Feb 19, 2021
Today I get the honor of
introducing you to Dr. Benny Cheung, a director of DecTech. You may
remember that company’s name as Dr. Henry Stott, a cofounder,
joined me on the show in episode 130 to discuss some of their other
work.
This conversation digs deeper on
a specific project that Benny worked on to reduce opportunistic
insurance fraud. You’ll get to learn all about it during the
episode and I promise it is fascinating to learn how some simple
nudges can help reduce a problem of, essentially, little white lies
that were costing the UK insurance industry a billion pounds each
year.
We also get to learn a little
about Benny and the research he did studying creatures that may
seem very different from humans, but whose behavior we can still
learn quite a bit from. He completed a Ph.D. and a two-year
postdoctoral research fellowship in the field of behavioural
science at the University of Cambridge before joining Dectech.
During his academic career, he was involved in commercial projects
in the clinical research and biotechnology industries. His areas of
expertise include retail, eCommerce, financial services, utilities,
telecommunication, and advertising.
Show Notes:
- [00:40] Today I get the honor
of introducing you to Dr. Benny Cheung, a director of
Dectech.
- [03:11] Benny shares his
background and how he got involved in behavioral science. He
started in behavioral genomics.
- [03:44] Benny joined Dectech in
2005 to apply techniques and technology in behavioral science in a
commercial backdrop supporting clients to understand their
consumers better. Now the mission at DecTech is to provide the
tools that will allow their clients to make more accurate and
cost-effective predictions about their consumer’s
behavior.
- [05:08] A lot of behavior we
can trace back to genetics, so you inherit a lot of behavioral
traits.
- [05:35] Nowadays his focus is
more on the commercial backdrop and consumer purchasing commercial
decision making.
- [06:32] Benny shares about a
study he did with worms in 1999 about genetics and how intricately
genetics is related to the behavioral
outcome.
- [07:55] In that study, feeding
behavior came down to a single gene. While not all behaviors are
that simple, genetics plays a very important role in behavior. Your
environment also has a very important role to
play.
- [09:48] Benny shares about his
opportunistic insurance fraud project. They focused on everyday
consumers that were giving into temptations of being less than
honest at a specific point during their customer life
cycle.
- [11:29] The project was for the
Insurance Fraud Bureau in the UK.
- [12:42] Opportunistic fraud is
different from high-profile organized fraud because it is often
undetected. That is a challenge for the
industry.
- [12:54] The IFB came to them
and asked them to come up with a solution to fight this kind of
opportunistic fraud.
- [15:27] This type of fraud is
typically not planned, instead it is something people choose to do
at the moment.
- [16:14] Nudges only work well
in certain situations. You really can only nudge someone if
they are sitting on the fence.
- [18:47] Coming up with the
intervention messages was the first task. The second task was to
come up with a testing paradigm where they could test their
effectiveness.
- [20:41] The five principles
they picked to focus their intervention methods were:
norming(herding), consistency, priming, framing, and
reciprocity.
- [23:10] They prompted in a
covert way as customers verified they were not a
robot.
- [26:04] When you have to focus
on the words like in the captcha it has a different impact on the
brain.
- [26:24] For these interventions
to be usable they can’t leave a negative perception or
imprint.
- [27:11] They tested using a
randomized controlled trial. Recreating the realism of applying for
motor insurance online was a very important
aspect.
- [29:24] By comparing peoples’
responses collectively to those contentious questions in the
different conditions they could see how effective the interventions
were in swaying dishonesty.
- [30:13] On average the
interventions were able to sway 36% of the dishonesty. An
intervention in the norming category was proven most effective and
had a 55% impact of dishonesty swaying.
- [31:21] Of the 18 interventions
they tested only one of them didn’t really work. All of them have
shown some positive impact in swaying
dishonesty.
- [33:47] In behavioral science
it is paramount to test. The Holy Grail of testing is doing a
real-life trial, but they can be costly and risky to do, and hard
to scale.
- [36:01] It is beneficial to get
out of your way and test things when it is a safe space so you can
see what amazing things can come out of it.
- [38:53] None of the
interventions left a negative impact on the outcome of
perceptions.
- [40:58] Melina’s closing
reflections.
- [41:39] In the case of
opportunistic fraud, it was important to know that this is often a
decision made in the moment instead of premeditated or otherwise
planned. This is why the nudges were effective: they appeared right
at the moment where someone was teetering on the edge. Where does
that exist in your business and what are some nudges you could
implement to help encourage behavior for your customers or
employees?
- [42:52] Grab Melina’s brand new
book, What Your Customer Wants (And Can’t Tell
You), which is now
on presale!
Thanks for listening. Don’t
forget to subscribe on
Apple Podcasts
or
Android. If you like
what you heard, please leave a
review on iTunes
and share what you liked about the
show.
Let’s connect:
More from The Brainy Business:
Connect with Benny:
Past Episodes and Other Important Links:
Check out (and preorder!)
Melina’s upcoming book, What Your Customer Wants (And Can’t Tell
You) on Amazon, Bookshop, and Barnes &
Noble
If you are outside the US, please complete this
form to be first to know
when the book is available near you AND to help show there is a
presence in your country to speed along international agreements
and get it to you faster!