Applied behavioural economics

Behavioural economics is a powerful field that combines economics and psychology, and uses the understanding of these sciences to influence behaviours and improve decision-making for the better through low-cost, easy to implement interventions.

In 2014 Genesis Analytics created the first team of consultants in Africa to use a scientific understanding of human behaviour to solve applied problems in the business world.

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Expertise Areas

Insights

Our clients seek, first and foremost, to understand human decision-making. They are interested in the choices their customers, staff and patients actually make, and how they will actually behave, rather than how run-of-the-mill focus groups and surveys predict they will behave.

Behavioural economics poses awkward, long overdue questions for research methods predicated on traditional conceptions of human behaviour. Awareness need not be driven to increase usage, nor knowledge improved to increase treatment compliance. These facts expose the flaws in traditional insights processes.

We focus on being action-oriented and specialise in two key proprietary behavioural research methods:

1.      Decision mapping: Detailed mapping of how people make decisions, throughout a lifecycle of interactions.

2.      Choice preference research: A testing method for evaluating what people actually choose, as opposed to claimed preference (such as with conjoint).

Given our mix of backgrounds and projects, we have also advised on behavioural insight requirements for people tracking technology, behavioural data analysis, experimental economics, behavioural segmentation, and ethnography.

Some of our clients also benefit from keeping on top of emerging issues in behavioural economics.  We thus curate and write original content for organisations, hinging on media and frequency preferences.

Choice and behavioural design

Behavioural economics represents a new tool with which to approach old business and public health challenges. Its particular appeal is that it targets small changes that have disproportionate results on the environments we work in.

In the business environment, our work has delivered a 146% increase in self-service usage, 38% increase in on-time payments, a 44% increase in insurance sales, and a 155% increase in retention, to name just a few.

In the public health space, our work with the National Department of Health and its implementing partners used behavioural economics to increase medical male circumcision uptake (MMC) by South African men. Conducted in both call centre and social mobiliser channels, the intervention endeavoured to increase MMCs by 92 400 a year; with its ultimate impact being the potential aversion of 9 240 new HIV infections a year.

Anywhere organisations interact with their customers or patients offers an opportunity to nudge them towards a specific set of behaviours. For this reason, we are channel-agnostic and have worked in call centres, branches, with apps, websites, in marketing (ATL, BTL, direct, etc.), through intermediaries, and more.

All of our work is rigorously tested in a pilot of some sort. Some call it A/B testing, others call it running an RCT; we call it prototyping. Borrowing from engineering, prototyping is testing a near-finished product or service to understand impact, bugs and issues. What this means for clients and stakeholders is that if, during prototyping, a new design delivers a 23% increase in sales, or reduces a social ill by 35%, it will.

This means that we know with confidence that across channels, sectors, and clients, the ROI that we deliver will be anything between 4x and 19x.

Choice architecture build

In many of the channels in which we operate we are able to take the design all the way to completion. In others, specialist technical skills are required for taking the design over the line. App builds are a case in point; we aren’t developers.

Our first recommendation is to work with the preferred vendors of our clients. If that isn’t possible, we have a range of suppliers we keep on books for this purpose.

Behavioural economics shines a light on oft-neglected areas that don’t necessarily have technical providers in the market. We therefore have in-house expertise outside of our core proposition in the following areas:

1.    Call scripts: Whether paper-based or digital, we have a solution that can be implemented within your environment.

2.   Conversation tools: Conversation tools are “decision structures” that, in most cases, look and feel like brochures. Our insight is that brochures are often used in face-to-face interactions to structure the discussion. By changing the brochure we can change the conversation in a way that nudges people towards the intended behavioural outcomes. In the past this has included sales discussions, retention calls, or cross-sell in intermediated environments.

3.   Forms: We love forms, largely because they are typically so underthought and neglected. We have proven that they represent powerful mechanisms for influencing behaviour. One of our recent engagements showed that simple changes to application forms could increase cross-sell by more than 40%. In almost every commercial decision (appointment bookings, sales, cross-sell, up-sell, retention, etc.) there is a form that can be used to influence behaviour.

Digital business advisory

We use insights from digital psychology to provide behaviourally informed insights. We design user journeys, wireframes and copy across all digital platforms that incorporate these insights and help our clients to optimise their social and commercial goals through their new and existing digital platforms.

Commercial testing and roll-out support

The true commercial value from changing human behaviour comes through implementation. As a result we spend a lot of time making sure we can quantify the effectiveness of a prototype through A/B testing to ensure that our intervention is directly responsible for the improve results, to make sure it will scale well, and to be sure that the change-management processes and training are handled effectively.

We often leverage internal change-management and training teams, or where those don’t exist, we have vast experience in handling these processes ourselves.

Our testing team usually takes clients on the prototyping journey so that when the results are finalised they can execute on roll out, without our help. However, clients often ask us to support, which then involves trainers, change managers, and project management support.

Either way, behavioural change is effected across the organisations and stakeholder environments for maximum commercial impact.

