Carrot Rewards, a mobile app that spruiked its use of behavioural economics to engage 1.1 million users, filed for bankruptcy this year after failing to find an investor.
This got me thinking: are businesses embedding behavioural economics in product design but overlooking its use to influence those who pay the bills?
Behavioural economics on the inside
With loyalty points for petrol, travel and groceries as their prize, the Carrot Rewards app encouraged Canadians to walk more, get flu shots and complete health questionnaires. According to a media release, it was an “AI-driven wellness app that leverages behavioural economics and nudge theory to motivate and reward users for making better lifestyle choices”.
The behavioural economics component seems largely to have been the immediacy of reward, tapping into short-term bias, with small rewards promptly transferred upon the completion of a task. User friction was also reduced, with easy ways to track tasks and transact points.
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Did it work to improve health behaviours? A study determined the app increased average daily step count by 5% and as much as 21% amongst physically inactive users. So yes. Early signs were good. Using behavioural economics inside the app was working.
Behavioural economics on the outside
Here’s where I broaden my point though, because I don’t know the details of how the Carrot Rewards team sought to influence investors, I just know they clearly failed.
What I have noticed among businesses that talk about using behavioural economics, including advertising and market research agencies, is they seem to limit their use to the mechanics of the product to be consumed.
In other words, the app’s usability but not the task of getting people to download it. The ad campaign but not getting the clients to agree to it. The research but not getting the clients to use what’s discovered.
It’s a blinkered, siloed use of behavioural techniques and means great behavioural economics-powered initiatives are failing for lack of a behavioural economics-powered influencing approach. They haven’t incorporated behavioural economics into the external positioning.
It’s like having the world’s greatest chef in the kitchen but failing to think about how you will get people to the restaurant. What a waste!
Behavioural techniques are a 360-degree skills-set. By that I mean you can use the same techniques on:
- Your customer (the consumer or user);
- Your stakeholders (investors and/or leaders); and
In the case of an app, for example, that means within-app usability and functionality to drive the behaviour of user. It means anticipating and overcoming resistance to downloading the app in the first place, and trying to get users to prioritise its placement on their home screen.
Further, it means securing investment to develop the app by influencing stakeholder perception of value. Ask yourself why they should bother and how you can minimise risk. Use short-term bias to emphasis short-term advantages, nullify loss aversion by providing assurances in favour of the investment, and amplify the downside of missing out on the opportunity.
In terms of using behavioural economics on yourself, it gives you a roadmap of how to adjust your behavioural patterns. You can use environmental primes to change the course of your behaviour for example, like setting a motivational phrase as your morning login, the size of the plate you eat from and what music you play at what time.
The lesson from the failure of some behavioural economics-infused products is that it may not be the products at all, but rather how they are sold in.
Behavioural economics on the inside isn’t enough, it needs to be on the outside too.