Text me better

December 2, 2013 by
Filed under: Public policy, The RSA, Uncategorized 


Text messaging and social media have become an increasingly common part of customer service. Here are two contrasting examples:

New parents can sign up to any number of information services from the NHS, the third sector or private companies. One common service is a text that coincides with the infant getting older, initially weekly and then monthly. The texts can be very reassuring telling parents what they are likely to expect at any precise age: for example, reassuring the parent of a 16 month old that it is perfectly normal for a toddler to veer between being completely charming and utterly inexplicably furious.

At the recent Fairbanking awards held at the RSA many of the accounts that were highly rated, including the first ever to receive five stars, had systems for texting people warning people of the danger of going overdrawn and encouraging them to save. The best accounts seem to increase substantially the propensity of customers to save for ‘rainy day’ items like holidays, houses or weddings.

The significance of the second example lies in the possibility that it offers a way out of the free banking problem. As Adair Turner argued last year, the problem with banks offering free current accounts to customers in credit is that it is not the basis for a viable retail business model. For this reason, the banks have to find other ways of making money which they have consistently done by misleading offers, dodgy fees and dodgier products. For years bank leaders have admitted off the record it is almost impossible to find a virtuous way of making money out of customers as long as free banking (which is unusual in other countries) persists. When asked why they don’t simply start charging, the banks freely admit that they don’t trust their rivals not to swoop down and opportunistically steal their customers.

But if, through texting and other means, banks offer an effective and personalised information and support service we may find a way out of this deeply damaging dead end. Income on accounts in credit can be made in two ways – either through a differential on the interest rate earned by the bank and paid to the customer or through a service charge. To win a Fairbanking seal of approval accounts like the RBS/NatWest Instant Saver with Savings Goals have to show both that they offer interest rates broadly in line with the market average and that they don’t use the old trick of offering bonus rates at the beginning which quickly taper off once the customer has been hooked.

More broadly, there is little doubt digital and social media based customer service will grow and grow, but a game changer could come if we start to select and judge these services by their behavioural efficacy. So, for example, an important part of deciding which gym to join might be the digital customer engagement service it provides; by combining behavioural psychology with personal data and algorithmic learning these services might soon start (if they haven’t already) to provide more than just useful information; they will promise – like the Nat West bank account – to help you personally meet your goals.

As customers we can then judge the service by that same criterion: Did the nudging  from the gym make me go more often? There may, of course, be other criteria we apply. ‘Go to the gym NOW you lazy git’ may work as a message but I might also find it offensive. However, the technology should quickly be able to work out what kind of messages you respond to well – especially when it gets easier to trawl data and combine information from different products to develop a fuller picture of our motivational character. It is already the case that platforms like Google and Amazon seem to know our tastes better than we do.

Hopes for this new world of relational services should be tempered by some reservations. Raised expectations must work both ways. If I am regularly getting personalised text messages it would be unforgivable for the service provider to then worsen the deal I am getting without alerting me.  As the exploitation of information imbalances and customer inertia have been an integral part of the business plan of banks and energy companies for decades, this is a major challenge and one I suspect most these companies don’t yet fully appreciate.

Also, perhaps the behavioural impact will be less than we hope. What works is not necessarily what sells. The impact on saving levels of the NatWest account described above has impressed behavioural economists but it may be a one off or may not last. After all, globally billions of pounds are spent on diets that don’t work and self-help books that only make us more miserable. One reason diets fail (apart from the dubious motives of those who promote them) is that we are living in an obesogenic society. Individual nudging can be useful but it needs to be part of a strategy that includes wider public education and engagement, shifts in social norms and sometimes state regulation.

While relational services in the public and private sectors hold the prospect of helping us live bigger, better lives we should never forget that major and sustained behavioural shifts are inherently social phenomena.

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Comments

One Comment on Text me better

  1. Edward Harkins on Tue, 3rd Dec 2013 10:11 am
  2. I’m a sceptic for now on the hopes of the peddlers of the use of information services for influencing behaviours. ‘nudging’ etc. There is an enormous array of audiences for social media and other Internet based information services (a fact that many promoters of the online information ‘industry’ still seem to struggle to address). Within that array, most online users are becoming ever more savvy and alert to attempts to manipulate their attitudes and behaviours – something that the consumerist marketing industry has already learned to it’s great costs (or rather their clients’ great cost).

    After all, the citizen as consumer has to be increasingly savvy in an era when our hopes that something the likes of the Coop Bank was at least an ethical operation are confounded.
    Twitter @EdwardHarkins

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