The Surge Toward A Behaviourial Approach to Digital Distribution by Melaina Vinski
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Transcript of The Surge Toward A Behaviourial Approach to Digital Distribution by Melaina Vinski
PwC’s Digital Services
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
PwC’s Digital Services
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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PwC’s Digital Services
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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
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.
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