When it comes to making decisions we often unconsciously consider things that are comfortable and familiar.  Things like our beliefs, previous choices and set routines stick with us like glue to form our own personal status quo. This results in us having a disproportionate value for what we know and are inclined to navigate towards pre-set options even if other options are available or potentially better for us. Using the Status Quo bias in marketing is about leveraging our natural preference for things to stay as they are and resistance to making an effort.

How insurance companies create inertia to net millions

Even in the age of price comparison sites, changing your car insurance is an arduous task. Page after page of forms to fill in, digging around for old claims paperwork and proof of a no-claims bonus, and then the inevitable surprise at the end of a price that is rarely what you were hoping for.

Insurance companies know this – it’s why they do two things. The first is to give you a price that is close to what you paid last year. It’s never exactly what you paid last year. It’s also never cheaper than what you paid last year. It’s just a little higher, enough to make you question whether it’s worth going through the hassle to save that little extra going elsewhere.

The second tactic is one you should recognise  too: Don’t worry, there is nothing you need to do now, we’ll automatically renew your policy. How kind of them – you literally don’t need to lift a finger. And it’s that lack of finger-lifting that nets the industry millions of pounds of revenue a year.

What if you are on the other side of the status quo, working against it? The banking sector provides a couple of great examples of how this can be done – but in this sector it ain’t easy, and it ain’t cheap.

We are more likely to get divorced than change our bank account

Have you ever noticed how many banks offer cash incentives for switching? This is the visible and costly battle against the status quo bias, businesses shelling out millions of pounds in a desperate act of cajoling customers to switch accounts. Throwing money at the problem is all well and good if you have it, but what if you don’t?

Neo banks like Monzo and Starling faced this challenge when trying to grow their businesses, and had to create a different incentive that required a bit more thinking – they built a new kind of bank. Branchless, app-based transacting, remote verification, informative dashboards and more. These incentives lead to millions of sign ups and thousands of switches. But, even these clever, shiny new startups couldn’t fully overcome the mighty status quo, eventually buckling to cash incentives to onboard the unconvinced, showing just how powerful this bias can be.

Top tips

  • Reduce friction to re-purchase – remember those Amazon Dash buttons? Noticed that ‘Checkout with PayPal button’ on an eCommerce site? We loathe friction and brands that reduce it reap the rewards in repeat use.
  • Give your customers a reason to stay – beyond the obvious approach of making your offering bloody brilliant, offer incentives, discounts and benefits for staying on. Loyalty schemes can be an indication of a brands trying to maintain the status quo.
  • Show them what they are going to miss loss aversion is a contributor to our upkeep of the status quo, showing people what they are going to lose by leaving you can be a strong pull to stay.
  • Leverage defaults – the best action is no action; one less decision to make or less finger to do is a welcome thing and even worth paying a small premium for.

This is an excerpt from our latest free report: Applying Behavioural Economics in Marketing

By Greg Copeland

Behavioural Strategist