Consumerism: Do we really know what we want
  • Aug 22, 2021
  • EOE Digital

Here is a scenario for financial advisors: Company A has 47% of its employees registered for pension funds while Company B has 97% registered for pension funds. Therefore, Company B's employees are going to be sipping mimosas on the beach in retirement age while Company A's employees are going to be sitting in a cubicle in their 70s. What do you think explains the difference between these two types of companies that lead to such a massive gap? Out of the list mentioned below, what do you believe the answer is:

  • Level of Education
  • Income
  • Age

All the above are incorrect. Let’s take Kate for example. She is a single working mom who struggles to make ends meet. Yet she is saving for retirement. The secret is a form that was filled out when she was first hired. Company B's employees are automatically enrolled into retirement savings, while Company A's people had to manually select that option.  So, what does this have to do with marketing? Kristen Berman, who is a behavioural scientist, spent most of her career trying to study the gap between what consumers say they will do and what they actually do. Most organisations today design products and services by talking to customers through surveys, interviews, and focus groups. The problem with this method is that it is not working. For example, the dietary industry should help us manage our weight, but our waistlines are growing. So, what is the solution to understanding what the customer wants?

 

The trick is to focus on what your clients say and not what they do.

 

Usually, businesses ask three types of questions: they ask respondents about their past, their future and why. Let’s say that the health industry wants to prevent the unnecessary spread of infection. Therefore, they ask people to report how many times have they forgotten to wash their hands after going to the bathroom. A lot of respondents will not answer truthfully. The reason for this is that it is not socially acceptable to tell the truth in these circumstances, or because they just forget. Future and why related questions aren’t any better. The reason for this is that different environments and changes of circumstances will inevitably have an influence on our decisions. For example, a company asked employers if they put out free apples, will they take them. Most respondents answered yes. When the apples were put out, nobody took them and instead opted for fries.

 

How is a company going to build a product or a service to cater to that market if the research is not accurate?

This is done through behavioural design which is techniques and patterns that change the way people make decisions.

  • Initially, a behavioural diagnose will be developed which is where all the necessary steps people have to take to get to the desired outcome are mapped.
  • Then the phycological biases at play are identified which is our tendency to make decisions that are illogical. Doesn’t this sound familiar to financial behaviour?
  • Thirdly, they study what people do and not what they say. These methods are used by Google, PayPal and other high-profile companies. Instead of using focus groups, they use experiments for real genuine answers.


By utilising behavioural design in the insurance industry, we could adapt our methods to ensure that most South Africa realise the value of having a financial advisor.