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As we all know from experience, effective communication is vital to ensuring that you are meaningfully engaging with your consumers, which in turn brings commercial and regulatory benefits for your organisation.
Yet designing communication that is effective requires an understanding of consumers? behaviour and thinking processes, which is where behavioural economics comes in. It gives us a systematic understanding of how consumers are likely to respond and the tools to test this.
Identifying the purpose of each and every communication helps you make the most effective choices on the who, the what, the how, and the when.
Once you have nailed these down, you can move on to identifying the must know, should know, and nice to know information. These guide what your communication needs should prioritise and emphasise.
When it comes to bias, no one is immune. By working out which biases are most likely to be at play when consumers receive your message, you can either work with them, or choose to counteract them.
The three A's form a useful framework for detecting bias in how consumers Access, Assess and Act on information in a communication.
Based on behavioural economics literature and our experience of running experiments, effective communication:
Best practice is to test several competing designs to see which piece(s) of communication best meet your objective.
In the real world, A|B tests or randomised control trials are great, but sometimes it is wise to do the first test in a stylised environment, such as a laboratory/online experiment.
Digital channels provide firms with even more opportunities than traditional channels when it comes to effective communication and nudges, but they can also introduce new conduct risks, if the nudge is inappropriate.
We will discuss digital communications in detail during our forthcoming workshop on 17 October. We will also tackle the tension between the regulatory need to disclose everything and the behavioural insight of keeping it short and sweet.
Tim Hogg, Senior consultant, Oxera
19.04.24
17.04.24
15.04.24
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