Breaking Habits


Corporations are told that they must “innovate or die”, and so they invest significant amounts in new product development. Market research firms are engaged to undertake ideation, product development, and concept testing to help feed new lines of successful products.

Much of BDRC Asia’s work is in this area, but in order to establish whether a product really will be a success, we also have to understand the likelihood of a consumer or business following through on their intention to buy a new product or service.

Certainly, establishing whether a concept or product researches well is the starting point.  For FMCG products, ‘intention to purchase’ scores can be benchmarked against products that have been researched in the past and gone on to do well in the market. However, FMCG products are low-cost-purchase items and, more importantly, require minimal effort to buy. For example, there is minimal risk to the consumer in buying a new snack just out of curiosity and to see whether they like it or not, and the wide range of retail outlets that can stock the product make it an easy purchase. However, switching to a new IT system for your office requires significant investment, effort, risk, and time to implement.

BDRC Asia is undertaking a lot of research into ‘customer on-boarding’; part of this is to establish the level of effort required in taking out and starting to use a new product or service. Financial services is an area in which on-boarding can require various levels of effort from the customer, ranging from the initial application (e.g. for a credit card) and approval process (e.g. for a home loan), to using the service on a regular basis (e.g. Internet banking).

In recent research conducted by BDRC Asia, we found that even the smallest barriers to product on-boarding lead to a lot of consumers just ‘giving up’. This places a lot of demand on financial institutions. Firstly, they are under pressure to comply with increasing regulations (e.g. in relation to the opening of bank accounts). Due to money-laundering issues, more details about the identity of customers and the source of their funds are now needed in the account opening process. Secondly, the ability of the bank to assess creditworthiness (e.g. for credit cards) requires a certain number of questions on application forms, but the longer the form, the less likely people are to apply for the product.

Internet banking is another interesting area. Even in Singapore, one of the most technologically advanced nations in the world, with almost universal Internet access, there are still many consumers and businesses who do not use Internet banking.

There is often a trade-off between security and ease of use. The easier it is to set up an Internet banking account and the easier it is to access it, the more customers you will attract and the more they will use it. However, consumers also expect the very best security.

But this is not the only challenge facing banks. In recent research conducted by BDRC Asia among small and medium enterprises, we asked businesses why they do not use Internet banking. The answers included somewhat passé fears about hacking, but perhaps the biggest barrier is simply the habits related to banking that have been formed over the years.

Habits are a strange thing – we actually found in our research that businesses ‘enjoy’ going to the branch and queuing, and for this reason do not use the Internet banking alternative. While banks have tried to make the in-branch experience more enjoyable, there is only so much that can be enjoyable in branch! Logging into your Internet banking from the convenience of your desk and completing a transaction in three minutes must surely be the selling point in comparison to thirty minutes in the bank, and that doesn’t even include the time taken to travel to and from the bank, which in places like Jakarta can be quite significant and stressful.

There are theories behind why people like queuing. Apparently the participation in queuing has socialist roots (e.g. showing respect for others and treating yourself as an equal by waiting your turn). The trip to the bank, while monotonous, can actually be a welcome break from the office environment – some bosses like to tell their staff, “I’m going to the bank” as a means of showing their status (e.g. “I have control over the money”) and reassuring staff that they are in control of the company’s finances.

Among consumers, we found from research in Singapore that one reason people do not use Internet banking is that they like going to the street to use ‘their’ AXS machine. AXS machines are well-designed self-service machines that allow consumers to perform a range of transactions such as paying bills. All of this can be done in the comfort of their own living room using Internet banking, but the ‘trip to the AXS machine’ is a routine that people seem to enjoy, even in the rain!

This places challenges on organisations looking to introduce new products. While the product can research well, the research itself puts people on the spot – for example, you ask, “what are you going to do?” and they reply, “yes, I will buy it”. We then not only need to analyse the likelihood of follow-through, which can involve a number of additional questions, but also to examine what can be done to ‘break the habit’. Direct questioning on the likelihood of a consumer to follow through on their intentions can sometimes work. For example, in a follow-up to the ‘will buy’ answer, we can ask people whether in reality they are likely to follow up on their intentions. We need to establish the ‘priority’ to follow through – for example, are the current alternatives really that much worse? How much time and effort is required in following through on your intentions?

More indirect ways to assess the likelihood of follow-through is to establish how much the consumer or the business has broken habits in the past (e.g. tried new brands, changed software, acquired new products, switched vendors), essentially to see the extent to which they are creatures of habit, habitual changers, or somewhere in between.

But to bridge the gap between research and sales, we need to know how best to convert the business opportunity to revenue. Sometimes this is down to ‘happenchance’: a consumer happens to be in the right place at the right time to be sold a new product. A much underutilised part of research is to obtain market intelligence from the front-end salespeople. These people are valuable sources of information who can advise on ‘when’, ‘where’, and ‘how’ of consumers buying new products, and based on these findings corporations can refine their business development strategies. Furthermore, research among your own sales force can be quick and highly cost-effective, and can help to maximise the follow-through on the purchase of the products that have passed the research stage.