Understanding how we behave differently online: part 1

Understanding how we behave differently online: part 1

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By Crawford Hollingworth, Liz Barker and Jamie Halliday, The Behavioural Architects.

In the last decade we have learnt more about our behaviour than in the last 100 years. We have begun to map the human behavioural blueprint!  Research by psychologists, neuroscientists, anthropologists and sociologists have allowed us to understand more than we ever have about our behaviour, judgement and decision-making.

Whilst much of this learning has been in ‘the real world’, there is now an emerging focus on how these insights can also be applied to understanding our ever-expanding digital world.[1] This is important because the online environment can affect our behaviour in very different ways.

The Behavioural Architects have been working with companies and organisations around the world, and using behavioural science to understand how to optimise online behaviour and behavioural journeys, building on our own learning and insights from academia. From this experience, we are beginning to build a fascinating picture of our behaviour online and how it differs from the offline world we live in.

Frameworks and concepts from the behavioural sciences, in particular behavioural economics, have become proven tools for better understanding and predicting human behaviour in the offline world. It’s important to understand how these frameworks and concepts operate online and to what degree there’s variance from the offline world. For example, to what extent are we influenced by social norms and the desire to conform, how strong is our preference for the status quo, and how great is our degree of honesty or attention in the basic choices we make?

This article is the first of a three part series in which we explore some of the latest insights into online versus offline behaviour, analysing research findings which illustrate:

  • How and why the online world affects our behaviour in interesting and often surprising ways;
  • The general patterns of our behaviour and decision-making online; and that
  • How we think and choose online may fundamentally differ from our behaviour and choices offline.

Part 1 looks at some of the shortcuts we make online, to save time or deal with the plethora of choice; Part 2 analyses how we may be less influenced by social norms and pressures online. Part 3 then goes on to analyse the impact of the physical device on our behaviour and consequent decision-making.


1. We are more prone to using mental shortcuts and rules of thumb online to overcome choice and information overload:

  • There is now such a wealth of information and of choice online, that some psychologists and neuroscientists believe our cognitive capacity is being impaired - with implications for our capability to absorb and understand information. A recently published UK consumer survey by Carat[2] found that:
  • 41% of people said they feel overwhelmed by the wealth of choice on the web, making it hard for them to make purchase decisions. 
  • 26% of people feel there is so much information online that it is hard for them to find what they are looking for when shopping online. 

Merely choosing what to read and what information to access can present us with a multitude of paralysing choices. For example, Nicolas Carr, author of ‘The Shallows: What the Internet is Doing to Our Brains’[3] has highlighted several pieces of research which show that we can become overwhelmed when reading an article online if there are too many hyperlinks embedded in it. We become distracted and tired from needing to make continual choices about whether to click on a link.

Research has also found that we absorb less information when reading a heavily hyperlinked article, missing the primary message, and are less likely to become absorbed in it or think deeply about what is written.

The digital world encourages us to multi-task across a number of digital devices now, to have several apps and tabs open, as well as email and instant messaging and continuous notifications from social media (unless we’ve opted out of the default settings and turned them off). Neuroscientists argue that our brains were not designed to work by multi-tasking. Earl Miller, a neuroscientist at MIT says even “when people think they are multi-tasking, they are actually just switching from one task to the other very rapidly. And every time they do, there’s a cognitive cost in doing so.”.[4]

Simply knowing we have an unread email in our inbox has been found to reduce IQ by up to 10 points. In the back of our minds we might be fighting the urge to see who it is from and what it says, “Is it bad news or good? Is it urgent?”.

Even more astounding is that if we are multi-tasking whilst trying to learn, understand and absorb new information, that new information may be stored in the ‘wrong’ part of the brain - the striatum, which is responsible for storing procedures and skills - rather than the hippocampus which stores and categorises facts and new ideas in ways that make them easier to retrieve.[5]

In this ‘always on’, wired world in which most of us exist, termed the ‘look down’ generation recently by Simon Schama, it seems likely that, more than ever, consumers are frequently in a state of cognitive impairment and continual distraction, multi-tasking and trying to process ever growing amounts of information online.

These effects mean that when we are online we may be more likely to resort to mental shortcuts and rules of thumb to make decisions, which could be error-prone.

  • Some shortcuts may be social: for example, several surveys have found that consumers increasingly resort to relying on the recommendations of friends, or content from friends because they felt so overwhelmed by choice.
  • Other shortcuts might be the screen location of a potential choice: initial research has suggested we may be more likely to choose an option depending on where it features on the screen.
  • And another rule of thumb may be to stick with the status quo – see more on this in point 2 below.

