Eight housing providers have joined forces with Capita for a ground-breaking collaborative research project using ‘nudge’ theory to promote channel shift in their organisations.
Following Capita’s recent behavioural insight project, ‘Nudging your way to reduced rent arrears’, a new programme has been launched using the same approach to achieve channel shift among tenants, encouraging them to access the various services they need online. The premise? By applying nudge theory to channel shift, businesses can use this tried-and-tested method to help them achieve their targets of reducing costs and improving customer engagement.
What is nudge theory?
Nudge theory is a multi-disciplinary approach to the applied science of human behaviour. It suggests that positive reinforcement of behaviours, coupled with hints and suggestions, can influence motivation, collaboration, and decision processes. Nudges towards the ‘preferred’ behaviour can often be more effective, and less prone to resistance from groups or individuals, than direct instruction or overt enforcement.
Until now, supporting channel shift strategies has prioritised the back-office technical platforms and functionality to allow them to offer new, self-service channels, along with the cultural change inside the organisation required to make it happen. But what about improving buy-in and encouraging channel shift on the outside of the organisation?
This new project embraces a 360-degree approach in encouraging channel shift, by applying nudge theory and behavioural insights to change customer behaviour and shift them to the new, self-service channels that are being made available. This is a more proactive approach than the passive ‘if you build it, they will come’ tone organisations may have taken in the past.
What does the nudge programme promise?
In embarking on the new research project, each participant organisation has identified a need to maximise their resources and reduce costs, both of which can certainly be achieved by successful channel shift. The programme will support them in developing really effective strategies to change the way their customers transact with them, and help them achieve these much-needed efficiencies.
Nudge theory isn’t just a great idea, it has been proven to work and demonstrates some truly impressive results. The BBC introduced similar principles in promoting customer self-service for its TV Licence fee collection contract, a project run by Capita on behalf of the government. Following the introduction of nudge theory and strategies to support it, the BBC has seen a 20 per cent reduction in TV Licence evasion, a 40 per cent reduction in costs vs. income and a 20 per cent reduction in headcount.
By bringing together this experience, our deep knowledge of the housing sector, and our participants’ knowledge and understanding of their customers, we believe that this programme could realise annual six-figure savings for the participating organisations.
If this sounds optimistic, the following figures make a compelling case for the impact channel shift really can achieve:
| Contact type | Average cost | Volume before channel shift | Cost before channel shift | Volume (50%) after channel shift | Cost after channel shift |
|---|---|---|---|---|---|
| Face-to-face | £8.60 | 7,000 | £60,200 | 3,500 | £30,100 |
| Contact centre | £2.80 | 79,000 | £221,200 | 39,500 | £110,600 |
| Website | £0.15 | n/a | n/a | 43,000 | £6,450 |
| Total | 86,000 | £281,400 | 86,000 | £147,150 | |
| Saving | £134,250 |
A 50 per cent shift of tenants from face-to-face (estimated at £8.60 per transaction) and contact centre transactions (£2.80) to online self-service (costing just £0.15 per transaction) results in an annual saving of nearly £135,000. These figures are based on annual call-centre volumes of around 79,000 calls per year – if an organisation’s call centre takes more calls than that, the saving is even bigger. A housing provider that takes 300,000 calls each year would be looking at savings over £400,000 annually from the same 50 per cent shift.
The nudge programme
Nudging your way to channel shift comprises a series of hands-on workshops and events based over a 12-month period, during which the participating organisations’ staff will learn about the application of behavioural science and customer profiling and segmentation. They will design different nudge interventions for their customers, and then will take part in randomised controlled trials of these in real time. These trials really are the gold standard in evidence-based decision making, and will allow them to see exactly what effect their interventions have had on channel-shift for their customers.
This proven methodology will help organisations shift even the toughest mind-sets within their customer base to affect sustainable and real change.
Mike Eckersley is a business change and project manager for Capita Software Services.
