Behavioural economics is a powerful tool for financial marketers, allowing you to get under the bonnet of consumer behaviour. This means you can create campaigns that resonate, drive action and deliver real results. Richard Shotton is an expert in the practical application of behavioural science and shows how understanding the psychological factors that influence decision-making can change your marketing strategy.

One of Shotton’s key tips is to eliminate friction in the decision-making process. As Nobel Prize-winning psychologist Daniel Kahneman says, “Make it easy.” Barriers in the financial services sector stop people from engaging with products. These could be anything from complicated application forms to unclear communication. By simplifying processes – streamlining online applications or making messaging clearer – you can engage with more consumers. I’ve seen this first-hand when researching how to persuade savers to become investors. Many savers felt that investment companies’ websites were impenetrable, mainly due to the language used, making their target audience feel alienated through using overtly complicated language.

But it’s not just about removing barriers; it’s also about recognising the power of behavioural biases in consumer decision-making. For example, let’s consider the concept of social proof. Instead of saying “9 out of 10 people trust us” brands can creatively imply their popularity. This subtle approach builds consumer confidence and drives action. When people see others are participating, they are more likely to join in themselves.

Another key aspect is the use of commitment devices – strategies that encourage consumer commitment. These devices are crucial in motivating people to participate in saving and investment programmes. Personalised messages to consumers about their goals can increase their chances of staying on track and lead to better financial outcomes. By being personal, marketers can guide consumers to their financial goals.

Nest is a great example of how behavioural insights can be applied in financial marketing. In a recent episode of The Growth Engine podcast, Nest’s Head of Marketing, Nick Laws, discussed several behavioural principles and how they’ve increased consumer engagement and growth:

  1. Remove Friction: Nest’s auto-enrolment feature is a great example of how removing barriers can increase participation. By simplifying the enrolment process for employers, Nest make it easy for them to sign up their employees to a pension scheme. This proactive approach removes a big hurdle and makes participation almost effortless.
  2. Leverage Social Proof: Nest’s messaging builds trust through inclusivity. By showing that all employers, no matter what size, can be part of the pension scheme, it creates a sense of belonging and community. This approach encourages greater employer engagement, making participation in the scheme the norm and motivating others to follow suit.
  3. Commitment Devices: Nest uses clear, customer-centric communication to give members control of their retirement savings. By making information accessible and simple, Nest helps members understand their options and feel more confident in their financial decisions. This clarity encourages members to commit to their financial future.

Using behavioural economics in your marketing enables marketers to inspire consumers to take action. By understanding the underlying behaviour, you can create campaigns that really speak to your audience. It’s not just about promoting a product; it’s about building a relationship based on trust and understanding.

To use behavioural insights in your marketing, try this:

  1. Identify Consumer Pain Points: Research what your target audience is struggling with. Surveys, interviews or feedback analysis will help. Once you know what they’re struggling with, you can tailor your messaging and processes.
  2. Match Insights to Challenges: Now you’ve identified the barriers, match them to relevant behavioural principles. For example, if consumers struggle with making decisions due to too many options, apply the principle of simplifying choices to make them clearer.
  3. Test and Iterate: Run small tests of your behavioural strategies and see what works. Gather data on engagement and conversion rates and be prepared to iterate based on what you learn.

To dive in further, read Richard Shotton’s books, The Choice Factory and The Illusion of Choice. Both are full of practical examples and actionable advice and are a treasure trove of information that you can apply to your marketing. They dive into the details of consumer behaviour and provide strategies you can plug into your campaigns.

But it’s not just about the theory; it’s also about application. Understanding the principles of behavioural economics is one thing, but implementing them is where the hard work is. This is where tailored support can make a big difference.

If you need help implementing these ideas, get in touch. Our team can guide you through the complex and rewarding world of behavioural economics.