natalie horne - ote london - behavioural economics

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26/06/22 Copyright © 2013 PrimeDecision Copyright © 2013 PrimeDecision Behavioural Economics Natalie Horne Strategy Director, Prime Decision [email protected] prime-decision.com | @natalie_horne

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Topic: Behavioural Economics Key Takeaways: How to hone in on human behaviour to market your product Shaping communications to psychological decision-making tendencies Improve ROI by becoming more effective at influencing choices to engage, act and buy

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Page 1: Natalie Horne - OTE London - Behavioural Economics

30/09/2013

Copyright © 2013 PrimeDecisionCopyright © 2013 PrimeDecision

Behavioural Economics

Natalie Horne

Strategy Director, Prime Decision

[email protected]

prime-decision.com | @natalie_horne

Page 2: Natalie Horne - OTE London - Behavioural Economics

Who is Prime Decision?Marketing strategy with a behavioural edge

Page 3: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

What is Behavioural Economics?

Page 4: Natalie Horne - OTE London - Behavioural Economics
Page 5: Natalie Horne - OTE London - Behavioural Economics

homo economicus

Page 6: Natalie Horne - OTE London - Behavioural Economics

Optimal,Normative

Realistic,Descriptive

Page 7: Natalie Horne - OTE London - Behavioural Economics

Get ready!

Page 8: Natalie Horne - OTE London - Behavioural Economics

Which is the best option?

a. 40% chance of winning £22.50

b. 5% chance of winning £180.00

c. 65% chance of winning £15.40

d. 25% chance of winning £36.00

e. 80% chance of winning £11.25

Page 9: Natalie Horne - OTE London - Behavioural Economics

a. 40% chance of winning £22.50 £9

b. 5% chance of winning £180.00 £9

c. 65% chance of winning £15.40£10

d. 25% chance of winning £36.00 £9

e. 80% chance of winning £11.25 £9

Correct =

Page 10: Natalie Horne - OTE London - Behavioural Economics

Get ready!

Page 11: Natalie Horne - OTE London - Behavioural Economics

WINLOSS

LOSS

LOSS

LOSS

LOSS

LOSS

WINWINWIN

Page 12: Natalie Horne - OTE London - Behavioural Economics

More wins or losses?

Page 13: Natalie Horne - OTE London - Behavioural Economics

More wins or losses?

X 4

X 6

Page 14: Natalie Horne - OTE London - Behavioural Economics

What did behavioural economists discover?

We are bad at judging probabilities We are good at judging frequencies

+ many other patterns

Page 15: Natalie Horne - OTE London - Behavioural Economics

Primacy effect Defaults Endowment effect Framing Availability heuristic

Social norms/approval Anchors Priming Commitment devices Hyperbolic discounting

Codifying human tendencies

Page 16: Natalie Horne - OTE London - Behavioural Economics

Availability heuristic

Page 17: Natalie Horne - OTE London - Behavioural Economics

Framing effects

Web subscription $59

Print plus web $125

Web subscription$59

Print only$125

Print plus web$125

52%increase

68%

32%

16%

0%

84%

Page 18: Natalie Horne - OTE London - Behavioural Economics

Priming

Page 19: Natalie Horne - OTE London - Behavioural Economics

Primacy effect Defaults Endowment effect Framing Availability heuristic

Social norms/approval Anchors Priming Commitment devices Hyperbolic discounting

Codifying human tendencies

Page 20: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

Applied BE

Page 21: Natalie Horne - OTE London - Behavioural Economics

A creative approach to solving problems

Behavioural science:

Strategy

Tactics

Page 22: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

Prosecute criminals

Raise premiums

Typical approach:

Page 23: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

Target behaviour:

Get people to be more honest during the claim processes

Page 24: Natalie Horne - OTE London - Behavioural Economics

Depletion

Moral reminders

Format

Proximity

Supervision

Page 25: Natalie Horne - OTE London - Behavioural Economics

Experiment: Easter Bonus

I recognise that I have moral obligation to complete this task honestly.

Contro

l

Oppor

tunit

y

Hones

ty P

ledge

0%

2%

4%

6%

8%

75%decrease in high claims

95%Decrease in maximum

claims

Page 26: Natalie Horne - OTE London - Behavioural Economics

Potential to scale

What would an insurance process look like that was designed to promote honesty?

Claims process

Marketing touch-pointsCustomer communications

There is a tremendous scope to apply psychological insights to reduce fraud

Page 27: Natalie Horne - OTE London - Behavioural Economics

The Seven Lenses

Script

SocialStory

Sync

Sense Scenario

Structure

Our proprietary framework

Page 28: Natalie Horne - OTE London - Behavioural Economics

Story: What do people

say? What do they not

say? How do they justify

their choices?Script: What are the habits? How could these be

strengthened/ disrupted?

Which other scripts could be mimicked/leveraged?

Social: What are others

doing? Are they aware of

this? What form

does/could this awareness take?Sense:

What are the stimuli? How/are they

perceived? How does this affect

their experience/choices?

Structure: Which choices are

presented? How are they

framed? What is the

rationale for the order/defaults?

Scenario: Which external or

emotional/personal factors could feature?

Is there scope to modify/personalise?

Sync: What are our own

biases? Have we tested our

assumptions? Have we missed alternative contexts?

Questions to ask:

Script

SocialStory

Sync

Sense Scenario

Structure

Page 29: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

Typical approach:drive

more

traffic

Page 30: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

Target behaviour:

Get (more) people to donate (more)

during the online booking process

Page 31: Natalie Horne - OTE London - Behavioural Economics

Script

SocialStory

Sync

Sense Scenario

Structure

“Just £1”

Page 32: Natalie Horne - OTE London - Behavioural Economics

In summary:

Page 33: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

Define target behaviours

(measurable actions in specific contexts)

#1

Page 34: Natalie Horne - OTE London - Behavioural Economics

Interrogate

(hypothesise, prioritise)

#2Script

SocialStory

Sync

Sense Scenario

Structure

Page 35: Natalie Horne - OTE London - Behavioural Economics

Copyright © 2012 PrimeDecisionCopyright © 2012 PrimeDecision

Experiment!

#3

Page 36: Natalie Horne - OTE London - Behavioural Economics

30/09/2013

Copyright © 2013 PrimeDecisionCopyright © 2013 PrimeDecision

Get in touchNatalie Horne

Strategy Director

[email protected]

prime-decision.com

@natalie_horne