Michael Ellison is the President of Corporate Insight.
Ok, I made that up. There’s an interesting article in this month’s Harvard Business Review titled, 98% of Readers Love this Article (I guess I plagiarized too) that discusses the power of social norms. Essentially, the writer shows several instances from outside the financial sector where promoting actions taken by other people influences the activity of consumers.
For example, you might be familiar with the signs in hotel bathrooms imploring you to save the environment and hang up your bath towel rather than have it replaced. While this encouraged compliance, a study found that when the messaging was changed to say that the majority of guests reuse bath towels, the reusage rate increased by 26%. By showing that other guests did, in fact, reuse towels, current guests seemed more willing to do the same. Peer pressure seems to work.
While the article did not provide examples from the financial services industry, a few applications are well positioned to benefit from a similar approach:
- E-Delivery – For years, clients have been exposed to messaging on statements, login interstitials, and collateral pieces to do their part in saving the environment by signing up for e-delivery. Discussions we’ve had with clients seem to indicate that, despite these efforts, adoption of e-delivery has remained pretty consistent. Perhaps using social norms would help here. Perhaps changing the message to “48% of XYZ Brokerage Clients get their documents delivered online” would be more effective. This could be especially effective with proxy mailings and annual reports.
- Promoting Security & Password Changes – Similarly, the ways in which firms discuss the importance of password changes could be modified to apply some peer pressure. For example: “Did you know that XX% of our customer change their passwords every month?” Or, “Did you know that XX% of our customers have opted to use our security tokens?”
- Increase Adoption of Mobile – Again, social norms could be used in promoting mobile technology, and here firms could even leverage App Store ratings. For example, E*Trade might say in their promotion: “See why E*TRADE Mobile earns 4 out of 5 stars by our users.” Or, something that shows adoption rate, “XX% of our clients have installed our mobile app since the latest upgrade.”
The article does provide a word of warning, however: be careful what you normalize. They cite that organizations might talk about the frequency with which people do the opposite of what they are trying to encourage. For example:
When explaining the change, the IRS emphasized that the penalties were necessary because the agency had found that large numbers of people were falsifying returns. Although one can laud the IRS for its transparency, the strategy was wrongheaded: The following year IRS auditors found a 22% increase in tax fraud. Why? In attempting to address a problem, policy makers inadvertently broadcast the message “Look at all the people who are already doing this undesirable thing!”
In this data-driven business environment that we now live in, the metrics should be available for firms to develop some compelling messages to drive client initiatives. In fact, 98% of your competitors are doing so!