A cutting edge behavioural approach to achieving your contact centre’s objectives August 29, 2016 CCMG Conference – Down the rabbit hole 20160829 v2.0 brm Applying behavioural economics in contact centres CCMG National Conference 2016
A cutting edge behavioural approach to achieving your contact centre’s objectives
August 29, 2016
CCMG Conference – Down the rabbit hole 20160829 v2.0 brm
Applying behavioural economics in contact centres
CCMG National Conference 2016
Table of ContentsIntroduction to behavioural economics
Using it to increase sales, cross-sell, product usage, and retention in
contact centres
3
Before continuing with an explanation of behavioural economics, consider the following question: Would one of the tables fit in your dining room better than the other?
Introduction to behavioural economics
4
They are in fact identical tables. The graphic is merely a visual illusionIntroduction to
behavioural economics
Which line is longer?
Source: Genesis Analytics team analysis, 2016 5
Introduction to behavioural economics
They are in fact identical. The graphic is merely a visual illusion: your eyes were deceiving you
Source: Genesis Analytics team analysis, 2016 6
Introduction to behavioural economics
Our intuition deceives us in repeatable, predictable, consistent ways and there is nothing we can do about it
Source: Genesis Analytics team analysis, 2016 7
Introduction to behavioural economics
8
These cognitive illusions have turned up unexpectedly in many studies; for example, what do you think causes these large differences in rates or organ donation across countries?
Source: Ariely, 2008
Rates of organ donation membership across a sample of European countries(Percentage of the population, 2008)
86%
100%100%100%100%100% 97%
12%17%
28%
4%
Netherlands Belgium FranceAustriaGermanyDenmark United Kingdom
Portugal SwedenPolandHungary
Check the box alongside if you want to join the organ donation program
Check the box alongside if you DO NOT want to join the organ donation program
Introduction to behavioural economics
9
As another example, imagine choosing between these two trips overseas
Source: Ariely, 2008
Option set 1 Option set 2
Free trip to Venice for 5 days, all inclusive
Free trip to Paris for 5 days, all inclusive
Free trip to Venice for 5 days, all inclusive
Free trip to Paris for 5 days, all inclusive
Free trip to Paris for 5 days, all inclusive, except for coffee
Introduction to behavioural economics
10
A real example of this was the subscription service for The Economist magazine
Source: Ariely, 2008
Option set 1 Option set 2
68%
32%
26%
84%
0%
Introduction to behavioural economics
11
Behavioural economics is the science behind why people act “irrationally” and how they can be nudged in a particular direction
Source: Genesis Analytics, 2015
Hindsight bias
Negativity bias
Denomination effect
In-group bias
Verbatim effect
Spacing effect
Recall biases
Picture superiority
Context effect
Self-generation
effectModality effect
Social biases
Fairness
Herd effect
Market norm vs.
Social norm
Representative bias
Bandwagon effect
Decision biases
Hyperbolic discounting
Decoy effect
Bayesian conservatism
Framing
Attribute substitutionConfirmation
bias
Boomerang effect
Belief biases
Rhyme as reason effect
AnchoringAttentional bias
Availability bias
Recency bias
Frequency bias
Introduction to behavioural economics
Behavioural economists know that we know two systems of thinking that cause most of our strange decision-making
Source: Genesis Analytics team analysis, 2016 12
Subconscious and automatic
Emotional
Vulnerable to biases and systematic errors
Conscious and deliberate
Slow, infrequent and effortful
Fast, frequent and effortless
Logical, skeptical and reasoned
Calculated and precise
System 1: Reacting
System 2: Reasoning
Introduction to behavioural economics
My team at Genesis Analytics is obsessed with the strange way humans think and make decisions – we use this to assist companies in growing and becoming more profitable
13Source: Genesis Analytics, 2015
Our clients include:
If this interests you:
TED Talk: Dan Ariely – Are We In Control Of Our Own Decisions?
TED Talk: Sheena Iyengar – The Art of Choosing
Introduction to behavioural economics
Table of ContentsIntroduction to behavioural economics
Using it to increase sales, cross-sell, product usage, and retention in
contact centres
15
410 calls
17%
We went on to assist a large retail bank to optimise its client migration campaign. The application of behavioural economic enhanced the script and resulted in a 97% increase in sales and a 550% improvement on the implementation of the strategy
Source: Genesis Analytics, 2015
Original Script: Behavioural economics Script:
Mr Smith the reason for my call is to discuss your current product so as to optimise your experience.
Would you like me to continue?
Mr Smith our systems have identified your account as having qualified for an upgrade to better suit your needs
We have already helped upgrade many of our customers and would like to do the same for you now…
Mr Smith most customers with your needs are currently using a Product X for the reasons I just explained to you. Would you like me to upgrade you over the phone right now?
Example of elements:
Framing
Herd effect
Default effect Mr Smith would you like to move to a Product X or a Product Y?
