FXD 2019 Keynote: Rob Gifford, Mad*Pow
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Simplifying Decisions & Choice Architecture, Rob Gifford, Managing Director, Experience Design, Mad*Pow
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FXD 2019 Keynote: Rob Gifford, Mad*Pow
- 1. Designing Choices: Strategies for Simplifying Financial Decisions
- 2. Choiceis Increasing. Which insurance plan should I choose? What type of bank account do I need? Which funds should I select for my 401K? What type of loan do I commit to? ?? ? ?
- 3. WeAllWant to bein Control.
Editor's Notes
- I'm Rob Gifford, Managing Director of XD I've been working in design for over a decade, most of that has been in financial services and healthcare I'm here to talk to you about a theme that keeps coming up in project after project – choice and how to make them simpler
- Reason choice is reoccurring in our project work is that, we're at a moment in time where it's ever increasing. This is true for fin services, where disintermediating brokers, agents and advisors who typically help guide customers through these types of financial decisions This means that everyday consumers are ask to make unfamiliar but incredibly important decisions like these As people charged with creating great customer experiences, we're ideally situated to help them I'm going to walk you through some of the psychology of choice outline 5 ways that we can simply decisions for our customers. So where do we start? Understand the value people get from choice Choice serves a distinct role in our lives It offers Autonomy
- This is a fundamental drive that helps us feel motivated, engaged, and in control. This is my 16 mo old daughter, she's learning to eat with a spoon, she only gets about half the food in her mouth but she won't let you feed her. When it come to choice, we're all little bit like her. –control helps us to feel more invested in the products or services we consumer When we aren't offered choice we often left wondering if there was something better out there.
- Here's an example from some concept validation research we did for a Homeowners Ins Quote Flow After answering identical questions, once concept walked a member through a single coverage recommendation and spelled out details about it so they made sure they understood what it included and how we got to the estimate The other concept spent less time explaining the coverage to them, and simply offered them 3 options with slightly different coverage – the middle tier, which most people chose, was the same as in this first first concept Even though most customers chose the same level of coverage, they actually reported feeling higher confidence not receiving an explanation, but when they exercised control and chose their own plan [update wires!!!]
- Part of the reason we feel more confident is because we all see ourselves as unique. We have unique life situations that lead to unique needs and values, think about a saving account: Convenience Price sensitivity Return rate We're attracted to companies that provide more options, we believe we'll be more likely to find the right match for our needs
- This creates a dilemma, because it turns out we over-estimate our ability to sift through options and select the optimal one. Instead we have some pretty big limitations: Cognitive misers – the have a fixed amount of mental energy and attention, so they're constantly looking to conserve it In finance – people don't understand important concepts (compounding interest, liability) People look to the future with biases (we may be overly optimistic and overestimate the rate of return we'll get or the insurance coverage we need, on the flipside or over-estimate potential dangerous event because they're easy to call to mind)
- What this means is that instead of more and more options guaranteeing people find the right thing for them Anxiety amount making the wrong decision Choice deferral –regret avoidance Dissatisfaction and Regret - you can more easily envision a past where you made a different decision Ultimately, to people making worse decisions (worse future outcomes).
- As designers it's our job to take into account people and their limitations when we create experiences for them, so they can make them with more confidence. How do we reduce the amount effort it take to make good decisions.
- To do this, we need to know exactly what makes decisions effortful for people. There are two main factors: The complexity of the choice – how many moving pieces are there and how similar are options The expertise of the person deciding – how familiar are they with the domain and have they formed clear preferences Both of these factors are present in choices about financial and health decisions
- So that means that when we're tasked at designing to make a choice simple, we have two primary goals: 1. Reduce the amount of work required to evaluate and compare your options 2. Increase customers expertise and knowledge so they can easily know what a good choice looks like. I'm going to walk through a few tangible ways to do this.
- The first thing we need to do when we're designing a choice is decide how many options we're going to provide. No surprisingly there is a balance here. Too Little Choice. So too little choice can prevent people from feeling a sense of ownership or that the match is just right Too Much Choice But requires more effort for people to get through and create more anxiety So what is the right size?
