Can a survey increase the amount your customers are willing to pay?
Last year, our London office was fortunate enough to work hand in hand with a select few Water utility companies in the UK. The basis for our work was a regulation imposed by the UK regulator Ofwat. This collaboration led to some of the most interesting work we have ever done; fusing creativity with digital and behavioural science, and culminating in results that astounded the industry.
Background
Water Utility Companies within the UK are heavily regulated due to the nature of their business. If a customer moves to a new city, they do not have the liberty to choose between water providers (like they can do between energy utilities), they are forced to go with whichever one that is servicing their area. Water Utility Companies therefore enjoy a monopoly in the market.
The risk with monopolistic companies is that it wouldn’t matter what these companies would want to charge the customer; the customer has no choice but to pay up (not that we are suggesting that Water Companies would abuse their power — quite the contrary; every one of them we met cared deeply about their customers and providing an even better service year on year). However, due to their position, these utilities have to create a business plan every five years that is then submitted to their regulatory authority, Ofwat.
Business Plan requirements
This business plan needs to cover multiple areas of the business, including but not limited to pricing, sourcing water, preserving water, maintaining their infrastructure, and supporting vulnerable customers.
Part of the process states that these utilities must involve their customers in creating their business plan, to ensure that it is not one-sided and that the customers have the opportunity to input their preferences and priorities. This is a crucial point, and Ofwat heavily penalises utilities if they brush over this.
One of the requirements of Ofwat was for Water Companies to come up with new and innovative approaches when engaging their customers to address the challenges facing their sector. The directive explicitly stated that the surveys must be fun, engaging, innovative, and most importantly they must demonstrate robust data.
The two questions that had to be answered were:
- How many customers would be willing to increase their bills for a higher level of service?
- Where should the water utility invest their revenues? What’s more important for customers?
There are only so many ways one can make a survey (or so we thought!), so we were brought in by a consultancy to inject some creative technology into the projects.
The concept
The challenges we were facing from a Product Strategy perspective were:
- There is a huge amount of background knowledge and context to understand the services of a utility company, since they do so much more than just “providing water”
- We had to ensure that the data and responses are “robust”, i.e. statistically significant and it is drawn from a wide range of probability distributions
- The completion time of the survey had to be under 5 minutes
We decided to tackle the lack of context and background by making the game educational and fun at the same time. The core idea was to create a miniaturised World where we can demonstrate all the different aspects that water utilities must take into account when prioritising.
As users would move the sliders (increasing or decreasing the investment in that service), the World would reflect the change instantly, educating the user of both the pros and cons of their choice within that service level.
For example, if users decide to increase the amount of water from the river (illustrated on the right), it will bring their bills down, but it will also have a larger negative impact on the utility’s carbon footprint, as well as the wildlife in and around the river.
This approach also allowed us to include elements of gamification and gratification, so users can see the impact of their choices in real time, instead of second guessing and making decisions based on assumptions and limited contexts.
Behavioural Economics
As highlighted above, one of Ofwat’s criteria was to make the data robust. This meant we had to take extra care to ensure we were not influencing the users in any way, as that would skew the data and impact the investment decision making.
Classical economy assumes that people make decisions rationally. Therefore, given identical options, they would consistently make the same decisions. However, scientists have proven that sometimes people’s preferences are dependent on how the options are presented. This type of cognitive bias is called the framing effect, since people act on the limited information they have and let their perceptions influence their decision making.
We have taken these effects into consideration during both our UX and UI design phase, and applied the following two strategies:
- Ensure that from a UI perspective the “worst case scenario” (e.g. the river decreasing in breadth) is still realistic and not daunting. This will inform the user of the potential consequences of their choice without influencing them
- From a UX perspective, we randomise the order of the screens and the different services within the screen as well. This means that different users will see different services first, resulting in a more even preference of choice in the final data
Impact
We have now worked with multiple water utilities across the UK, applying similar design and psychological principles to different survey concepts, resulted in very different approaches and end products.
However, the overarching and incredibly surprising results from the surveys were that the majority of the participants opted in to increase their bills. We attribute this to being a direct result of being educated about what it really takes to deliver water to their homes; being presented the potential negative consequences of their choices; and the gamification that comes through trying to get the right end price and minimizing the negative consequences.
These projects were fun and challenging to work on, but they also definitely reinforced our direction to include Behavioural Economics on a much deeper level. It is clear that this field has a lot of practical applications to offer for the strategies and designs of digital products.
