How we access products and services and why we choose to speak to real life people has changed radically over the past 20 years. Jo Thomson details Procter research into how behavioural economics can add value to modern day customer interaction.
Behavioural economics, or BE, can be used to transform the way customers make economic and personal choices including those related to an organisation’s services. In particular, it challenges the view that people make decisions rationally. One of the hottest topics in business leadership today, it combines economics and psychology to explain how people:
- Do and choose things by observing others and copying.
- Use habits to act without considering other options.
- Try to ‘do the right thing’ but can’t.
- Are loss-averse and want to keep what they already have, rather than try something new.
- Value something today over tomorrow.
- Change their decisions based on the way information is presented to them.
Behavioural economics has been researched and tested by a number of academics and is most often known as “nudge” (as described by Richard H. Thaler and Cass R. Sunstein). It explains why people sometimes make decisions in a different (often not purely logical) way when influenced by factors such as positioning information, words, actions and attitudes. One example of this would be point of sales positioning of fruit or treats at a supermarket check-out to prompt a certain purchasing choice. Many senior government officials and politicians are examining the way that it can influence the public – for example – improving health, road safety and tax compliance.
‘The key ingredient in making this happen is choice’
This statement is in line with the Big Society concept our current government is instilling in us all. The theory that we set out to experiment with in reality was that each technique, if deployed correctly, should encourage customers to have a two-way conversation and be more in control of making decisions that are right for them.
We engaged with some of the UK’s leading financial institutions and worked to test five out of the forty plus behavioural economics techniques across eight dynamics – sales, service, complaints, business, consumer, written word, telephone and compliance. Testing over an eight week period, using 70 staff to communicate with 69,997 customers – we dedicated 764 hours of research time to support the test. The research also stripped out as much bias as possible – including allowing for the Hawthorne Effect (impact that because frontline service professionals were being treated as unique and special – then one could argue they delivered better results).
What did we find?
The short answer is that if set up and deployed correctly, behavioural economics techniques can have a dramatic impact on customer experience and sales through service.
The research demonstrates that there is value in deploying behavioural economics – because it gives the frontline additional and different conversational tools to have a more adult to adult interaction. These tools are not widely used (if at all) right now – and because the variables are so huge in terms of number of techniques (over forty) and functional specialism of interaction – it opens up a whole new way to address the challenges facing communities:
- Improving customer experience, re-building trust and relationships with increasingly autonomous customers.
- Driving value from the interaction in terms of sales or changing behaviours.
- Driving self-service to reduce costs of operation.
- Differentiating UK service interactions from cheaper offshored alternatives.
Headline results from the research test groups:
- Sales increased by 20.27%.
- Customer satisfaction - up by 7.14%.
- Resolution improvement – up by 62.5%.
- Sales Conversion – up by 11.85%.
- Agent confidence - up by 17.8%.
- Performance against objectives improvement of up to 20% by 62.5% of the pilot team.
The best ways of making it work for you
Make the decision. What’s important to you right now – getting the basics right or going forward with a range of techniques that may differentiate your proposition?
1. Language audit
Organisations need to examine their corporate and customer language and ask ‘how stuck in a rut is it?’ BE offers great opportunities to freshen language and in the process improve customer experience, re-build trust and drive self-service while engaging frontline people. Consumers are seeking value in these stringent economic times, but does current customer interaction language play to this anxiety and really assist consumer decision making?
2. Be bold & detox
How well matched is your language across all the channels? When was the last time you compared and cleansed across letter, spoken and internet? Give your frontline people the empowerment to make this happen. BE is not just for verbal communication, rather it works across other channels – internet, email, web-chat, face to face and correspondence. This will help your operation truly differentiate from cheaper, offshored alternatives.
3. Extended BE toolkit for engagement
Use the 40 plus techniques as a programme of empowerment and engagement – it could take two years to truly implement and test them all. The lesson of Procter’s research is that organisations need to review their customer interactions, needs and behaviours, before the careful planning and deployment of BE. This includes choosing the right techniques for individual interactions and deploying them intensely. Embedding the learning and capability development is crucial for long term success and employee engagement. It’s another reason why the opportunity is limitless and long term in terms of sustainability.
4. Bite sized chunks
Procter’s research focused on working with people who had a range of experience, knowledge and savvy and while there was a lot of feedback around these techniques being ideal for new starters who had yet to form “bad habits” – it was clear to Procter that the more established and experienced the frontline person, the easier they found it to adapt and be flexible with the concepts. The by-product of empowerment and ownership was such a strong and powerful one for the teams – it would be wrong to ignore it. Even then – their feedback was that experimenting with the techniques in bite sized chunks is absolutely crucial.
5. Grown up deployment
Creativity and empowerment are key to deployment of advanced development programmes associated with BE. This should be instilled at frontline, not cascaded through scripting or briefing or 1 ½ hour ‘hit and run’ training sessions. Empowered employees create engaged customers, as proven by many studies, and sophisticated deployment builds buy-in and involvement.
What are the potential long term implications of BE ?
This is not another mass market “thou shalt…” – for BE to work best – front line advisors have to be tuned in and turned on to BE – the empowerment has to exist culturally for it to work best in the long run.
In light of the progress of customer contact, increase in self serve and need for knowledge workers by telephone or web chat – BE could play an extremely important role in making the customer feel special – as the techniques provide an extended tool kit for having an adult to adult conversation
For those organisations who have the ability to be forward thinking – to embed an extended programme of bringing BE to life – this would be a great opportunity to enhance your customer communication and also provide rich material to extend learning & development within the organisation.
Jo Thomson is managing director of Procter.