Decision Technology
How can I
optimise my customer
communications?
What is my
brand
model?
How is my
advertising
perceived?
How will my
new product
perform?
What should
be my channel
strategy?
What price
should I charge?
Why do
customers
switch?
How can I manage
brand image?
Which products
should I bundle
together?
Behavioural. Experimental. Statistical.
about us
This is an introduction to Decision Technology (Dectech).
Dectech specialises in helping businesses and policymakers
understand and manage customer decision-making, from
acquisition through to retention and all the points in between.
Dectech was founded in 2002 by Professor Nick Chater and
Dr Henry Stott who strongly believed that customer insight
fell far short of what was possible and was failing to reflect
the lessons learned from behavioural research.
Dectech is at the
very forefront
of a new, rapidly
expanding field
RORY SUTHERLAND
Vice Chairman, Ogilvy Group
Henry Stott
Nick Chater
Henry has over 25 years of
commercial experience across
retail, finance, telecoms,
energy, and other sectors.
Before Dectech he was a
Director at Oliver Wyman,
a financial services strategy
consultancy, where he helped
to create its Risk Practice.
Henry has a PhD in cognitive
science and statistics. He has
co-authored The Times’ Fink
Tank football column for over
ten years.
Nick is a professor at Warwick
Business School where he
founded their Behavioural
Science Group. He has over
200 publications and four
national awards to his name.
He is a Fellow of the British
Academy and is on the
advisory board of the Cabinet
Office’s Behavioural Insights
Team, also known as the
“Nudge Unit”.
The Offer
Practice
Why: Generate organic
growth by expanding the
product set and optimising
prices and other attributes
Who: Pricing,
product development,
strategy teams
Copyright © 2015 Decision Technology
He is the resident expert on
Radio 4’s “Human Zoo”.
The Trade
Practice
Why: Increase revenues
by improving customer
acquisition, retention,
and cross-sales
Who: CRM, DM,
online, merchandising,
retail network
The Brand
Practice
Why: Track the brand,
manage touch points,
and amplify comms
effectiveness
Who: Brand managers,
PR, creative agencies,
media buyers
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our approach
Dectech seeks to define a new category that is both
market research agency and strategy consultant.
We deliver field research and customer insights
alongside financial analysis and business advice.
We believe in this hybrid approach because it marries
the necessary focus on commercial results with
a practical understanding of what drives human
behaviour. In practice, this means we are differentiated
from our competitors in three ways.
Behavioural
Experimental
Statistical
Whilst the term began to
gain widespread traction in
2010, for example through
the introduction of the UK
government’s “Nudge Unit”,
we’ve been working in this
field since the 1990s.
We are behaviourists in that
we doubt people’s ability to
accurately report the causes of
their actions and we therefore
focus our research on those
actions themselves and their
causes. As such, we aim
to understand the cognitive
processes that underlie human
decision-making.
To truly identify the causes of
behaviour requires randomised
controlled trials where different
conditions are implemented to
measure their effects. Direct
Mail “test and learn” is an
example of this approach.
But field trials are often
expensive or inappropriate
(e.g. for testing radical
changes or if there are
regulatory restrictions on what
you can offer). So we re-create
a facsimile of a given decision
(e.g. by simulating a retail
environment) and use this as
a test bed for the experiment.
Dectech uses advanced
statistical techniques to fit
psychologically-motivated
models to large behavioural
and experimental datasets.
Consequently, our findings
are more robust, diagnostic,
and actionable than traditional
methods. These quantitative
predictions can then be used
to measure the financial impact
of strategic options and thereby
build the business case for a
given strategy. Whilst the term
“big data” has recently gained
currency, this has been part of
our work for many years.
Dectech has helped us understand what
matters to our customers… working with
Vodafone on our pricing strategy, often
to tight deadlines, their contribution has
always been influential on those decisions.
MARK HOWE
Head of Post-Pay, Vodafone
Copyright © 2015 Decision Technology
Dectech is a key business partner. Their
unique approach to helping us track
brand performance and provide insight
on consumer needs and behaviour is
invaluable in helping us make the right
choices for our members.
ASHLEY SCHOFIELD
Chief Marketing & Experience Officer, giffgaff
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our clients
Dectech’s work was instrumental in our
production of the ‘Kitchen Parties’ ad
for IKEA, one of their most successful
ever, delivering results that were hugely
liberating for our creative process.
JACOB WRIGHT
Strategy Director, Mother
One measure of our performance is that, in an
average year, 81% of Dectech’s business is
with clients who have commissioned work the
previous year. Likewise, of the 19% that is new
business, 16% is purchased by former clients
moving to new companies.
For the last ten years Dectech
has continued to deliver strategic
insights on our business that we
can’t find elsewhere. I’d advise
any marketing director to listen
to them.
