effectiveness of interventions for everyone?

If so, the toolkit of interventions could conceivably shrink over time as commercial practitioners overuse interventions to meet their short-term goals. Most would agree that interventions used to boost prosocial behavior in sectors such as healthcare have much more consequential outcomes. In time, prosocial practitioners may be less able to rely on the most heavily used tactics from the commercial domains such as social proof and scarcity messaging.

#2 : How will the growing backlash against big tech and “surveillance capitalism” affect behavioral science?

Much of the feedback from the public relates to behavioral interventions they have seen online, not offline. Many of the strategies for which big tech companies are critiqued center on the undermining of a user’s self-determination. The public may conflate the activities of these seemingly ubiquitous companies (gathering customer data in order to predict and control behavior) with those of the behavioral science community. If so, practitioners might find themselves under much greater scrutiny.

Feedback loops matter

There probably was never an era when simple behavioral interventions gave easy rewards. Human behavior—context-dependent, and driven by a multitude of interacting influences—will remain gloriously unpredictable.

The lesson I take from our study? Feedback loops affect the efficacy of behavioral interventions more than we realize. Just because an intervention was successful five years ago does not mean it will be successful today. Practitioners should pay as much attention to the ecosystem their interventions operate in as their customers do. There’s no better place to start than spending time with them—talking, observing, and empathizing.

We should also consider our responsibilities as we use behavioral interventions. Marketers should design nudges with more than the transaction in mind, not only because it is ethical or because they will be more effective over time but also because they bear responsibility toward the practitioner community as a whole. We owe an allegiance to the public, but also to each other.

===

Originally published in Behavioral Scientist magazine, June 12th 2019.

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How powerful is anchoring?

shutterstock_142974694

We decided to explore the effects of anchoring (relying too heavily on the first piece of information we see when making a decision).

The experiment

Everyone reading this will have had the same email. It’s a staple of office life.

“I’m taking part in a charity run, will you sponsor me?”

If I asked you what would influence your donation amount, you’d probably ask, “Who’s asking for sponsorship?”, “What’s the charity?” or even “How skint am I this month?”

But what about the amounts other people had sponsored? Would seeing that others donated large amounts on an online giving portal nudge you into giving more?

We created a behavioural experiment with matched nationally representative samples of 1,000 UK adults to explore this.

  • We mocked up two charitable giving pages and asked people seeing them how much they would donate towards their friend’s charity run. Like in real life, these had names, pictures, good luck messages and donation amounts.
  • The only difference between the control and the test versions was that test version used higher average donations (£20, £50, £100) than the control (£5, £10).
  • We used a monadic survey design to isolate the influence of the anchors; matched nationally representative samples of 1,000 UK adults saw either the test or control version.

Anchoring 1What we found

You can get people to double their donation merely by showing them other people donate more. Mean donations were £8.81 when people were anchored low (£5, £10) but £18.17 when they were anchored high. This was a 106% uplift.

Anchoring 2.jpgKnowledge = immunity?

As this was part of a larger behavioural experiment examining the effectiveness of a range of different behavioural interventions, we also had the opportunity for some mischievous subgroup analysis. Later in the survey we asked participants a range of profiling questions. You might be surprised to learn that almost half of the UK population agreed that “I am more intelligent than the average person” (49%) and around 1 in 8 “have heard of behavioural economics” (13%).

Neither inoculate you against anchoring, as it operates unconsciously.

Anchoring 3.jpg

Giving is inherently social

Thinking more broadly about charitable giving, social pressure plays an important role.

Sponsoring someone bonds us closer to them. It’s a tangible signal that you care about them and their cause. When you listen to people talk about sponsorship, many admit to feeling a subtle pressure: for example “will the person asking be offended if I say no?” There’s also pressure not to step out of line with our peers: “what if everyone else gives and I don’t?”

My interpretation? In our experiment anchoring is exacerbated by social pressure: an interaction effect applies.

Isolating anchoring from social pressure – experiment 2

  • We asked a simple question: “You want to make a one-off donation to a cancer charity. You go to their website and find the donation screen below. How much would you donate?”
  • We mocked up a donation web page, again with two versions. In each you could select from three suggested donation amounts, or enter a sum of your own choosing. The test version prompted people to donate larger amounts (£20, £80, £150) than the control (£10, £50, £100). This was the only difference.

What we found

  • Anchoring increased charitable donations in this experiment also, but the experimental effect was not as large (a 45% uplift).
  • As before, a higher anchor not only meant larger donations, but more people donating and greater variance in giving (choosing to donate a bespoke amount rather than picking from the amounts suggested).  

Anchoring 4.jpg

So what have we learnt?

Anchoring is powerful

Anchoring is a subtle signal that drives our choices. Context is the driving factor here, not the individual. If you control the context, you control the choice.

Anchoring affects all of us 

As our cheeky subgroup analyses indicate, self-proclaimed intelligence and/or knowledge of behavioural economics does not inoculate you from cognitive biases. Think hard on this the next time an estate agent or car salesperson takes you through a few options in an order of their choosing.

The effects of anchoring are unconscious

Anchoring works unconsciously. Applying it ethically should be our first concern.

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