clock menu more-arrow no yes

The Rise of the Chief Behavioral Officer

It's a thing.

quickmeme.com

Waiting is frustrating. People like to know when things will happen. Uncertainty about when the wait will end is made worse by humans’ poor ability to forecast the future and evaluate the past — for instance, on average, people overestimate how long they’ve waited in line by some 36 percent.

For decades, companies have worked to solve the problem of waiting, but only recently have those solutions brought big benefits to customers. Amusement parks like Disney were early pioneers — knowing that long lines were intimidating, they broke them apart into short segments that worked their way around in a maze, each segment out of sight of the next. While that structure succeeded in getting people into long lines, it didn’t ease the frustration of uncertainty — there was a guessing game around each turn: Will this be the last one? Tracking services from package shippers like FedEx and UPS improved the waiting process, but again only solved half the problem. They eliminated some uncertainty by showing what city and facility packages were at, but left the estimation of actual arrival up to the customer.

Tracking was just the first step in improving waiting. Telling people exactly when the wait would end was the next. Today, customers in bus stops and train stations in major cities are alerted about bus location via apps and digital screens. In Tampa, real-time bus arrival information cut the percentage of frustrated passengers by almost one-third. Taking it a step further, companies like Uber improve on that wait-estimation feature by adding a visualization of where a driver is on a map as a way to verify the accuracy of the arrival-time estimate. Looking forward, at least one startup is trying to do for waiting what Seamless has done for ordering, by giving customers access to wait times at restaurants nationwide, and then letting them make a reservation based on that information.

Tracking, visualizing and estimating don’t make waiting shorter, but they do improve the overall waiting experience by answering the “what?” and “when?” caused by uncertainty. In the modern economy, companies that anticipate pain points and bring certainty and reliable information to the customer experience are rewarded with loyal customers. It should be no surprise, then, that companies that put customer experiences at the center of their products and services are often industry leaders.

Creating great customer experiences is not easy, but here’s some good news. Academic research in behavioral economics and psychology has produced a foundation of lessons that, when combined with technology, can help companies relieve customer pain points and deliver delightful experiences in any industry. Dan Egan of the automated investing service Betterment estimates that between 10 and 20 Fortune 500 companies have someone at a C-suite level serving in the role of a “chief behavioral officer,” bringing behavioral science perspectives to strategic business decisions. Beneath them are people in consumer research, marketing, analytics and user-experience departments, who work with behavioral science concepts daily.

With an abundance of data, academic research and money, consumer finance companies are at the forefront of behavioral science application. HelloWallet and Acorns use it to improve saving and investing behaviors. Acorns, for example, offers an investment version of Bank of America’s Keep the Change program by rounding up every debit card purchase and depositing it in an investment fund. Merrill Lynch’s Face Retirement tool helps customers save for retirement by bringing them face to face with a digitally aged picture of themselves as a way to help establish a stronger connection between the present and the future.

It’s not just numbers-intensive fields like consumer finance that can use behavioral science, of course. Even advertising can be improved with behavioral science and technology. Consider the streaming-content provider Hulu, which has an advertising model based in part on a 1960s psychology experiment. In that experiment, researchers offered children the option to eat one marshmallow now, or to wait a little bit and receive two marshmallows. On that same principle, Hulu now offers viewers a “marshmallow” option for ads: Customers can elect to watch a longer ad up front, then watch their selected program, uninterrupted; or they can watch the program right away and experience typical commercial breaks throughout. This choice provides a better customer experience by empowering customers to choose their preferred method of consumption.

So, let’s say your organization is eager to use behavioral science to improve customer experiences. Should you hire a chief behavioralist? Or pursue an organization-wide behavioral mindset?

The honest answer is: It depends!

A fundamental lesson of behavioral science is that “context matters.” Before moving forward with one model or another, ask yourself: What are your company’s goals? Are you trying to develop experiences or establish thought leadership? What are your cultural norms? Is interest in behavioral science coming from top management or elsewhere in the organization?

If your company does decide to hire a chief behavioralist, practicing good behavioral science is a team effort. Researching insights, scoping projects, engaging clients, building technology, designing tests and measuring results is rarely done by one person. When delivered successfully, customers get more of what they want and, in turn, reward those companies with their business and trust. Here’s hoping more companies go beyond the transaction and use behavioral science to make the world a better place.


John Balz is the chief behavioral officer at Opower, a cloud-based software provider for the utility industry, where he leverages behavioral science in consumer marketing and strategic communications. He got his start in applied behavioral science working on the New York Times bestseller “Nudge,” and has professional experience using its principles to motivate behavior across a range of industries including financial services, social programs, health care and retail. Reach him @Nudgeblog.

This article originally appeared on Recode.net.

Sign up for the newsletter Sign up for The Weeds

Get our essential policy newsletter delivered Fridays.