"Behavioral Economics Driving Design" Vince Maniago, #ProductSF | Summary and Q&A

TL;DR

People tend to plan for the future but make suboptimal choices when it comes to financial decisions. Mint uses behavioral economics to help users make better choices and increase engagement.

Key Insights

• 🌱 People often plan for the future but struggle to make optimal choices in the present.
• 💌 Behavioral economics techniques, like email reminders or focus persuasion, can significantly improve user engagement.
• 😨 Visual cues, social impact, and fear of loss are powerful motivators in influencing financial decision-making.
• ❓ Testing and experimentation are crucial in identifying effective strategies, and failure is a natural part of the process.
• 🦻 Mental Notes and other tools can aid in product design and testing.
• 😃 Big swings and taking risks can lead to significant successes, even if many experiments fail.
• 🎓 Financial literacy is still a significant issue, with half of college graduates failing a financial literacy survey.

Transcript

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Questions & Answers

Q: How does Mint differentiate itself in helping users make better financial decisions?

Mint stands out by using behavioral economics and psychology to understand user behavior and guide them towards making optimal financial choices. By leveraging techniques like email reminders and focus persuasion, they increase user engagement and improve financial decision-making.

Q: How does Mint use promotion and prevention focus to influence user behavior?

Mint hypothesized that users would have a prevention focus, motivating them to avoid missing transactions and maintaining their financial accounts. This hypothesis was tested with soccer players, where promotion-focused players aimed for three goals and prevention-focused players aimed to avoid missing more than two. Mint applied this concept to subject lines in emails and saw a three-to-one increase in user engagement.

Q: How does Mint utilize visual cues to improve user engagement?

Mint conducted experiments using different images, such as a child in the rain having an emergency versus someone on vacation on a beach. They found that the emergency image resulted in a 20% increase in user engagement. Visual cues can evoke emotional responses and influence decision-making.

Q: How does Mint leverage social impact and fear of loss to drive user behavior?

Mint offers users the opportunity to have a social impact and keep the platform free, tapping into people's desire for free stuff and making a difference. Additionally, Mint emphasizes the potential loss of financial security, framing 401(k) companies as the enemy. Leveraging fear of loss can motivate users to take action and make better financial decisions.

Summary

In this video, the speaker discusses how people tend to make suboptimal choices when it comes to making decisions, especially about money. He explains the concept of the emotional brain versus the logical brain and how the emotional brain often wins. He then shares his experience with using behavioral economics and psychology to improve user engagement with a financial app. He talks about the impact of sending extra emails to users and the importance of understanding promotion and prevention focus. The speaker also explores the use of imagery and incentives to influence user behavior. Lastly, he emphasizes the importance of taking risks and learning from failures in order to achieve success.

Questions & Answers

Q: How do people tend to make decisions when it comes to money?

People tend to plan big for the future but fail to make optimal choices at the time of decision-making. The emotional brain, driven by immediate gratification and desires, often overrides the logic brain, which focuses on long-term goals and financial responsibility.

Q: What did the speaker discover about financial literacy among college students?

The speaker found that half of the college students surveyed failed a simple financial literacy survey. This information led him to investigate the behavioral patterns of successful and unsuccessful users of a financial app.

Q: Did successful and unsuccessful users of the financial app differ in terms of their financial positions?

No, there was no significant difference in financial positions between successful and unsuccessful users of the app. Both groups made similar mistakes and faced similar challenges, revealing that financial knowledge alone does not guarantee financial success.

Q: How did the speaker use behavioral economics to improve user engagement with the financial app?

Using behavioral economics techniques, the speaker sent an extra email to users who had not added a bank to the app. This simple intervention resulted in a 32% increase in user engagement with the product.

Q: What is the difference between promotion focus and prevention focus?

Promotion focus refers to individuals who are driven by goals and growth. They are more likely to take risks and actively pursue objectives. On the other hand, prevention focus individuals are more cautious and concerned with avoiding mistakes or losses.

Q: How did the speaker use promotion and prevention focus to influence user behavior?

The speaker hypothesized that users might respond differently to certain messages based on their promotion or prevention focus. By framing the message as a prevention focus (e.g., don't miss a transaction, update your account today), user engagement with the app increased threefold compared to a message focused on the full financial picture.

Q: How did the use of specific imagery impact user behavior?

The speaker discovered that using imagery that evokes emotions, such as an image of a child in the rain having an emergency versus an image of someone lying on a beach, can influence user behavior. In this case, the emergency image resulted in a 20% increase in user engagement.

Q: What incentives were effective in getting users to engage with the financial app?

People are motivated by the idea of receiving free stuff and making a social impact. Leveraging these incentives, such as keeping the app free and helping users avoid losing their financial control, can drive user engagement.

Q: What is the default option for many employees regarding their 401(k) accounts?

Many employees default to having a 401(k) account set up through their workplace. This happens because of the convenience and automatic enrollment that employers often provide.

Q: What tools and strategies does the speaker recommend for product design testing?

The speaker suggests using tools like mental notes, which help in creating effective product designs. Additionally, using platforms like MailChimp, Optimizely, Google Analytics, and Mixpanel can enable A/B testing and data analysis to identify and optimize user experience.

Takeaways

The speaker's key takeaways include the importance of understanding users' decision-making processes, leveraging behavioral economics to guide user behavior, utilizing imagery and incentives to influence decisions, and taking risks while being prepared to learn from failures. By applying these principles and strategies, product designers can create more effective and engaging user experiences.

Summary & Key Takeaways

• Mint, a financial platform, analyzes how people make decisions and found that despite their financial position, users made similar mistakes with their money.

• Mint uses behavioral economics techniques, such as sending extra emails and leveraging promotion or prevention focus, to improve user engagement.

• Visual cues, social impact, and fear of loss are also effective in increasing user engagement and improving financial decision-making.