785 calls
Number of successful migrations
Correct migrations
94%
We convinced customers to listen to the full call
We convinced customers to migrate to the correct product
Behavioural economics in call
centres
16
We were able to improve the ability of consultants to upsell clients by up to 26% on key products. These learnings were tested in a contact centre and scaled across channels
Source: Genesis Analytics, 2015
The likelihood of selling premium products increased, with a corresponding decrease in cheaper products(Changes in the likelihood of selling certain products between the test and control groups, percentage, 2014)
-7,0%-5,1%
1,6%0,6%
25,8%
4,8%
Product C: ~R300 per month
Product D: ~R200 per month
Product F: ~R50 per month
Product E: ~R100 per month
Product A: ~R700 per month
Product B: ~R450 per month
• A large multimedia company onboarded customers over the phone, activating their services in real time
• During this call the customer would need to choose which product they were activating, ranging in price from around R50 per month to roughly R700 per month
• The consultants had no sales training, but had the opportunity to upsell the customer onto different packages
• We segmented customers into two groups, and created a very short and simple needs analysis for each group
• In this needs analysis we used one or two key phrases which played on the herd effect and the denomination effect
• We created simple cue cards to assist the agents in using the default effect to encourage upsell
Context Nudges used
Customers shifted from purchasing cheaper products to more expensive products, with no change in the total sales
Behavioural economics in call
centres
17
Through a very simple initiative in a contact centre, we were able to reduce the number of customers who missed their first few payments by close to 40%
Source: Genesis Analytics, 2015
• One of our long-term clients struggled with customers missing their first few payments
• Despite the fact that the customers had gone through considerable effort setting up the product and installing it in their home, around one in five customers missed one of their first few payments
• This has a material impact on the business in terms of lost revenue, but also in terms of the customer experience and NPS scores
• After the payment plan was explained to the customer, they were asked to write it down (self-generation effect, context effect)
• They were then asked to repeat the plan back to the consultant (combats the verbatim effect)
• These two simple steps had a dramatic effect on the customer’s payment behaviour
11.8%
Test
19.0%
17.0%
-38%
2.0%
Control
9.8%
2.0%
Failed to pay pro rata amount Failed to pay first full month
ContextCustomers in the test group were significantly less likely to miss one of their first payments(Proportion of customers who missed their pro rata or first monthly payment, percentage, 2014)
Nudges tested
Behavioural economics in call
centres
18Source: Genesis Analytics, 2015
Our team successfully illustrated the benefits of behavioural economics in short-term insurance sales. Working with both lead-warmers and sales agents, we were able to increase the average sales per agent per day by 25%.
The transfer-to-quote ratio increased by 28%-points
-3%
Test
+25%
Historical Average
TreatmentControl
+28%
+16%
6 Month Average Test
+31%ControlTreatment+16%
Average sales per day increased by 16%-points
• We were retained by a large insurance company to demonstrate how behavioural economics techniques can be used I their contact centre teams to increase the volume of new sales
• The volume of outbound sales is largely driven by the lead warmer’s ability to transfer quotable leads and the sales agent’s ability to convert a quote into a sale
25%Overall
increase in sales
The combined impact of the two sets of results
Default effect:“Should we begin with your car, house or contents?”
Reciprocity:Allow one “discount” from the agent and one from the manager
Mirroring:Repeat customer’s words throughout call
Endowment effect:“Some insurance companies overcharge clients by as much as 20%”
Herd effect:“We value all x million of our clients”Framing:
“Will you be able to make a decision today?”Anchoring:Pitch premium at higher price by loading it at first
Context
Nudges used
Behavioural economics in call
centres
19
Behavioural economics was instrumental in scripting and redesigning the processes in an entertainment providers call centre, resulting in an increase in self service channel usage by 146%
Source: Genesis Analytics, 2015
• A large home entertainment provider had, over time, incrementally improved their call centre allowing them to achieve high customer satisfaction in this environment
• They quickly became victims of their own success, when over time this led to a large increase in call volumes and hence an increasing drag on the budget
• We were tasked with increasing the ability of the call centre agents to encourage customers to use self service channels such as the website, smartphone app, etc.
• Behavioural economics was used in scripting and process redesign to achieve a 146% increase in self service usage
Behavioural economics in call
centres
“Customers like you are solving this query with…”
“Mr Smith, most of our customers are solving this query by…”
146% increase in self-service
usage
Scripting
Process redesign
We worked to break down the learned behaviour of calling the call centre when any problem occurs by redesigning processes
20Source: Genesis Analytics, 2015
How to think like a behavioural economist when facing challenges in your contact centre
The commitment
Define strategic goals
Understand the decision process
Test, learn, and refine stimulus
Implement initiatives
Modify the choice architecture
Genesis Analytics has strong capabilities in the steps that matter most: designing interventions, and testing them empirically
How we apply behavioural economics