Colin Jowell (main photo) is a director in KPMG’s customer brand and marketing advisory business. In this guest post, says this downturn will be different and how behavioural science holds some valuable clues to understanding why…
When the GFC hit, the average person in the street knew very little about the mechanics of it. And while they cared about the impact it had on them, most would still be hard pressed to explain why and how it happened.
CoVid is therefore fundamentally different. Everyone’s lives and livelihoods are being impacted, and we understand the cause. Daily behaviour has changed overnight. What once was the domain of Hollywood movies is now a stark reality people are unlikely to forget.
While losing a job is tough, it doesn’t compare to a loved one falling ill or worse. The knowledge this can happen again at any time will impact our behaviours for a generation or more. Those with parents or grandparents who lived through World War 2 never questioned irrationally-stocked pantries or hoarded wrapping paper. Kids of this generation show the same level of understanding.
Although we’re hearing “unprecedented” a lot right now, that doesn’t mean our situation is unpredictable. Evidence-based biases from Behavioural Sciences are a useful way to understand how we will be when the isolation phase passes.
Here are five useful clues to help us plan for the future.
CONFIRMATION BIAS: Our tendency to favour new information that aligns with what we already believe to be true.
Organisations may be tempted to put market research on hold as the results will be skewed to current circumstances. But now is a vitally important time to capture what people are consciously thinking. The way we see the world changes as we sit inside fearing an unseeable enemy. This “new normal” will be the baseline for understanding subconscious future choices.
LOSS AVERSION: Our tendency to avoid losses rather than capture gains.
Previous downturns have favoured low-cost offers. But the value equation may be more nuanced this time as people consider longevity and reliability requirements to be more important than price. Loss aversion may also be behind the current social media trends of people considering the value of “buy Australian” not just as a matter of patriotism but of survival.
HERD BEHAVIOUR: individuals in a group acting collectively without centralised direction.
We’ve already seen the ugly side of this with panic-driven fisticuffs over toilet paper. Amid such uncertainty about the future, people will find comfort in crowds. This means that it will be more important than ever to demonstrate that others have already bought what you are selling.
AMBIGUITY EFFECT: We have been proven to avoid situations where the outcome is unclear.
Having lived an experience that is so intensely uncertain, it’s reasonable to expect our avoidance of ambiguity will remain in overdrive for some time yet. This will be especially true when it comes to considering our financial future. Speculators will still be there but the average customer will expect far more guarantees and certainty. It’s possible this will make it harder for start-ups and disruptors. But organisations that are aware of this issue can build in necessary clarity and assurance. What was a growing distrust of large established organisations and institutions may begin to decline as we witness those same groups coming to the rescue. By doing the right thing and demonstrating long-term thinking and generosity reputations can be rebuilt.
AFFECTIONAL BONDS: We are happiest when we believe that there are people who will come to our aid in the face of difficulty.
Whereas once we were looking at a future of pure AI-driven efficiency, building trust with a “bot” seems like a more remote prospect now. We will want to know that it’s people making sensible and compassionate decisions in ways that an algorithm cannot be prepared for. Technology won’t go away by any means, but how it’s presented may require a rethink.
These are just a few of the emerging insights from behavioural science. Hundreds of studies and observations can provide an evidence-based platform to take some of the guesswork out of what happens next – and help us better plan for the future.