When I was little and asked to do something my friends were doing, my mother often responded, “if all you friends were jumping off a bridge, would you?” Even a casual study of human behavior would suggest that in many cases the answer to that question is YES, and behavioral scientists have a very clear understanding of how social norms and peer pressure impact the behaviors of consumers of all ages.
Social norms are the informal, unwritten rules that govern and influence behavior among members of a group; research, experiments and practical applications have demonstrated just how powerful social norms can be. Some industries really leverage this science to shift behaviors. Most of you likely receive a quarterly or annual statement from your local utility provider, showing how your use compares to your neighbors. Much of the genesis for this process came from a large study in San Diego where a variety of methods were tested to get consumers to use less electricity. Messages touting cost savings, environmental protection or society benefit generated almost no measurable reduction in use. But the message that their household was using more energy than their neighbors generated an overall 10% reduction among consumers who received that news. Think about that – a reminder that focused on cost savings had no impact, but the news that you did not compare well with your neighbors shifted behavior significantly! That is powerful.
So how might credit unions use this technique to help shape better financial behavior in their members? As an example, how might we use this to help our members save more? One way would be to highlight the difference between an individual household’s savings balance and the average balance of a group of your members that the targeted household is part of.
There are some guidelines for leveraging social norms to shift behaviors.
- For the purposes of social norms in behavioral economics, members tend to identify with a societal group because of the characteristics the group represents. And most individuals have at least 7-10 of these sorts of groups to whom they relate. So make sure that the societal group you use reflects a group that your target is part of or aspires to be part of. Specificity is important, and studies show the narrower you can draw the societal group the more powerful the impact. Using an average for your entire membership is good, but specifying a neighborhood, an age range, family size, or a S.E.G. is likely to have a stronger impact in your effort to shift behaviors.
- As powerful as the established behavior of someone’s societal group can be, even more powerful in effecting behavior change is the news that the behavior of your group is shifting. Shifting behavior in your societal group sends a message that something is changing and provides a stronger impulse to evaluate your own behavior. For instance, telling your members that their societal group is beginning to save more will usually have more impact than simply telling them that their societal group saves more.
- Messages that a household trails it’s societal group should not focus on the shortfall, but instead offer encouraging tones and offer simple, straightforward suggestions for improving performance. Similarly, households that are exceeding the performance of their group should receive positive messages that encourage continued strong behavior.
We have worked with organizations that have used the concept of social norms to, among other things, reduce loan delinquency rates, increase the number of members who vote in board elections, improve staff participation in training programs and to increase the number of hours their teams contribute to volunteer programs. How might your organization leverage this science?
*Yes, we know that the legend of a mass of lemmings following each other off a cliff is just a myth, but still!