Driving Engagement: Behavioral Science Insights from Credit Karma and Google

Kristen Berman


CEO & Co-Founder


Irrational Labs
Kristen Berman
Kristen Berman

Episode Summary

Today on the show we have Kristen Berman, the CEO and co-founder of Irrational Labs, a renowned product design and behavior change lab.

In this episode, Kristen shares her extensive experience in the field of behavioral economics and its application in product and marketing strategies. We delve into how understanding user psychology is crucial in product design, highlighting the influence of the environment on user behavior.

Kristen discusses the challenges companies face in activating and engaging users, providing insights into the application of behavioral science for enhancing user experience. She shares successful strategies and examples from her work with companies like Credit Karma and Google, emphasizing the impact of habits on long-term user engagement.

We wrap up the episode with Kristen's final thoughts on the future of behavioral science in product development and an invitation to explore more resources in this field.

As usual, I'm excited to hear what you think of this episode and if you have any feedback, I would love to hear from you. You can email me directly at Andrew@churn.fm. Don't forget to follow us on Twitter.

Mentioned Resources



Applying Behavioral Economics in Product and Marketing00:02:54
Understanding User Psychology in Product Design00:04:16
Challenges in Activating and Engaging Users00:06:08
Leveraging Behavioral Science to Enhance User Experience00:11:19
Strategies for User Activation and Retention00:17:56
The Impact of Habits on Long-Term User Engagement00:33:12
Closing Thoughts and Future Work in Behavioral Science00:42:42


[00:00:00] Kristen Berman: People have all these intentions to do something, but the real problem is getting us to act on them, and so this is the where behavioral science really plays. We think about people want to be rich, we want to be thin, and yet we do things every day that don't align with those long-term values, and so that gap is very meaty to think about as you're designing your product. People may say one thing and yet they do another, and that's kind of the fun part to solve.

[00:00:34] Andrew Michael: This is Churn.fm, the podcast for subscription economy pros. Each week we hear how the world's fastest growing companies are tackling churn and using retention to fuel their growth.

[00:00:33] VO: How do you build a habit-forming product? We crossed over that magic threshold to negative churn.  You need to invest in customer success. It always comes down to retention and engagement. Completely bootstrapped, profitable and growing.

[00:01:00] Andrew Michael: Strategies, tactics and ideas brought together to help your business thrive in the subscription economy. I'm your host, Andrew Michael, and here's today's episode.

[00:01:11] Andrew Michael: Hey, kristen, welcome to the show.

[00:01:14] Kristen Berman: Great to be here.

[00:01:15] Andrew Michael: It's great to have you. For the listeners,  Kristen is the CEO and co-founder of Irrational Labs, a product design and behavior change lab dedicated to using behavioral economics insights to help people be happier, healthier and wealthier. Kristen is also the co-founder and principal of Common Cents Lab, and prior to this, Kristen held roles in product management at Intuit and product marketing at Litro. So my first question for you, Kristen, is what was the catalyst that drove you towards behavioral science?

[00:01:46] Kristen Berman: Great question. So I was a product manager at QuickBooks Online in the early days and really we were hitting some walls with increasing activations and retention, trying to figure out how to get people to import their customer list so that as soon as they did that they'd be sticky and now use the product. The main kind of a hot moment light bulb is I heard Dan Ariely speak. This was in around 2007. And really as a product manager, we are trying to figure out insights about user behavior, customer psychology, and we interview 10 people and we call it a day and we say we figured it out and it turns out that there's a full science behind psychology and what people do, why they do it, and we're just not looking there.

[00:02:33] Kristen Berman: So as soon as I kind of figured this out, started collabing with Dan on the side doing projects, doing some experiments and over time really figured out that this was where I wanted to be. We then started Google's Behavioral Economics Group and from there kind of off to the races on applying behavioral science to product and marketing challenges.