- There is no hard and fast answer, but there are clear guidelines. Luckily, we have Miller's law, one of the most validated principles in cognitive psychology- it says that the amount of items someone can hold in their memory maxes out around 7 items We can use it as a guidepost for choices Process of comparing options is incredibly memory intensive- remembering something about what saw before while you're considering at new options To make decisions feel easy, we should avoid presenting 3-5 options at at once That doesn't mean you can't offer more, but think about staging that decision out of steps by asking people to select between different categories first or customizing certain parts of a product, then another.
- Even when you limit the amount of options, decisions can still be hard if we're asking people to decide between things that aren't very different. When options are too similar people have no bases to choose one thing over another – spin wheels
- Way to do this: align options to needs and values of key user groups Make sure attributes of options vary in distinct and recognizable ways Highlight the details that are the most important, so they don’t try overweight things that aren't likely matter as much Jetty, an insuratech start-up, does a great job at this… something else they're doing is: Clear labels and descriptions that tell you who the plan might be good for Reduce amount of detail about the plan attributes that presented Coverages that vary in recognizable and meaningful ways
- We've talked about how we can make choices less complex, by reducing the amount of effort required to evaluate and compare options. People who are new to a domain or don't make decisions regularly may have difficulty identifying what the best option for them Look for opportunities to help these novices and run-of-the-mill consumers to behave more like experts, by providing the tools that experts have: 1. Understanding of concepts and terminology 2. Quick rules of thumb to evaluating options 3. Understanding the consequences of making certain choices.
- Let's start with making the decision space understandible
- At the most basic level, we need to eliminate jargon and technical terminology This may sound obvious, but time and time again In a quest to convey all the nuances of a concept we lean on convoluted or outdated terminology like these As insiders these terms often make all the sense in the world to us But they simply wash over our customers or worse, Make them feel Unconfident about their choice Compounding the anxiety of a choice Preventing from making informed ones So it's important to work closely with Legal and Product to refine these terms, allowing time in projects
- Even if people understand the words we use, we need to make the concepts concrete. Just like in our UX practices, scenarios help us internalize the real life context of people using our products, they can help people understand of abstract financial concepts Here's an example for a landing describing Renters Insurance that we designed. We focused on defining plausible (but not graphic) scenarios where Liability insurance can be invoked
- Not only do people need to understand the concepts we present them, they need support in selecting an option
- We've talked about how people try to conserve their attention, That means they're often OK making a good enough decision if they're efficient This process is called "satisficing" We can design to this nature by looking at what simple rules of thumbs savvy consumers use: Simple formulas Social Proof Even trust seals and ratings can be relevant Especially in a data rich environment you can do some interesting things with these… Example: multi-product bank could use information about payroll deposits to suggest retirement options One way to find these are to observe your sales staff, customer service reps and then think through how you might be able to find data to serve up this information in a targeted way
- Finally, one of the most effective ways to simplify a decision is to circumvent the unfamiliarly details of the product all together and focusing on people are an expert in, they're plans and their goals. Reframing choices in terms of how selecting one option or another will to affect their future outcomes, can remove the need to exert mental effort required to learn new concepts and language all together This is how good financial financial advisors have conversations. They don’t ask about what fund types you want to buy or what % return you want, they ask: "When do you want to retire? and "What type of lifestyle to you want to have?" I’m not suggesting that every decision experience needs to start with an interview, but that we pivot from a product centered framing of choice to one focused implications and outcomes
- We can move from something like this, a robust comparison table… to this [next slide]
- To something like these: Target Date funds Or offer more control with tools like Betterment's retirement planner that allows you set your retirement age, allocation and risk tolerance Think about how much simpler this is than forcing people to identify the right balance of bond / stock balance (most retirement funds do) Summary, this help people have confidence that their selections are tailored for them but removes much of the uncertainty
- In the end, what I'm saying is that these are only a few of the ways (well vetted) that you can start to design for all this increasing choice. In the end it's not about manipulation or nudging, but providing the clarity people need to feel confident. Do that starts with an understanding of the limitation and ensuring we help people orient them selves to their options and level up their expertise so they can come to choices with preferences (more like experts)
- In the end, what I'm saying is that these are only a few of the ways (well vetted) that you can start to design for all this increasing choice. In the end it's not about manipulation or nudging, but providing the clarity people need to feel confident. Do that starts with an understanding of the limitation and ensuring we help people orient them selves to their options and level up their expertise so they can come to choices with preferences (more like experts)
- Provide confidence in decision, not by nudging and manipulation by providing clarity an insight that aligns to the limitations and tendencies we know people have.