Corporate capacity building

We offer training in behavioural economics and often full capability building to core clients.

For clients at the start of the journey, they have typically read or heard about behavioural economics and want to develop a foundational knowledge of how to apply it in their context. They might want to attend a public training session that involves multiple firms across multiple sectors, or they might wish to have a more targeted training approach that narrows in on their sector, firm, and behavioural challenges.

To clients further along the journey, they want to find a way to internalise behavioural economics within their business. They are keen to develop an internal capability, and with our help, are able to achieve this within a fairly short time.

We therefore offer:

  • One-day training workshops: running frequently are our training workshops that are open to clients across different sectors. The training covers a basic theoretical foundation, public examples, and proprietary case studies.
  • Bespoke training: if you prefer the anonymity of a closed session, or want a deeper process to embed content that is specific to your environment, we tailor our training sessions to your needs.
  • Capability building: designed specifically to build institutional capability to deliver on a behavioural economics agenda. This takes the form of equipping existing staff, or building an internal team from scratch. Depending on your needs, we can deliver an end-to-end service from strategy setting, to job specs and recruitment, to onboarding and coaching.
Projects

Taking applied behavioural economics online for retail shopping

Project name:
Where web psychology meets behavioural economics in retail ecommerce space

Service:
Applied behavioural economics

Sector:
Retail

Area of Expertise:
Insights
Digital business advisory

Client:
Confidential

Date:
2018 - 2019

Country:
South Africa


Genesis Analytics’ Applied Behavioural Economics (ABE) team held two internal capacity-building workshops with one of the top clothing retailers in South Africa where we explored applying behavioural insights to various business segments ranging from credit, rewards, marketing and analytics to customer insights.

Off the back of ABE’s successful delivery of these behavioural economics training workshops, we were retained to apply behavioural economics to the retailer’s online rewards platform as it shifted from the traditional bricks-and-mortar business to its redesigned e-commerce platform. The main challenge was to consolidate its various brands in the conglomerate onto a single platform. We explored the use of web psychology to design reward and credit webpages to optimise decision making and nudges to influence customer behaviour.

After understanding the possible online customer journeys, we redesigned the wireframes and simplified the user journey, leveraging insights from web psychology, which includes designing with visual and social biases in mind that affect how users engage with their screens and the offerings on them. The final webpages are being designed and once launched will reach over seven million clients across both website and mobile channels.

ABE’s deep dive into the world of e-commerce continues: our next project with the same retailer involves helping to design a rewards programme. The project involves thinking through micro-design elements on webpages, usability testing and user journey design.

Behavioural economics boosts annual premiums by 60%

Project name:
Using behavioural economics to boost retirement saving contributions

Service:
Applied behavioural economics

Sector:
Financial services
Insurance and asset management

Area of Expertise:
Choice architecture build
Behavioural change

Client:
Large asset manager

Date:
2018 - 2019

Country:
South Africa


The Applied Behavioural Economics team was commissioned to improve the conversion rates and the premiums collected for an asset manager’s retirement-product campaigns. The campaigns sought to migrate customers from old-generation products to new ones, while also increasing monthly premium contributions.

The insights that surfaced during the “understanding” phase of the work revealed that the proposition communications were information heavy, unclear on the customer benefit, and did not provide a salient course of action for interested customers.

The team redesigned the process by embedding behavioural economics throughout the customer journey. A priming SMS was introduced, communications were simplified, and the campaign strategy was optimised with behavioural insights.

A rigorous test was implemented and resulted in a 27% increase in conversion rates, as well as a 60% increase in the annual premiums collected. This benefited the firm and also its customers, who as a result are better prepared for retirement. The 2.5 times ROI in this work paved the way for continued applications of behavioural economics in the client’s product campaigns.

Behavioural campaigns lift loans response rates by 102%

Project name:
Nudging personal loan acquisition

Service:
Applied behavioural economics

Sector:
Financial services

Area of Expertise:
Choice architecture build
Choice and behavioural design

Client:
South African financial services provider

Date:
2019

Country:
South Africa


A large financial institution approached the Applied Behavioural Economics (ABE) team to increase the response rates for one of its financial services campaigns. Behavioural economics principles were successfully applied to optimise various existing customer communication channels throughout the personal loan take-up/uptake journey.

The financial institution found the take-up of personal loans was low, especially among clients/customers who had not previously taken up any personal loans . The project and tested campaign were thus aimed at pre-approved clients who had not previously taken up a personal loan.

The improved communication channels included the initial campaign SMS and email, contact-centre agent call script, and the personal loan confirmation email. The success of the project was, therefore, not only based on an increased response rate to SMSes and initial emails but also on the higher conversion rate from contact-centre agents who used a behaviourally informed call script.

ABE piloted its newly designed communications over a course of six weeks, measured against the existing, business-as-usual models. The test campaign SMS achieved a 163% uplift in response rate against the previously used SMS, and the campaign email, a 43% uplift. Not only did the behavioural economics-trained contact-centre agents book more loans but also to a higher monetary value.

