Podcast Summary: The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Episode: 445. From Insights to Action: Behavioral Science at Lyft with Irrational Labs
Release Date: November 14, 2024
Host: Melina Palmer
Guests: Evelyn Gosnell & Dr. Isabel McDonald from Irrational Labs

Introduction

In episode 445 of The Brainy Business: Understanding the Psychology of Why People Buy, host Melina Palmer delves into the intricate world of behavioral economics with Evelyn Gosnell and Dr. Isabel McDonald from Irrational Labs. This episode focuses on applying behavioral science to real-world business challenges, exemplified by a recent collaboration with Lyft.

Guest Introductions

Evelyn Gosnell serves as the Managing Director at Irrational Labs. With a decade-long tenure, Evelyn transitioned from product management at brands like Christian Dior to behavioral science, leveraging her expertise to enhance product experiences and drive business outcomes for tech giants such as Lyft, TikTok, and Google.

Dr. Isabel McDonald is a senior behavioral scientist at Irrational Labs, holding a PhD in Public Policy from Harvard University. Her passion lies in utilizing behavioral economics to develop technology tools for social good. Isabel's background includes consultancy roles at Mercer Consulting and a postdoctoral position at UC Berkeley's Haas School of Business, where she influenced Fortune 500 companies on talent strategies and employee motivation.

Case Study: Lyft's Women Plus Connect Feature

The core of the discussion revolves around a project Irrational Labs undertook with Lyft to boost the adoption of their Women Plus Connect feature—a program designed to match female drivers with female or non-binary riders, enhancing safety and comfort for both parties.

Project Overview

• Objective: Increase opt-in rates for the Women Plus Connect feature among Lyft drivers.
• Challenge: Despite positive qualitative feedback and initial city-based success, national rollout saw lower-than-expected opt-ins.

Evelyn Gosnell explains, “Lyft came to us and said, can we use behavioral science to make sure drivers are really aware of this option and those that want to have opted in?” (07:15).

Methodology and Experimental Design

Irrational Labs approached the challenge by:

1. Behavioral Mapping: Analyzing the user journey to identify psychological barriers impeding opt-in rates.
2. Message Crafting: Developing 20 potential messages incorporating various behavioral tactics.
3. Selection and Testing: Narrowing down to three key messages for A/B testing against a control group.

The Three Treatments

1. Neutral Message (00:59)

   • Content: Clearly explained the feature without any behavioral nudges.
   • Effect: Led to a 97% increase in opt-ins compared to the control group.
   • Quote: “Women Plus Connect is this new feature that increases your likelihood of matching with female or non-binary rider drivers...” (07:54).

2. Confirm Settings Treatment

   • Content: Prompted drivers to confirm their current settings, subtly nudging them to opt in.
   • Effect: Achieved the highest increase with a 173% rise in opt-ins.
   • Quote: “Looks like you are not opted in to Women Plus Connect. Is that correct? Tap to review.” (07:54).

3. Concreteness Treatment

   • Content: Provided specific scenarios where the feature would be beneficial, making the benefits tangible.
   • Effect: Resulted in an 83% increase in opt-ins and also led to drivers working more hours, enhancing overall engagement.
   • Quote: “Driving late, try Women Plus Connect and you can match with more women and non-binary riders at night or anytime.” (07:54).

Isabel McDonald reveals, “The confirmed settings treatment had the most opt-ins... but the concreteness message was the only one that changed drivers' behavior and actually caused them to drive more hours with Lyft.” (12:07).

Insights and Discussions

Effectiveness of Behavioral Treatments

The treatment messages, though varying in approach, all significantly outperformed the control. The confirmed settings message was most effective at increasing opt-ins, demonstrating the power of prompting users to verify their current choices. However, the concreteness treatment not only boosted opt-ins but also had a secondary effect of increasing drivers’ engagement with the platform.

Melina Palmer highlights, “The concreteness of it makes it come alive and makes the value of it even more kind of robust.” (17:03).

Balancing Business Goals and Behavioral Science

Evelyn emphasizes the importance of aligning behavioral interventions with overarching business objectives. For Lyft, while increasing opt-ins was primary, promoting more driving hours was also crucial.

Evelyn Gosnell: “It's about thinking carefully about how you set up an experiment... ensuring you measure not just the immediate outcome but also related behaviors.” (15:19).

Framing and Mental Models

Isabel discusses the significance of framing messages concretely to shape users' mental models, making the benefits more tangible and actionable.

Isabel McDonald: “Making things more tangible helps them think about when they might use this feature.” (16:04).

Challenges in Op-acing Behavioral Interventions

Crafting effective messages within constraints (e.g., character limits in push notifications) requires meticulous planning and testing. The team navigates these challenges by iteratively refining their approach based on data-driven insights.

Evelyn Gosnell: “Every word needs to work really hard for you... designing compelling messages within tight constraints is a critical and fun challenge.” (19:02).

Key Takeaways

1. Specificity Enhances Engagement: Concrete messaging not only drives initial opt-ins but also fosters deeper engagement with the product.

2. Behavioral Mapping is Crucial: Understanding the entire user journey helps identify and address specific pain points or drop-off moments.

3. Alignment with Business Goals: Behavioral interventions must consider broader business objectives to ensure holistic success.

4. Iterative Testing Yields Insights: Continual experimentation and willingness to test unexpected hypotheses can lead to significant breakthroughs.

5. Uncomfortably Specific Goals Drive Success: Defining precise, measurable behaviors facilitates effective intervention design and accountability.

Conclusion

Melina Palmer wraps up the episode by emphasizing the power of behavioral frameworks like the 3B framework (Identify a Behavior, Reduce Barriers, Amplify Benefits) and the importance of setting uncomfortably specific goals to drive meaningful change. She encourages listeners to apply these principles to their own businesses and share their experiences.

Melina Palmer: “What might it look like if you were to come up with something that's so specific it makes you feel a little uncomfortable? How might you design an initiative to help you achieve that goal?” (48:57).

Evelyn Gosnell adds, “Try it out... and make sure you're living in your end user's shoes to truly design for their needs.” (46:15).

Isabel McDonald: “Being uncomfortably specific helps streamline ideation and aligns teams towards clear, actionable objectives.” (43:50).

Notable Quotes

• Evelyn Gosnell (07:15): “Lyft came to us and said, can we use behavioral science to make sure drivers are really aware of this option and those that want to have opted in?”

• Isabel McDonald (12:07): “The confirmed settings treatment had the most opt-ins... but the concreteness message was the only one that changed drivers' behavior and actually caused them to drive more hours with Lyft.”

• Melina Palmer (17:03): “The concreteness of it makes it come alive and makes the value of it even more kind of robust.”

• Isabel McDonald (16:04): “Making things more tangible helps them think about when they might use this feature.”

• Melina Palmer (48:57): “What might it look like if you were to come up with something that's so specific it makes you feel a little uncomfortable? How might you design an initiative to help you achieve that goal?”

• Isabel McDonald (43:50): “Being uncomfortably specific helps streamline ideation and aligns teams towards clear, actionable objectives.”

Final Thoughts

This episode underscores the transformative potential of behavioral science in business contexts. By dissecting real-world applications, such as Lyft's Women Plus Connect feature, Evelyn and Isabel demonstrate how nuanced, data-driven strategies can lead to substantial improvements in user engagement and business outcomes. Listeners are encouraged to adopt these insights, framing their goals with precision and leveraging behavioral tools to foster growth and customer satisfaction.

For more information and resources mentioned in this episode, visit thebrainybusiness.com. Connect with Evelyn and Isabel at irrationallabs.com.