[Don’t] listen to your customers

When asking questions fails

Imagine you’re a researcher at a company. You’ve been tasked with increasing employee participation in retirement savings programs. Your company already tried doing in-depth financial education to no avail; only 47% of their employees are signing up for sponsored retirement plans, which is a big deal when you consider similar companies boast 90% participation. Your company wants to do away with this disparity, and it’s your job to figure out what’s causing it.

What people said:

86%² of people who were saving for retirement cited how important it was to have money for the future, saying things like “I want to be able to have something to fall back on” and “I want to be prepared and live comfortably.” Whereas people who were not saving for retirement said things like: “I can barely afford to pay bills.” 64% of this group blamed not having enough money.

The real reason:

The real reason people save for retirement or (don’t save) is because they’ve been defaulted into a savings plan. Companies who automatically enroll employees in a retirement savings plan increase savings rates by 50 percentage points.³
It has nothing to do with a preference for the future or not having enough money.

But some people probably got it correct, right? Right?! Not really.

How many employees were able to articulate why they choose to save or not save for retirement? Across all conditions, only 6.2% of participants mentioned anything close to enrollment form design or default enrollment. Getting granular, while 12.3% of multiple choice respondents cited default enrollment as the reason they’re saving, only 0.2% of those answering open-ended questions mentioned it. That’s shockingly low.

Imagine you could only trust 6% of the people you brought in for research. What’s Going On?

Decades of work in psychology show that much of human behavior is guided by mental processes outside our conscious awareness.⁵⁶ Simply put, we are unaware of what goes on in our brain, our susceptibility to biases, and how we make decisions.⁷

Conclusion? We just can’t ask “Why”

Your customers (scratch that, all of us!) are not aware of all the forces at work on us and thus answering questions about them is almost laughable. One more example that should hit home.

  1. Your customers tend to make up stories to explain their behavior. This is the Press Secretary.
  2. These stories tend to attribute behavior to attitudes, beliefs and preferences (e.g. “I care about my future”).
  3. The stories tend to discount the choice environment’s influence on behavior (e.g. we don’t say, “the default made me do it”)¹⁵
  4. We’re not aware that any of this is going on. If anything, we are overconfident in our ability to reflect accurately on our behavior.

About the Authors

Kristen Berman co-founded Irrational Labs, a behavioral product design company, with Dan Ariely and was on the founding team for the behavioral economics group at Google. Before designing, testing and scaling products that use behavioral economics, Kristen was a Sr. Product Manager at Intuit and camera startup, Lytro.

References

[1] Multiple Choice Survey demographics: (454 respondents: open response) 48% female, 72% White, 46% between 18–34, 41% less than $35,000 income, 60% employed full time. Open Text Survey demographics: (446 respondents: multiple choice): 36% female, 75% White, 57% between 18–34, 40% less than $35,000 income, 69% employed full time, Combined:(900 respondents): 42% female, 73% White, 51% between 18–34, 41% less than $35,000 income, 65% full time.

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Kristen Berman

Kristen Berman

Thinking about Irrationality. Behavioral Scientist. Co-founder of Irrational Labs and Common Cents Lab.