After the proven success of behaviourally informed client/customer communications, it is recommended that all contact-centre agents be trained in behavioural economics. The insights applied to this personal loan uptake journey can also easily be applied to other campaigns and customer communications of the particular financial institution.

ASSISTING to build INTERNAL BEHAVIOURAL ECONOMICS CAPABILITY

Project name:
Building and assisting an internal behavioural economics capability

Service:
Applied behavioural economics

Sector:
Financial services
Insurance and asset management

Area of Expertise:
Choice architecture build
Behavioural change

Client:
Major financial services provider

Date:
2014 - ongoing

Country:
South Africa


Based on a series of exceptionally successful projects with a major financial services provider over the past five years, the Applied Behavioural Economics (ABE) team has been working closely with stakeholders to continue achieving this success on a larger scale by establishing and guiding an internal behavioural economics capability.

The ABE team has continued engagement with this new team, assisting the members in increasing behavioural economic application across the organisation through a variety of projects. One such project was to design behaviourally informed financial education curricula to be taught in workshops. Another project focused on overhauling employer risk benefits, from the beginning of the risk lifecycle, where focus was on increasing the number of converted quotes, to the end of the lifecycle, where proactive return-to-work strategies were implemented to nudge employees to return sooner.

One project was in the financial products space where the ABE team helped reduce the high drop-off rates of new customers by decreasing the 90-day onboarding period to a 40-day process. Previously poor expectations management was addressed by training call-centre agents to use behavioural techniques, and designing supporting emails and SMSs that reinforced the importance of financial goals.

In another project, the joint team used behavioural insights and techniques to address high levels of disinvestment from long-term investment products. The project focus was threefold: decrease disinvestment, increase retention, and increase the overall customer experience over the entire customer journey. An A/B testing approach was adopted, splitting the call-centre agents into two groups and training only the treatment group with the new collateral, which included behaviourally informed scripts, emails, letters, SMSs and infographics.

Updating collateral, using behavioural economic insights and techniques, has significant impact on customers. In one project, email engagement increased from a base of 33% in 2018, to as much as 47% by early 2019. Thus, customers were far more likely to access financial products critical to their financial future nearly two months sooner. Using the A/B testing approach has shown similar impact: results from a project using this approach showed, on average, that customers exposed to behaviourally informed collateral disinvested 15.4% points fewer than their counterparts, equating to over R25 million being conserved. Agents in the treatment group of an A/B test saw a net promoter score increase of 7.9% points, on average, relative to agents in the control group.

To date, the joint team has completed a number of successful projects and continues to work on additional projects, with numerous business development opportunities in the pipeline.

Behavioural Experiment validates new financial product

Project name:
Using behavioural experiments to improve product research

Service:
Applied behavioural economics

Sector:
Financial services

Area of Expertise:
Insights
Choice architecture build

Client:
Confidential

Date:
2017 - 2018

Country:
United Kingdom (UK)


Genesis Analytics was commissioned to determine whether a pivotal new product would function by using a robust behavioural experiment. The experimental approach was key because focus groups and surveys could not adequately capture the experience of using the client’s product.

The client is developing a new digital-only bank that will replace its existing operations. The key differentiator of its product is that it uses behavioural nudges to help customers understand their finances better. 

Before the team’s involvement there were important decisions to be made in terms of how the product functioned. The team created a digital environment where respondents could experience how the product would work over a series of six simulated “weeks”. 

The respondents received a salary, chose what to buy, how much to save, and more. With a sample of 6 000 nationally representative respondents, the team gathered hard data on how people behaved under the various account setups. 

The approach culminated in a number of specific product suggestions that the client is now building into its core banking system.

Meet the Team

Areas of Service Expertise

  • Insights
  • Choice and behavioural design
  • Choice architecture build
  • Digital business advisory
  • Commercial testing and roll-out support
  • Corporate capacity building

Related Sectors

  • Communications and Media
  • Digital economy
  • Financial services
  • Retail banking
  • Insurance and asset management
  • Manufacturing
  • Retail
  • Transport and Logistics

Introduction to our work

Projects

Project

Taking applied behavioural economics online for retail shopping

Genesis Analytics’ Applied Behavioural Economics (ABE) team was retained to apply behavioural economics to a retailer’s online rewards platform as it shifted from the traditional bricks-and-mortar business to its redesigned e-commerce platform.

View Project
Project

Behavioural economics boosts annual premiums by 60%

The Applied Behavioural Economics team was commissioned to improve the conversion rates and the premiums collected for an asset manager’s retirement-product campaigns. The campaigns sought to migrate customers from old-generation products to new ones, while also increasing monthly premium contributions.

View Project

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Leading the team

Bavani Naidoo

Partner (Financial Services Strategy)

Bavani Naidoo
Partner (Financial Services Strategy)
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Luwela Nodada

Senior Associate (Co-Lead)

Luwela Nodada
Senior Associate (Co-Lead)
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Jamie McGraw

Senior Associate (Co-Lead)

Jamie McGraw
Senior Associate (Co-Lead)
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