IAN CROOK
Marketing Director, Tesco
I would warmly recommend Dectech to
anyone. They apply themselves flexibly
and intelligently to solve my commercial
headaches and are fun and easy to work
with along the way.
MIKE O’DONOHUE
Director of Insight and Data, British Gas
Copyright © 2015 Decision Technology
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our work
The Offer Practice: Promotions and Bundling
Retail
Brief
A large retailer was diverting about 15% of its
gross margin into promotional discounts. Whilst
certainly generating sales, it wasn’t clear whether
this activity was also creating value.
Problem
Whilst the econometric trade-off between margins
and volumes is plainly important, promotional
activity can either generate footfall, or put
shoppers off (for example by producing price
uncertainty).
Figure 1: Footfall Impact of Price Discounts
Half Price
85
Save £
80
70
Buy 1 get 1 free
65
X for £Y
60
55
Labelled Discount
Every Day Low Price
50
Multi-Save
-50%
Store Attractiveness
75
45
-40%
-30%
-20%
Price Discount
-10%
0
Solution
A behavioural research review, client stakeholder interviews and a customer survey were
used to develop a long list of promotion mechanics and their characteristics. In an online
experiment, we presented products one at a time to customers and asked them to rate
the prices. Different customers saw different prices and promotion labels. Figure 1 shows
how labelled discounts outperform unlabelled “everyday low prices”, but how multi-saves
underperform.
Impact
The project contributed to a growing body of evidence that promotions, and particularly multisaves, were destroying value by cannibalising other sales, corroding trust, straining the supply
chain, and damaging availability. The client decided to cut promotion density by over two-thirds.
Copyright © 2015 Decision Technology
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our work
The Trade Practice: Customer Communications
Financial Services
Brief
In conjunction with the FCA, this insurance
division of a UK clearing bank was interested in
overhauling its home insurance renewal letter to
improve customer experience and retention.
Problem
In the wake of mis-selling scandals and extensive
new regulation, the letter had become bloated.
This represented an additional obstacle to already
disengaged customers obtaining the right cover.
Figure 2: Letter Outcome Impacts
50
60
Outcome Score
70
80
90
+14%
Understand
Spread of performance
across 30 letter variants
Engagement
+7%
Informative
+5%
Empowerment
+5%
Satisfaction
+14%
Worse than Current Letter
Better than Current Letter
* Right-hand side percentages indicate improve over the current letter
Solution
Based on a literature review of existing behavioural research we constructed thirty alternative
letters to overcome different decision-making biases and barriers. Some of these letters were,
by design, not compliant with current regulations. These variants were tested in a lifelike
randomised controlled trial that measured their impact on a range of customer outcomes as
shown in the chart. Most letters were more effective than the current letter, with the winning
variant better on every outcome, but half the length.
Impact
The main recommendations were immediately adopted in a new letter. Other recommendations
were carried into live field trials. The FCA and internal compliance function accepted the key
“less can be better” finding.
Copyright © 2015 Decision Technology
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our work
The Brand Practice: Brand Tracking
Telecoms
Brief
The client wanted to raise spontaneous
consideration, as measured by our brand tracker,
not least of all because it formed part of their
performance-related bonus.
Problem
As the green dots in Figure 1 show, there are large
sampling errors each month in the proportion of
spontaneous mentions, making it hard to manage
this metric.
Figure 3: Mobile Phone Consideration
Pct of Spontaneous Mentions
45%
40%
Smoothed
3-month
average
35%
30%
Arrows show significant (p<.05) movements
25%
Q1
Q2
Q3
TV Campaign
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Quarter
Solution
The traditional approach is to report a three-month rolling average. Our tracker reported the
raw rates, the rolling average, and a more diagnostic trend curve. The curve was constructed
using various statistical techniques to remove sampling errors, add insight from the mention
order, smooth the time series, and diagnose significant movements. For example, this deeper
analysis showed how Q8 wasn’t as bad as it looks.
Impact
The tracker’s “easy to explain” rolling average was reported for the management dashboard,
but the curve was used to guide activity. Despite a very limited above-the-line budget,
consideration rose significantly and consistently over the next three years.
Copyright © 2015 Decision Technology
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contact us
Decision Technology Ltd
Dilke House,1 Malet Street,
London WC1E 7JN
Email: [email protected]
Telephone: +44 (0)20 7193 9812
www.dectech.co.uk
Registered in England and Wales
Registered Company Number: 04474557
Registered Office Address: 26 Red Lion Square, London WC1R 4AG
facebook.com/decisiontechnologyltd
@dectechconsult
https://www.linkedin.com/company/decision-technology
Decision Technology is an MRS Company Partner.
All MRS Company Partners and their employees
agree to adhere to the MRS Code of Conduct and
MRS Company Partner Quality Commitment whilst
undertaking research