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Behavioural Economics

Designing for Humans

Customers, employees and citizens frequently make bad decisions that aren’t in their own personal interest, or in the interest of the organisations they interact with. For example, customers don’t pay debts even when they can afford to; employees are slow to adopt new technologies which would save them time; and citizens waste water when it is in short supply. When humans act like this, it’s often because we rely on instinct to make decisions, which is influenced by the way choices are framed, timed and socialised.

PwC’s behavioural economics team works with organisations to help customers, employees and citizens improve decision-making in line with organisational goals. Our solutions are win-win: customers, employees and citizens retain choice but are not led astray by behavioural biases; organisations increase revenues or decrease costs. Our solutions are rapidly scalable because they typically involve small but powerful tweaks to the way in which choices are presented. Moreover, we use experiments to demonstrate the impact of our solutions and scale the most successful interventions in a rapid and evidence-based way.

We help clients use behavioural science to:

Increase revenue

Behavioural economics can be used as a very effective tool to boost revenue. It can be used to influence employees and customers to make decisions that are better for them, as well as more profitable for organisations. By using experiments, we are able to accurately measure the impact of behavioural solutions on an organisation’s revenue.

Key questions we can help clients to answer:

  • How can we tailor debt and tax collection strategies to prompt different customers to make payments?
  • How can we effectively communicate to improve customer experience and loyalty?
  • What pricing strategy will help maximise revenue, traction and long-term profitability?

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Reduce cost

Costs are often incurred as a result of poor decisions made by employees, customers and citizens. Re-designing the ‘choice architecture’ under which decisions are made, for example changing the way choices are framed and the environment in which they take place, can dramatically reduce costly behaviours.

Key questions we can help clients to answer:

  • How can we encourage customers to shift from using costly communication channels to cheaper and more efficient alternatives?
  • How do we streamline customer interaction to reduce operational costs?
  • Are we effectively managing the costs of our insurance claims?

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Improve customer outcomes

Businesses often want to change the way customers act and interact with them, and in doing so change the way customers feel about businesses. Behavioural economics provides a powerful toolkit to nudge customers to making better choices, without limiting their choice or freedom.

Key questions we can help clients to answer:

  • How do we effectively promote better customer engagement and understanding in planning for their financial decision making?
  • How can improving accessibility and transparency in financial communications induce customer engagement and prompt action?
  • How can we increase service consumption efficiency and limit the wastage of scarce resources?

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Boost employee engagement

Employees are an organisation’s most important asset and it is therefore vital to help employees focus on doing what they do best. Behavioural economics can help organisations achieve internal firm goals such as technology roll-outs and employee goals such as financial stability, without distracting employees from their jobs. Much in the same way that an organisation’s building and architecture influences who they talk to and how they feel, the choice architecture through which information is conveyed affects decisions and behaviour. By playing with these features, we can achieve win-win solutions for employees and employers.

Key questions we can help clients to answer:

  • How can we redesign our return-to-work processes to encourage sick employees transition back into work?
  • How can we help ensure employees’ pension saving designs are aligned to their ethical outlook and lifetime financial goals?
  • How do we effectively boost employee engagement and satisfaction?
  • How do we encourage people to adopt and engage with new technologies?

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Our behavioural economics approach

Our approach draws on research from across the social and behavioural sciences. We consider four factors in understanding decisions and behaviour: 1) the customer, employee or citizen actors, and the 2) economic factors, 3) behavioural factors and 4) social factors that influence those decisions and behaviour.

Our 5 step approach diagnoses the behavioural biases affecting key customer groups, identifying interventions and rolling out the most effective treatments at scale

Case studies

Remediation letter design

PwC worked with a financial services client to develop behaviourally-informed remediation letters that will lead to good decision making by the customers receiving the letters.

Performance management framework implementation

PwC applied behavioural economics to increase engagement with and the effectiveness of a new performance management framework being implemented by a major financial services provider.

Government department capability development

PwC is working with a Commonwealth Government Department to undertake several behavioural economics initiatives to improve outcomes for the target population, and supporting development of the departmental capability and methodologies.

Behavioural economics of financial advice

PwC ran a project for a financial services regulator to better understand the behavioural factors affecting how consumers seek and use financial advice. The objective was to develop communications to enable consumers of financial advice to make better decisions.

Grant programme compliance

PwC provided behavioural economics advice to a Commonwealth Government Department on how to increase compliance with grant programme requirements, while also reducing the associated burden.


Encouraging sustainability in retail through behavioural economics

How can retail employees can encourage their customers and colleagues to adopt-low carbon behaviours? Read our five behaviorally informed principles to find out

Economics in Business podcast - Actions speak louder than words: Why Behavioural Segmentation is powerful at driving customer value

Are you value-sensitive or time-sensitive? Active or dormant? Proactive or a procrastinator? These questions are at the heart of Behavioural Segmentation, an approach to segmentation that makes nudges significantly more effective at influencing behaviour. The integration of behavioural science into customer insight is proving to be a powerful accelerator for businesses to understand their customers and, more importantly, use that insight to drive value for them and their customers alike. 

To discuss how putting these approaches helped Sage increase customer satisfaction and reduce churn, host Freddie Martin is joined in the studio by Suresh Natarajan, who leads the PwC Behavioural Economics practice, and Brian Wall, Director of retention at Sage.

Listen on: iTunes  Spotify

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Contact us

Nick Forrest

Nick Forrest

UK Economics Consulting Leader, PwC United Kingdom

Tel: +44 (0)7803 617744

Suresh Natarajan

Suresh Natarajan

Behavioural Economics Lead, PwC United Kingdom

Tel: +44 (0)7764 958008

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