“The question … what behaviour do I want to encourage and how can I make that behaviour look like it’s commonplace?”

Richard Shotton, behavioural scientist and author of best-seller, The Choice Factory, gives us a nudge towards the potential power of social proof and making Choices friction-free.

How you save is a big decision and could be a long-term one. Is ‘making it easy’ just as important for big decisions as it is for the day-to-day ones?

Evidence from psychologists like BJ Fogg suggests that one of the most significant (but underrated) determinants of behaviour is how easy it is. This applies equally to both minor and major decisions.

Whatever the desired behaviour, identifying and removing even the smallest piece of friction can have a significant impact.

Evidence for this comes from an experiment by two psychologists, Bergman and Rogers, working with the Department of Education.

The Department had created a new offering that helped parents encourage their children to study. The psychologists randomly assigned parents into three different ways of signing up for the service.

They launched the service in one of three ways:

1. Standard. Parents were sent a text message saying that they could adopt the technology by enrolling on a website.

2. Simplified. Parents were told by text message that they could sign up just by replying ‘Start’.

3. Automatically Enrolled. Parents were told by text message that they could opt out of the service by replying ‘Stop’.

The signup rates varied massively dependent on the level of effort required: 1% for the Standard group, 8% for the Simplified group, and 96% for the Automatic Enrolment group. The psychologists then surveyed 130 education experts (e.g. senior teachers and administrators) to find out how effective they thought each approach would be. The experts correctly guessed that additional effort would put people off, but they were wildly wrong about the scale of that impact. They predicted uptakes of 39%, 48% and 66%. That’s a swing of just 27% points — in reality there was a 95%-point swing.

The psychologists argued that this mistake is remarkably common. Not only do small barriers have a big effect on behaviour change but also, those involved in the creation of the project typically significantly underestimate the effect of those barriers.

If you’re trying to change behaviour think about the customer journey. What are the tiny, seemingly inconsequential, pieces of friction along the way? If you remove them it is likely to have a bigger than expected impact.

Social proof often plays an important role in people choosing any product, but we can all be quite coy about talking openly about money. Is this a difficulty for any new money product and how can we overcome this?

Social proof is possibly one of the most impactful and robustly researched biases in social psychology. We humans are social animals — we take our cues from those around us. If a behaviour can be made to appear popular, it will become more so.

This is certainly something we can use to our advantage when promoting financial services.

There are ways to apply social proof literally within finance. For example, HMRC communicate that nine out of 10 people pay their tax on time. When they tested the effectiveness of this messaging it beat the control by 7.5%. There is nothing to stop a financial product making popularity claims.

But there’s an opportunity to be more creative than the HMRC example. Brands can imply their popularity, laterally, through their design, rather than just making direct claims.

One of my favourite applications of this comes from Apple. When the iPod was launched in 2001, all competitors used bland, black earphones. Passers-by had no idea which device was being listened to. In contrast, the bright white headphones of iPods stood out. By being so distinctive, Apple appeared to be the market leader long before it was.

And within the finance sector, Monzo have followed the same tactic. The neon coral cards are not only distinctive but hard to miss. By being noticed at every use, they look like they are everywhere. That sets in train a virtuous circle of social proof: they look popular, so more people switch to them, which in turn make them more popular still…

The question you should be asking is what behaviour do I want to encourage and how can I make that behaviour look like it’s commonplace.

How we save and who we bank with is a habitual thing for a lot of customers. What can behavioural science tell us about the best way to break old habits and form new ones?

An enduring trait among us all is our reliance on habit in decision making. It makes total sense — it saves a lot of time and cognitive effort to go for the sandwich you always have or run the same route you always run on a Sunday. No thinking involved, no need to weigh up the costs and benefits of every option.

Habits help life run smoothly — until we hit a bump in the road. This might be anything that causes us to reconsider things. And there are natural moments when this happens: this is what we need to harness if we want to break habits.

Any disruption to our environment can change behaviour patterns. I’ve carried out research that clearly shows this.

In 2017 I recruited, 2,370 nationally representative participants. I asked them whether, over the last 12 months, they had undergone any life events from a list of nine, such as starting a new job or university, getting married or divorced or retiring. And I asked them to state, for a variety of categories, whether they had tried any new brands over the same period.

The results showed that people were about two-and-a-half times more likely to have tried a new brand if they had undergone a life event. Among those whose lives had changed, 21% had switched brands, compared with 8% among those who had not.

Psychologist Katherine Milkman and her colleagues have carried out related research that shows a similar phenomenon. Several studies have confirmed the “fresh start effect” — people are more motivated to engage in behaviours that help them to reach their goals at the start of a new time period. For example, joining the gym in January. This happens not just at the start of a new year but also a new term, a new week — or a birthday.

Since saving money is seen as a step towards a future goal, it’s definitely a behaviour that’s more likely to start at one of these habit-breaking moments. So, identifying and targeting people who are undergoing significant life changes and re-setting habitual behaviours will help them to make saving part of their new normal.

Richard’s best-selling book The Choice Factory covers 25 cognitive biases and outlines easy ways to apply them to business challenges. He tweets about psychology and marketing from the handle @rshotton.

If you know someone we should talk to who could help us build the future of life savings, drop us a line at simon_lyle@standardlife.com. Sign up to early access here