Customer Experience and Behavioral Science — A Moment of Truth
Behavioral science experimentation is becoming more mainstream in the commercial world as academic knowledge and expertise find their way to real world marketing and sales problems. This trial and experimentation period is a “moment of truth” of sorts for academia (relative to the relevancy and accuracy of behavioral science concepts) and commercial firms struggling to find innovative ways to influence behavior to find growth. Through this experimentation period, behavioral science will either transform how marketing and sales decisions are made or become a less influential niche area of application?
In this article, we discuss the current state of the industry in terms of adoption, and the industry and academic challenges emerging.
What’s at stake?
Using insights from behavioral science, marketers can have granular understanding of consumer behavior and gain sustainable competitive advantages that are not obvious to their competitors, including more effective communication, more successful innovation, increased conversion and transaction size and expanded product penetration.
“Applied” engagements
In a recent case study, a client wanted to optimize the effectiveness of communication with customers to improve engagement and to nudge customers to complete desired actions. Many of the communication letters they send out to their customers consist of negative information, such as a prescription expiring or a new fee to be charged regularly. Researchers started the project by interviewing customers about what they think and how they think we should improve the letters. We gained some great insights through the interview but we know from behavioral science that consumers are not always good at articulating their thought process, nonetheless to recommend how to improve communications. Therefore, a team of behavioral science reviewed the letters and modified those letters based on behavioral science principles. The three of the changes that were made on the communication letters were: i) making the action steps seem easy by providing clear instructions, ii) framing an argument with a clear explanation for “why”, iii) controlling fear paralysis from bad news by informing customers exactly how to manage their situations. Finally they ran A/B tests to validate the effectiveness of those modifications in increasing customer engagement. The results demonstrated that they were able to increase client’s KPI by as much as 50%, a significant improvement on customer engagement.
Another important behavioral science framework that the commercial world can employ is the regulatory fit theory. This theory states that consumers approach things around them with two different outlooks: promotion focus and prevention focus. Those who are promotion-focused tend to be more appealed to messages that emphasize on achieving and maximizing; whereas those who are prevention-focused tend to be more appealed to messages that emphasize on protecting and preventing. For example, the difference of these two outlooks can be clearly seen in the oral care industry. Promotion-focused consumers tend to respond better to advertisements about fresh breath and thorough mouth cleaning; while advertisements about preventing gum disease and toothache tend to be more appealing to prevention-focused consumers. This theory provides excellent guidance on developing communication strategy, product positioning and benefit framing.
Key industry and academic challenges
The partnership of market research industry and behavioral science academic can bring out the best of both worlds in terms of further understanding on human decision-making and the market impact. However, there are challenges on both sides. One of the biggest challenge of applying behavioral science to market research is to shake up the status quo including the long-established company-wide marketing philosophy and structure. Secondly, expertise in both academic and market research is crucial to translate the academic insights into marketing frameworks that can be turned into marketing activations. On the other hand, the academics needs to be aware of the industry-academia language barrier, discrepancies in incentives of research and to challenge the industry’s perception that BSci is all about a quick fix.
