22  Post-sales

While post-sales interactions with customers are often an inferior way of addressing poor product design and distribution practices, the long-term nature of many financial products, the ongoing decisions required of customers, and customers’ often changing financial positions necessitates that those interactions are well designed.

22.1 Text messages and credit card payments

The classic post-sale interaction is a behaviourally designed prompt to trigger an action at a critical time.

As one example, Behavioural Economics Team Australia (2019) partnered with Treasury and Westpac to see if reminders could encourage consumers to pay credit card debt earlier. They sent emails and text messages with various content such as a basic message (“Hello Name, Payment on your Westpac credit card is due next week.”), a loss frame (“To avoid paying more interest, think about lowering or even clearing your full debt”) or social norm (“Many people choose to pay the full debt on time.”)

SMS reminders resulted in an increase in payments of $134 the following month (a 28 per cent increase). There was no difference between the different types of messages, including the basic message. This suggests the effect of the response was not due to the amelioration of any “bias”, but rather by gaining attention.

22.2 A text message backfire (at least for the bank)

Alan et al. (2018) reported on a Turkish bank that sent text messages highlighting a discount on overdraft fees. The messages reduced overdraft usage, which suggested that people were not aware that there was a price on overdrafts. The discount was an increase from their reference point.

Conversely, text messages simply mentioning to customers that they had an overdraft available increased usage.

22.3 Lemonade

For insurance products, a critical interaction occurs when a consumer makes a claim. Often these claims are fraudulent. For instance, claims for damaged or lost iPhones typically surge just before release of the next model.

The insurance company Lemonade has introduced several features to their claims process to increase honesty. For example, policy holders sign a digital pledge of honesty at the beginning of the claim process, rather than the usual certification after entering the claim. Another measure by Lemonade involves the claimant recording a video of themselves describing the loss. Given the desire people often have to maintain a positive self-image of themselves, this may reduce the amount of blatant cheating.

The used of digital pledges is based on experiments by Dan Ariely and colleagues on honesty. In Mazar et al. (2008), students were induced to reduce cheating by citing honour codes before completing a test. In Shu et al. (2012), drivers gave more accurate mileage information when seeking insurance by signing at the beginning of the form.

Unfortunately (for this approach at least), these experiments have not replicated in large-scale multi-lab replications or additional fieldwork was based, in part, on fraudulent data (Verschuere et al. (2018), Kristal et al. (2020), Anonymous (2021)). It is not clear that this measure has any effect.