We develop creative solutions to challenging business problems using scientific insights about how people actually think and behave, rather than what they say
Traditionally, companies have built products and services based on the assumption that their customers are fully rational and always act in a way that maximises their best interest. But insights from Cognitive Psychology, Behavioural Economics, and Neuroscience have revealed that this isn’t always the case and there is often a difference between what we say and how we act.
This is because all of the decisions that we make on a daily basis are made through two systems of thinking: System 1 is the emotional, automatic part of the brain, System 2 is reflective and effortful.
Behavioural Science highlights the need for an academically robust understanding of why customers behave the way they do, rather than simply designing products and services based on how we think they act.
Using this approach and deep understanding of how humans think, we are able to test solutions and their effectiveness across different business contexts.
It is for this reason that not all research techniques can be considered equal. The issue facing market research is that conventional methods assume that customers make decisions about products using their System 2 brain and direct their communications to this area. This is the reason that the attitudes expressed during focus groups do not always match the resulting behaviour.
Customers cannot articulate the drivers underlying their behaviour because they are unable to tap into their subconscious processing. In fact, is it often a change in behaviour that will lead to a change in attitude, not the other way around.
To gain a more holistic view from customer research, we need to talk to System 1.
From over 150 mental shortcuts and biases within the behavioural economics literature, we've identified what we call the C-Factors.
Alongside our own experience, these are the factors that researchers and regulators have identified as the most important in customer decision making, especially within financial services.
We use these mental shortcuts to help us identify the mental barriers that exist in a customer or employee experience and to develop fluent behavioural interventions, which overcome this friction.
Fear of the unknown
People have a preference for risks that are associated with known probabilities than uncertainties where probabilities are unknown
People prefer partaking in activities where the probabilities are known - such as gambling - over activities where the decisions rely on uncertainties, such as choosing an appropriate life insurance policy
People become attached to the first piece of information they are presented with, and they use it to judge all subsequent information
When asked to bid on items in an auction, participants were first asked to write down the last 2 digits of their social security number. Being anchored by this number influenced their value judgement when asked to bid on a bottle of wine - those with higher social security numbers said they would pay up to 346% more than those with lower numbers.
Follow the leader
We tend to trust people in authoritative positions such as doctors or celebrities, therefore we place more importance on their opinions and contributions
A famous experiment showed that 65% of people administered painful electric shocks to participants when instructed to do so by a doctor, which shows the influence authority has on behaviour, even when inconsistent with our values
Less is more
Having too many options can make us decline to make any decision due to the fear of not making the optimal choice
Sales of jam in a supermarket increased 10x when the choice of flavours was reduced from 24 to 6. Customers decided not to buy any jam when presented with 24 options as the decision was too difficult
Making a pledge
Once people have made a commitment to do something, they are much more likely to achieve the end goal. This is sometimes referred to as the sunk cost bias
When asked to specify their exercise goals & sign a contract to acknowledge their commitment, people were 50% more successful in achieving their fitness goals than those who did not sign a contract
Creatures of habit
People don’t like change & prefer things to remain the same. The more we behave a certain way, the more automatic this behaviour becomes
When the default option for organ donation was switched from opt-in to opt-out, consent rates significantly increased to almost 100%. Opting-in became the default behaviour
The power of emotion
We underestimate the influence of emotions & urges on our future decisions. How we think we will act and how we actually act can vary dramatically
Investors know that the best strategy is to buy stocks at low value and sell at high value. However when the market drops their emotions prevent them from acting rationally. They panic sell when they should wait until the stocks regain value
The importance of context
Our choices are affected by context and the relation to available comparisons. In other words, how options are framed affects our choices
When presented with 2 cameras costing $170 and $240 respectively, no difference in purchase decisions was found. However, when another camera costing $470 was introduced, the majority of people chose the middle option at $240
The power of ownership
People feel the pact of losses twice as strongly as they enjoy acquiring equal gains.
Employees awarded with a bonus at the start of the year, with the threat of revoking the bonus based on performance, made more effort to maintain a good performance than employees who received a bonus at the end of the year
It doesn't always add up
We use different mental bank accounts and rules of thumb when making decisions about whether to purchase a product
People often have a special “money jar” set aside for a holiday, while still carrying substantial credit card debt. The special fund is treated differently from the money used to pay off debt, even though it’s exactly the same
The future is bright
We are much more optimistic than we are realistic. We tend to overestimate our knowledge, underestimate the risks & exaggerate our ability to control events
When a group of people were asked how they would rate their driving skills relative to the wider population, 80% believed that they were better-than-average drivers, despite this being statistically impossible
We are impatient & tend to be biased towards making decisions that provide instant gratification & often put off decisions that are associated with future outcomes
When presented with a choice of receiving £150 today or £160 in 4 weeks and then asked to choose between receiving £160 in a year or £150 in 48 weeks, people will invariably choose the £150 now but will be willing to wait for the full year to receive the £160
We are always picking up on subconscious cues about our immediate environment, consequently affecting our behaviour and decisions
A wine shop conducted an experiment to see how store ambience would affect the sale of specific wines. On days where French music was played, French wines outsold German wines by a ratio of 5:1 and on the days they played German music, German wine outsold French wine by 3:1
Stand out from the crowd
People are more likely to look at and remember the details of salient objects relative to their neighbours
Neuroscientists tracked the eye-movements of consumers as they chose between snack items. They found that when consumers chose between a product they prefer & a visually enhanced but less preferred product, people tend to choose the latter
Jumping on the bandwagon
We are herd animals, therefore we measure our behaviour in relation to each other and decide what is acceptable & appropriate in social settings
When a pretzel cart passed through a train, 1 in 12 passengers bought pretzels. However, when people were cued by other passengers eating pretzels sales increased to 1 in 7 people.