[00:02:54] Andrew Michael: Yeah, I find it very fascinating and I think, if I look back at my career, the biggest failures have always been related to trying to change user behavior too much and not realizing how incredibly difficult it is. So I'm very keen to dive in today and understand a little bit more about behavioral economics and how it can be used and applied within building products and, obviously, the outcome and the output being retaining more users and making them, as you say, happier, healthier and wealthier. So I'm keen to dive into a little bit about your framework and how you tend to work with companies, and so maybe you could just get started like what does a typical company look like when they come to you and what is your role with them?

[00:03:38] Kristen Berman: Great. So we work with all types of companies. Behavioral science is basically a hammer that helps you understand what your users can do, and then the intervention or the change that you would do to either amplify some behavior or mitigate it and decrease it. And so when people come to us, they come across the spectrum. It's you know. We have a Brazilian bank asking us to help with repayments for loans and savings. We have health companies thinking about how you drive better nutrition and eating behavior, and we have your classic tech companies thinking about how do you drive conversion in the day one and conversion at day 30.

[00:04:16] Kristen Berman: And so really, when you start to understand someone's psychology, you can apply these insights, these tactics across the funnel and across domains and kind of to step back. The main theory in behavioral science is quite empowering for people who are building products and thinking about marketing them, which is the environment or the context that we live in really has an outsized influence on our behavior. So practical example I really like M&Ms. If M&Ms were sitting right next to me, I would eat them. Right now it's morning, it's 9:15 by me. I would be eating M&Ms if they were by me. If they were farther away from me, I would eat less of them. If the lid was on, I would eat less. If the lid was off, I would eat more. If everyone else was eating M&Ms, I would eat more. If nobody was eating them, I would eat less.

[00:05:02] Kristen Berman: And kind of the insight here is that my attitude, preference, beliefs for these M&Ms has not changed. The only thing that's changed is the environment by which I'm living in, next to these M&Ms. And so for product people, marketers, researchers, designers, you know folks tend to kind of study attitudes, preferences and beliefs more than the environment of decision making and really in behavioral sciences. Sure, attitudes, preferences, beliefs matter, but we take a first approach at looking at how people live in the environment they're living in in a digital world. This is the choice architecture of the buttons, this is the conversion flow. This is the thing that we all think deeply about most days.

[00:05:41] Andrew Michael: Interesting. Yeah, I think as well. There's a lot of biases that come into it, and one of the things I just said like is not often thought about is actually the environment in which people experience these products and services and where they come from. So I'm keen as well and you mentioned a few different sort of areas and some of those seem like incredibly difficult behaviors to change when it comes to living healthier and like everybody wants to live healthier, but we don't always want to put in the efforts and the steps that it does take us to get there.

[00:06:08] Andrew Michael: And this goes into sort of the idea of habits and how do we form habits. But I'm keen to hear as well like maybe we can talk through an example of a customer that you work with previously, what the challenge was at the start and then how you went about working with him on it.

[00:06:23] Kristen Berman: Great yeah. So we'll focus on Credit Karma, which is, as most folks know, someone who thinks deeply about helping people with their manage their credit. They had recently released a feature called Credit Karma money, which is helping you manage your money. They had a debit card attached to it and you know, like most credit cards or debit cards, the only real value is if people use the card, and this is the punchline to most fintech products is we need to get people using them. Activation is really really difficult, but we need to get usage

[00:07:01] Kristen Berman: And so you know the kind of the first stage of the funnel was really thinking about how people could get the card and activate the card. So that's step one. That was one of the big problems. Like they are interested in improving their finances. Otherwise, they want to express some momentum and to start the process, and yet folks aren't activating as much as anyone would like. This is not a Credit Karma problem, This is any credit card or debit card you would talk to has this type of activation issues.

[00:07:33] Kristen Berman: And then the second part is once they get the card, how do they get it?  In the term in fintech is front of the wallet or top of the wallet where you're pulling it out for coffee et cetera. And so with Credit Karma, it's a really lovely. It was no fee card, and so we were very happy to kind of encourage folks to start using this for their daily purchases. They also had a very nice lottery based kind of incentive model attached to it, the reward people at different moments for using it. The one problem that they had right is that once you get the card, you may not have any money on it, and this is kind of the main barrier.

