Putting the human touch into digital transformation
Changing behaviour is notoriously hard. Our instinctive response to a big challenge is to match it with an even bigger budget. This proportionality reassures us that the desired behaviour will naturally follow. Consequently, businesses spend huge budgets developing expensive digital solutions to change the behaviour of their customers.
So, why do 90% of digital projects fail to meet expectations and only deliver incremental improvements (Couchbase, 2015)?
The reason lies in the fact that they neglect to consider the most important catalyst affecting behavioural change; a scientific understanding of the motivations underpinning our decisions.
Consider a huge online retailer, who were experiencing significant drop off rates at the point of purchase. No one could understand why customers who had spent a considerable amount of time and effort shopping would abandon their basket at the final stage. There were two options for customers on the checkout page: Login or Register. Both presented a cognitive load for customers. Repeat customers struggled to remember their username and password. On the other hand, first timers perceived the effort of registering overwhelming. For a species with a preference for instant gratification, coupled with an innate aversion to ambiguous and effortful processes, neither were driving the desired outcome. A simple nudge on this page resulted in an additional $300,000,000 of revenue during the first year of testing. The cleverly simple nudge was the addition of a button labelled ‘Proceed as guest’. The relative cognitive ease represented by the third option meant it was, quite literally, a no brainer.
Interestingly, the ingenuity of this nudge meant that customers who had previously declined the opportunity to ‘register’ as a customer, were more inclined to do so once they had purchased their items. By chunking up the registration process into two actions, customers understood that they had completed the majority of personal information required to fully register and were therefore happy to complete the remaining few questions to become an account holder.
Using a similar tactical approach to a bigger societal problem, Cheema & Soman (2011) suggested that earmarking and labelling a savings account with a specific goal, such as a child’s college fees, could actually improve the inclination to continue saving. This intervention capitalises on our tendency to allocate money to different mental accounts, based on the respective spending purposes.
By applying Behavioural Economic thinking to the existing infrastructure, rather than imposing a new and expensive technological solution, these low-cost tweaks can result in seismic shift in behaviour.
Alternatively, digital solutions that incorporate the human touch at the point of inception often triumph over more rational products. Consider the traffic and navigation app, Waze, which is rapidly becoming the most widely used app in this space. Waze understands that humans have evolved to form networks of trust by the commitment gained in reciprocity. In other words, when we are given something, we reply with a benefit in kind. In this case, drivers update the app with real-time road information to help their fellow drivers navigate away from the traffic. This prompts the recipient drivers to reciprocate accordingly. The development of a community-based support system helps to create a more loyal and committed customer base.
Businesses that invest in an empirical understanding of the barriers and drivers involved in human decision making will consistently outperform those that don’t. Only when solutions adopt an empirical approach to behavioural change, through the application of Behavioural Economics and subsequent experimentation, can businesses be confident that they’re on the right track.
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