This has implications for how we might want to design optimal user experiences. We need to think about the online context which we are developing and design it so as to make things as simple as possible, with minimal cognitive load and an orientation to the user-perspective and behavioural journey.

Generally websites and online experiences need to be designed to be as fool proof as possible. But website design varies hugely in how well the user behavioural experience has been optimised. What is needed is to understand all contexts of, and influences on, user behaviour and create digital content that connects with that journey.

Some commentators advocate anticipatory design - where decisions are made and executed on behalf of the user - in order to reduce both choice paralysis and poor choice, as well as to leverage the huge amounts of personal data and information we hold about consumers, in order to personalise and customise choice so it is automatically optimal.[6]  

Conversely, we might argue that where important decisions are to be made - such as for investments, pensions, healthcare choices and, in the future, voting - we must design contexts and environments which create and support uninterrupted focus on the matter in hand.


2. We are swayed by the status quo in the online purchase process:

Behavioural science has frequently demonstrated that in some contexts we tend to accept pre-selected options and defaults and are likely to stick to the status quo. This effect may be much stronger in certain online contexts, such as online purchasing funnels which feature drip pricing or pre-ticked ‘add-ons’.

Here we investigate three different mechanisms which can increase the status quo effect online:

We stick with default add-ons: We tend to accept automatic add-ons to products and services we are purchasing online. Add-ons are often highly streamlined into the online purchase process compared to a traditional purchase in an offline context, making them particularly effective in this context.

The UK’s Financial Conduct Authority recently conducted a market study on general insurance add-ons for products and services such as gadgets, travel, cars or homeware such as boilers and gas appliances. They found that when products and services are bundled in this way - often at the final point of sale - consumers find it difficult to make an informed decision and tend to stick with the status quo, accepting the add-on.

Data the FCA obtained from a large insurer in the UK motor insurance industry showed that 80% of consumers bought Motor legal expenses insurance as a pre-ticked ‘add-on’ to their policy where they had already been automatically “opted-in” by default, compared to only 40% when consumers had to actively select it themselves.

One reason for this might be that when consumers are unsure and non-expert in a purchase, perhaps if it is a one-off or something they have not done before, they may treat defaulted add-ons as indirect advice from a more knowledgeable supplier assuming that the add-on is something they need or that most people purchase. An add-on may also appear to be a relatively small additional cost, compared to the consumer’s main purchase and may lead more people to accept the add-on.

Christopher Woolard, Director of Strategy and Competition at the FCA says:

“This is about ensuring consumers can make the right decision on what add-on insurance they do or don’t need. Forgetting to un-tick a box at the end of a purchase is not making an informed choice. Our work shows that the opt-out model means too often consumers are buying a product when they have not been able to give any thought to whether or not they need it. We are all familiar with having to double check whether or not we have accidently agreed to buy an add-on insurance product when buying car insurance or tickets online for example.”[7]

Following the release of this study, the FCA announced plans to ban the use of opt-out insurance selling and wants to encourage firms to introduce add-ons earlier in the sales process to reduce any status quo effects.

We stick with our first choice when faced with ‘drip pricing’: Some companies advertise a headline price for a product or service to attract consumers, with various surcharges - some essential, some not - then added on later in the purchase process. This is known as ‘drip pricing’ and is frequently used online.

For example, drip pricing is often used by low cost airlines to hide price surcharges such as a credit card handling fees and hold baggage. In 2012, The Guardian newspaper found that surcharges throughout this process were found to add as much as £82 to the advertised price of a flight.[8] While drip pricing exists offline too, it tends to be more ubiquitous online with greater opportunity to apply to all sales.

Research into this mechanism has found that consumers tend to stick with the status quo and go along with their first choice, even if it is not optimal. The UK’s Office of Fair Trading (OFT, now the Competition and Markets Authority) investigated this mechanism in 2010 using a behavioural economics lens. Surveying 3000 consumers they found that drip pricing had the largest and most significant effect on purchasing decisions of all online pricing mechanics.

A simple simulation, where the final price was just two ‘clicks’ away from the headline price, increased search and purchasing errors and over a quarter of consumers ended up buying from the first shop they visited when faced with a drip pricing model.[9] And this model was very modest in its design; in reality, there are many much longer, more frustrating experiences online.

Numerous cognitive biases may affect our decision-making in this context, enhancing our tendency to stick with the status quo:

  • Endowment effect - consumers feel that the purchase is as good as made when they have got a long way into the booking process. They don’t want to lose a product they feel they already ‘own’.
  • Commitment bias and sunk cost fallacy - consumers feel that they have invested time and energy into a lengthy online purchasing process and want to remain consistent with that initial decision.
  • Finally cognitive capacity is worn down as the consumer faces a lengthy, decision-ridden purchase process; many websites are as many as 7 ‘clicks’ away from final purchase, requiring multiple decisions over what to choose within each surcharge payment, how to pay etc. The ‘cognitive miser’ in us may simply lack the energy to begin all over again.

