5 Design Elements That Influence Member Behavior

Every detail in the member experience sends a message about how they should act. Thoughtful tweaks on the credit union’s part can lead to smarter choices from members.

Game-changing. Provocative. Useful.

This is the feedback we at Understood Connections hear when introducing the concept of behavioral economics (BE) to strategic leaders around the United States. They realize their organizations don’t really understand how consumers analyze choices and make decisions. Our discussions uncover missed opportunities, both with engagement and performance.

That leaders can use BE to create environments that nudge individuals to make smarter decisions seems surprising to many.

But why?

Classic economics, the stuff we all learned in school, suggests we act rationally, have stable preferences, and are not influenced by insignificant factors. Behavioral economics paints a different picture of human behavior.

Richard Thaler, the 2017 Nobel Prize Winner in Economics, talks about supposedly irrelevant factors that potentially have a huge impact on the way humans analyze choices and make decisions. He championed the concept of choice architecture and being a choice architect who uses knowledge of those factors to design an environment that allows for consumer choice while encouraging smarter decisions.

Help Members Make Better Decisions

The field of Behavioral Economics is proving how traditional economic models are terrible at predicting consumer behavior. When every message, price, and process a member encounters sways how they analyze options, it’s no wonder they make seemingly irrational decisions. Luckily, with the right tools, credit unions can tweak their member experience to encourage positive decision-making. Join Understood Connections and Callahan & Associates for a two-day workshop to build your better behavior toolkit.

An important underpinning of choice architecture is NO design is neutral. Every design, and just about every detail of that design, sends subtle and not-so-subtle clues for the preferred or suggested course of action.

For example, consider how these factors might influence the choices a member makes:

  • The order in which you provide product choices.
  • The number of choices you offer.
  • The defaults you establish to make implementation easier.
  • The business processes you implement to make it easier for members to execute one transaction over another.
  • The pricing structures and presentations you choose.

These supposedly irrelevant factors exert a powerful influence on the decision-making process. BE can help credit unions better connect with their members and encourage them to make positive financial choices.

Thaler coined the phrase libertarian paternalism, which is the idea that it is both possible and legitimate for institutions to affect behavior while also respecting freedom of choice. Freedom of choice is the key difference between influencing behavior and manipulating it. No design is neutral, but credit unions can design in a way that encourages smart behaviors without removing choices.

Be thoughtful about what smarter choices means for your members. Remember, every detail in the member environment you create sends a message about how you think they should act.

Callahan & Associates is partnering with Understood Connections, a behavioral insights consultancy, to help credit unions smartly leverage behavioral economics and create positive consumer experiences to drive decision-making. Attend one of our interactive, engaging workshops to understand what behavioral economics can do for your credit union.

April 11, 2018

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