Breaking Habits

Organisations are told that they must ‘innovate or die’, and to that end they invest significantly in new product development.  Insight agencies are engaged to undertake ideation, product development and concept testing to help feed a new line of successful new products.

Much of BVA BDRC’s work is in this area, but in order to establish whether a product really will be a success, we have also to understand the likelihood of a purchaser making real their intention to buy.

BVA BDRC undertakes significant research in ‘customer on-boarding’, in part to establish the level of effort required in taking out and starting to use a new product or service.  On-boarding for financial services can require varied levels of customer effort, ranging from the initial application (e.g. a credit card), the approval (e.g. a home loan), to using the service on a regular basis (e.g. Internet banking).

In recent research we conducted, it emerged that even the smallest barriers to product on-boarding lead to consumer drop out.  This places increasing demands on financial institutions, which are obliged by regulatory pressure to make customers ‘go through the hoops’.  But the longer the forms, the less likely people are to apply for the product.  There has always seemed to be a trade-off between security and ease of use.  Stung by competitive pressure from challenger banks, however, (e.g. WeBank and Jenius in Asia, Atom and Starling in the UK), the majors are starting to emulate the upstarts’ use of AI to streamline application processes.  And they need to – one of our London colleagues recently opened a completely new account with Starling Bank in just 10 minutes on a smartphone.  No human interaction was required and the new account was joined in the process to iPhone’s Apple Wallet, allowing immediate transactions.

In recent research conducted by BVA BDRC among SMEs in SE Asia, we asked businesses why they do not use Internet banking.  Responses included fears about hacking, but perhaps the biggest barrier is inertia, that old friend of banks and energy suppliers.

Habits are a strange thing – we actually found that businesses ‘enjoyed’ going to the branch and queuing, and for this reason may not use the Internet banking alternative.  While banks have tried to make the in-branch experience more enjoyable, there are limits!  Logging into Internet banking from the convenience of your desk must surely be better than 30 minutes in the branch, excluding the time taken in the round trip to the bank, which in places like Jakarta can be quite significant and stressful.

There are theories behind why people like queuing – e.g. about showing respect for others and treating yourself as an equal by waiting your turn.  The trip to the bank, while monotonous, can actually be a welcome break from the office environment – some bosses like to tell their staff “I’m going to the bank” as a means of showing their status (e.g. I have control over the money) and reassuring staff that they are in control of the company’s finances.

Among consumers, we found in Singapore that one reason people did not use Internet banking is that they liked going to the street to use ‘their’ AXS machine.  AXS are well designed self-service machines that allows consumers to perform a range of transactions such as paying bills.  All these can be done at home on internet banking, but the ‘trip to the AXS machine’ is a routine that people seemed to enjoy, even in the rain!

So, this challenges organisations which aim to introduce new products.  While the product can research well, the process of research may itself trigger response bias.  We then need not only to analyse the likelihood to follow through, which can involve a number of additional questions; but also, to examine what can be done to ‘break the habit’.  Direct questioning on the likelihood of a consumer to follow through on their intentions can sometimes work.  For example, in a follow up to the ‘will buy’ answer, we can ask people whether in reality they are likely to follow up on their intentions.  We need to establish the ‘priority’ to follow through.  For example are the current alternatives really that much worse?  How much time and effort is required in following through on your intentions?

But to bridge the gap between research and sales, we need to know how best to convert the business opportunity to revenue.  Sometimes this is down to ‘happenchance’, e.g. a consumer happens to be in the right place at the right time to be sold a new product.   Alternatively, front-line sales people may be able to feed in valuable commercial intelligence on the ‘when’, ‘where’, and ‘how’ consumers take out new products.  Furthermore, this process can be quick and highly cost effective.

BVA BDRC’s Qualitative Insight team applies current psychological theory as well as patented methodologies to reveal the ‘inner thoughts’ of consumers.  The team has worked with global financial organisations to develop new strategies for business growth.  Piers Lee or Richard Smith would be happy to discuss your plans.