Have you ever had this happen to you? You walk into a store to make a purchase – not an everyday purchase, but something a bit more substantial. Something that might require a bit of research to know your options before you head to the store. Like buying a new television or new pair of shoes. You know what you’re looking for and what you want in the product you’re about to buy. But then, when you get to the store, something magical happens.
Through product merchandising or helpful assistance from a store employee (or both), you walk out of the store having purchased something completely different. Not necessarily having spent more money than you had planned. But you do wonder what in the world just happened.
Welcome to the world of choice architecture.
Many times, the choices we make are not actually our choices to make at all. It may seem like we made a choice – decided on something, in fact – but in reality, there were likely hundreds of micro-steps put in front of us that led us down a desired path. Retailers, car dealers, and even the government use choice architecture to drive consumers into desired paths and purchases.
Choice architecture is a practice that you can use in order to drive desired behaviors from your customers or members. Many banks and credit unions are already doing this. For instance, do you charge a fee to people who do not enroll in e-statements and opt to receive their statements by paper instead? You’re essentially directing behavior by allowing the consumer to avoid a fee.
Swaying consumer choices doesn’t always have to do with avoiding fees or giving them the opportunity to earn money with you. Here are some great ways to subtly implement choice architecture at your bank or credit union to drive desired behavior:
- Account bundling. Early in my banking career, I was opening a brand new branch in a brand new market. In order to both drive traffic to the branch and sustain an acceptable level of products per household, we opened the branch with a promotion for new customers: earn $100 when you open both a checking and savings account and keep it open for at least 30 days.
Within days of the branch opening, I heard the Vice President of the region boasting to the President of the bank “We have achieved a 100% cross-sell ratio!” Of course we had! We used an incentive to drive customer behavior the way we wanted.
A long story short, account bundling (and service bundling, for that matter) can make a huge difference for your consumers and the end result for your organization. When used responsibly and practically, your service reps will never have to worry about their cross-sell success rate.
- Content marketing. Have you ever wanted to know how to do a home improvement project, so you looked up some DIY videos to watch, and then decided that whatever materials they were using in the video were the ones you absolutely had to have for your project? No matter what the cost? Well, that happened to me. And guess what? Its happening to your consumers, too!
If your consumers wondering how to pay for a new home renovation project and are looking for information, you want to be the place they turn to. Better yet, wouldn’t it be great if you could also use that platform to recommend which products and services they should be looking for? Content marketing helps you achieve this goal.
As reported by Google Trends, the top two financial products consumers search out and do research on before the buy are credit cards and checking accounts. At this point, both of these are commodities in the financial marketplace. Account features and rewards programs are very similar across the vast majority of products.
By being the resource your consumers turn to for information, you’ve already got a leg up on your competition and can also drive behavior.
- Cut website content. Analysis paralysis. It happens to the best of us. Especially when you’re making a big decision and a lot of money hangs in the balance. The choice most often made by having too many choices is to take no action. To make no decision. To walk away.
Don’t let this happen with your consumers when they’re looking at you to solve their financial problems! The first place your consumers are going to look for information is your website. The second will be to walk into a branch and grab a brochure. Both of these mediums should have enough content to educate your consumer on the idea that you have the accounts and features they are looking for. And that’s where it should stop.
Providing too much information can cause analysis paralysis or let consumers make a decision too hastily. Choice architecture is about leading your consumers down a path. So our advice? Cut content. Provide a means for them to ask for more information. Then follow up for the sale.
Did you find this article helpful? Great! Please share it with co-workers that would also benefit from the information. Do you want help implementing choice architecture at your bank or credit union? Let us know. We’ll perform a complimentary consult, provide you with the results and let you know what we think.
In addition to this blog post, MarketMatch provides a 30 or 60-minute seminar about Choice Architecture. Contact us to have us speak at your upcoming conference!