October 2012
by Steve Martin
Officials in Britain’s tax system had a problem: Lots of citizens weren’t paying on time. For years Her Majesty’s Revenue and Customs had sent letters to the late payers, using traditional threats of interest charges, late fees, and legal action to try to get people to mail in their checks. Some did—but many didn’t. So in a 2009 pilot study (for which I served as a consultant), HMRC tried a different approach: It changed the language in its dunning letters, drawing on psychological techniques to increase the odds that delinquent taxpayers would pay up.
In one letter HMRC appealed to people’s sense of civic duty. “We collect taxes to make sure that money is available to fund the public services that benefit you and other UK citizens,” it read. “Even if one person fails to pay their taxes it reduces the services and resources that are provided.” Another used actual statistics: “Nine out of ten people in Britain pay their tax on time.”
These small changes delivered big benefits. In 2008, HMRC had collected £290 million of £510 million in one portfolio of debt—a clearance rate of 57%. In 2009, using the new letters, it collected £560 million of £650 million in a similar portfolio—a clearance rate of 86%. Overall, the new letters, combined with some best practices from the private collections industry, helped HMRC collect £5.6 billion more overdue revenue in 2009–2010 than it had the previous year.
What compelled thousands of previously unresponsive people to mail in checks? The answer lies in a psychological phenomenon that’s widely known but poorly understood: People’s behavior is largely shaped by the behavior of those around them—what behavioral scientists call social norms. In particular, people are often motivated by their desire to conform with the group, especially if it’s a group with which they identify.
Social norms are not new. Behavioral scientists, including my colleague Robert Cialdini, have studied the concept for decades (Cialdini has written several HBR articles on it), and the advertising industry was crafting appeals on the basis of consumers’ desire to fit in long before the Mad Menera. But many businesses are only now beginning to experiment with social norms as a tool to drive profits.
As they do, here are five insights to guide them.
Look beyond marketing. The most obvious business applications of social norms are in sales and advertising, where examples of tremendous results from the slight rejiggering of a key phrase abound. My favorite is the famous substitution made by the infomercial writer Colleen Szot, who, in an ad for NordicTrack equipment, replaced the traditional call to action “Operators are standing by” with “If operators are busy, please call again.” The image of a call center overwhelmed by eager customers turned the exercise machine into one of the best-selling products in infomercial history.
But in the past decade businesses have begun to recognize that social norms can drive results in areas other than marketing. The British tax collection study shows how they can help a finance department. In earlier research, Cialdini, Noah Goldstein, and Vlad Griskevicius found that changing the wording on the placard in hotel bathrooms urging guests to reuse towels significantly increased compliance. Instead of casting the request in terms of environmental benefits, new placards in one chain stated that the majority of guests do reuse towels—and people’s desire to comply with social norms increased the reusage rate by 26%, saving the chain thousands of dollars daily in laundering and delivery costs.
Steve Martin is the UK managing director at Influence at Work, an Arizona-based consultancy, and a coauthor of Yes! 50 Scientifically Proven Ways to Be Persuasive (Free Press, 2008).
No comments:
Post a Comment