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The Surge Toward A Behavioural Approach to Digital Distribution

How a behavioural framework can help insurers sell directly

to customers

September, 2017 | Online Distribution Symposium

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PwC’s Digital Services

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Behavioural science helps us interpret the data.

Data helps us create targeted solutions for change.

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The Behavioural Economics Toolkit

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The Behavioural Economics Toolkit

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It all starts with the brain.

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It is the epicenter of what we value, why we behave the way we do, and

how we make decisions.

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The human brain operates with a very limited processing capacity

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As a result, we rely on mental shortcuts to help us navigate everyday life

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Applied Behavioural Economics is the application of how mental shortcuts lead to biased and

predictable patterns in decision making, attribution of value, judgement, and behaviour.

PwC’s Digital Services

Applied Behavioural Economics is the application of how mental shortcuts lead to biased and

predictable patterns in decision making, attribution of value, judgement, and behaviour.

Overload

ConfidenceFuture

Discounting

Overload

ConfidenceFuture

Discounting

Our tendency to be put off by a lot of information, whether it is complex or not.Overload Biases

Overload

Do you ever read the terms and

conditions when you download an app?

Information Overload

How long does it take you to choose a

movie on Netflix?

People are more likely to purchase an item when offered a limited array of choices –and are more satisfied with their selections.

Overload

Use Case no.1

Restructuring a product around a limited number of options with simple, meaningful attributes leads to a boost in sales.

Overload

Use Case no.2

Overload

Use Case no.5 Expedia lost

$12 million per yearby asking one additional question (company name)

Marketo found that a few non-essential fields were inflating their cost per lead by ~25%

Overload

Use Case no.6

Choice Overload

Use Case no.3

61% of employees participated.

75% of employees participated.

Providing families with auto-filled information from their tax return college enrollment increased by 8%

Friction

Use Case no.4

Making organ donation the default option increased donation sign-up rates by 148% in Ontario

Defaults

Use Case no.5

Makes it difficult to perceive and understand the value proposition of the product.

Overload Biases

Overload Biases

Leads to analysis paralysis, drop-off, or a rush through a process.

Overload Biases

Reduce the number of optionsMaking the difference obviousReduce the clutterLeverage defaults

Overload

ConfidenceFuture

Discounting

Overload

ConfidenceFuture

Discounting

Our tendency to be put off by things that we are not familiar with, or that we don’t know much about.Confidence Biases

Overconfidence

Are you an above average driver?

90%

Overconfidence

Are you an above average leader?

70%

Overconfidence

Are you an above average athlete?

60%

Overconfidence

Doctors that express complete certainty in a diagnosis were wrong 40% of the time

Are you absolutely sure?

Social Guidance

Use Case No. 6

77%88%

35% of Amazon’s revenue comes from the recommendation engine

Social Guidance

Use CaseNo. 7

Makes people feel uncomfortable or uneasy with their decision.

Confidence Biases

Confidence Biases

Leads to analysis paralysis, drop-off, or the dialing of the help center.

Confidence Biases

Make it easy to understandShow what others havepurchasedDemonstrate security

Overload

ConfidenceFuture

Discounting

Overload

ConfidenceFuture

Discounting

Our tendency to overweigh rewards now, and discount the impact of our decisions on our future self.

Future Discounting Biases

Future discounting

Do you go over your monthly data

allowance?

Social Persuasion

Use CaseNo. 8

Including social norms on tax forms increased compliance with due dates by 15%

9/10 people pay their taxes on time

Users who saw their savings wellness scores were lower than their peers saved an average of $600

extra into their savings account

Social Persuasion

Use CaseNo. 10

“How do I compare?” tool increased retirement contributions by 25%

Social PersuasionSocial Persuasion

Use CaseNo. 11

SalienceShowing future prices of household staples like milk and utilities have prompted 60%more people to investigate retirement options and contribute to retirement

Use CaseNo. 12

SalienceIndicating the amount that by which borrower's monthly payment would increase if they did not recertify lead to an 8% increase in certification rates

Use CaseNo. 14

Makes people put things off or procrastinate.

Future Discounting

Future Discounting

Leads to drop-off and a failure to complete the process.

Future Discounting

Make it easy to complete

Benchmark relative to others

Make the future salient

Overload

ConfidenceFuture

Discounting

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Applied Behavioural Economics is the application of how mental shortcuts lead to biased and

predictable patterns in decision making, attribution of value, judgement, and behaviour.

PwC’s Digital Services

Companies that apply the principles of behavioural economics outperform their peers by 85% in sales growth and 25% in gross margin

GALLOP

PwC’s Digital Services

Questions?

melaina.vinski@pwc.com