The OFT/CMA have clamped down on drip pricing in recent years in recognition of these effects on behaviour.

We stick with our past ‘favourites’ more online: Status quo bias also leads us to choose the same things repeatedly when ordering online.

Economist Andrea Pozzi analysed data from 2004 to 2006 for a large national supermarket chain in the US to compare the behaviour of household shopping both online and in-store at the same chain, for identical items and prices. Focusing on the cereal category, he found that consumers were more likely to stick to the status quo and habitual purchases with households over 7% less likely to try a new brand of cereal when shopping online. Further, online shoppers were also 10% less likely to experiment with new varieties or even box sizes of a known brand of cereal.

Brand exploration was more prevalent in-store than online. In store, consumers have a much richer amount of information to explore and make a choice from, particularly from physically holding a product. Online, the consumer can typically only read the nutritional information and look at an image of the cereal box, making it difficult to verify item quality.

Further, online features such as ‘favourites lists’ or a ‘one click’ purchasing based on past shopping history makes it so easy to stick with what we know, particularly when we are time pressed. Pozzi’s analysis showed that shopping online tended to be carried out on weekdays when consumers have less time and less inclination to browse, particularly for unexciting types of shopping such as the supermarket shop.[10]

For some, there is more interesting shopping - for clothes, music, antiques, gardening - anything which we may have a strong interest in and for which we may actually enjoy spending time browsing and exploring. But supermarket shopping for household staples typically involves making choices that are dull, repetitive or routine. In his recent book ‘Choosing not to choose’, Cass Sunstein argues that these kinds of choices are best served by predictive shopping and personalised defaults (even if these choices are easy to make) as this gives us back more energy allowing us to focus on more enjoyable decisions and choices.

Digital architects have to decide when to leverage status quo bias and let predictive or personalised mechanisms take away the burden of choice, and when to offer consumers the opportunity to break from habits and make their own decisions. This question adds a digital perspective to the long-running ethical debate in behavioural economics about the role organisations should play in “nudging” our behaviour. The context and even the category will likely dictate how much to play to the status quo.

As Daniel Levitin reminds us in his recent book ‘The Organized Mind’, our cognitive resources are limited, and making decisions, even easy ones, quickly whittles down that finite resource:

“It’s as though our brains are configured to make a certain number of decisions per day and once we reach that limit, we can’t make any more, regardless of how important they are… We can have trouble separating the trivial from the important and all this information processing makes us tired.”[11]

If we want to reduce the amount of decision-making we do each day, it makes sense to stick to the status quo when we can make gains in terms of time and cognitive savings from it.


Conclusion

As we have seen from these examples of behavioural differences in the online world, just as in the offline world, context is still king.

Research into behaviour in the online world is just beginning, but we can already see significant behavioural differences and similarities with the offline world. What is also clear is that the behavioural sciences can give us not only the strategic tools to make more sense of online behaviour but also the executional tools to influence it. The Behavioural Architects are working with many leading companies from around the world, applying frameworks and concepts from the behavioural sciences to develop and optimise online journeys and, at the same time, building on this exciting and evolving knowledge base about online behaviour.

To misquote a famous line from Star Trek, ‘It’s behaviour Jim, but not as we know it!’.


In part two of our series we analyse how we may be less influenced by social norms and pressures online.

This piece was written by Crawford Hollingworth, Liz Barker and Jamie Halliday, The Behavioural Architects www.thebearchitects.com


[1] ONS Statistical Bulletin “Internet Access – Households and Individuals 2014” http://www.ons.gov.uk/ons/dcp171778_373584.pdf

[3] Carr, N. “The Shallows: What the Internet is doing to our brains”, 2010, Atlantic Books

[4] Levitin, D. “The Organized Mind” 2014, p 96

[5] ibid.

[7] FCA Press release, “FCA proposes an end to opt-out selling of insurance add-ons” 25th March 2015: https://www.fca.org.uk/news/fca-proposes-an-end-to-opt-out-selling-of-in...

FCA Market Study “General insurance add-ons: Provisional findings of market study and proposed remedies”, March 2014, https://www.fca.org.uk/static/documents/market-studies/ms14-01.pdf

[10] Pozzi, Andrea. 2012. "Shopping Cost and Brand Exploration in Online Grocery." American Economic Journal: Microeconomics, 4(3): 96-120.

[11] Levitin, D. “The Organized Mind: Thinking Straight in the Age of Information Overload”, 2014, p6

 

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Author: The Marketing Society
Posted: 01 Jun 2015
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