[00:08:08] Kristen Berman: And so to Irrational Labs, when we're thinking about these types of problems, we do what's called a behavioral diagnosis, which we're walking through every single step of the funnel. We journey map on steroids, if you will. Where we're thinking about what are the psychological barriers to doing something and what are the immediate benefits that somebody could get from doing this kind of stepping back. This is our 3B model of behavior change, where we identify what the behavior is that we want someone to do, the barriers that are in the way and the benefits that would get them to do this today

[00:08:38] Kristen Berman: And this is one of the classic things that we work with companies on is just picking that behavior, because its behavioral economics is behavior change, and it's obviously an important step, but companies and teams miss this. And so for Credit Karma, it was about getting more reoccurring deposit set up, it was about getting direct deposit set up, and it was about doing this right away when they entered the flow.

[00:09:01] Kristen Berman: And so our team did this behavioral diagnosis and really focused not necessarily on this repeat behavior of using it for coffee, but getting instead people to set up recurring deposits or direct deposits. This is a one-time behavior that would lock them into future behaviors. This is much potentially easier than saying I will nag you every day to use it for coffee. Instead, I'm going to set up something that will help you long term.

[00:09:29] Andrew Michael: Well done. I find it interesting as well, as you're speaking, just hearing sort of the process you're taking and the sort of user journey map on steroids. And I think, if we think about, like other frameworks, the jobs to be done framework I think it's very popular, we've discussed it in the show many times you would start out with the jobs to be done and you'll get to the end of the day like people need a credit card for the daily purchases, like that would be like the job to be done, let's say.

[00:09:54] Andrew Michael: Whereas what you're saying I think is taking that a whole lot step further and it's like, yes, that might be the job that needs to get done, but how do we actually get them to do that job that they need to get done? And they may have come to us with this problem that they have, but actually getting them activated to see that value and to be able to realize that requires a deep understanding of the different steps and stages of that journey that they're taking and where their psychology is potentially at in each of those stages. So correct me if I'm wrong, but this is like a little bit of understanding and --

[00:10:21] Kristen Berman: It's actually what we call the intention action gap, where people have all these intentions to do something, but the real problem is getting us to act on them, and so this is the where behavioral science really plays. You know, we think about people want to be rich, we want to be thin, and yet we do things every day that don't align with those long term values, and so that gap is very meaty to think about as you're designing your product. People may say one thing, and yet they do another, and that's kind of the fun part to solve.

[00:10:48] Andrew Michael: Nice. So let's dive into that sort of behavior analysis a little bit deeper. And you mentioned, obviously, user interviews being a typical go to for product managers and for marketers. You normally spend 10 people and then normally you hear that if you've spoken to 10 people, you know enough already and you have established a good baseline of what the problems are or what needs to be focused on. You mentioned that only scratches the surface. I'm keen to hear how do you go to that next level and how do you start to really understand the underlying behaviors that are going to drive the action.

[00:11:19] Kristen Berman: Good question. So we typically recommend, and this is gonna sound maybe a little rude, but that people read more. So there's tons of papers around, if you're in a health app, if you're in a finance app, if you're in an enterprise software app, thinking about what decisions people are making. There's probably a meta-analysis that summarizes it for you in a very clean way. So the likelihood that there's something out there that some field has studied before, you're not the first person, is kind of a humbleness that I think the behavioral science field brings to it.

[00:11:55] Kristen Berman: You know, we're not like, kind of the human-centered design where we close our eyes and say, let's pretend that nothing ever has existed and we have a full white canvas. This may be a nice innovation exercise, one of many that you could do, but it's not necessarily super relevant if you're talking about a large societal problem, which most companies are trying to solve. Even if it ends up being a very small app, most people are going after some big problem, and these have been addressed before.

[00:12:23] Kristen Berman: Look at Google Scholar. There's now a list in it and consensus, which are apps that summarize literature in a very easy way. So the world has just gotten much easier to start reading. I would say that that really is an important, thoughtful exercise to go through. And then we do this behavioral diagnosis where we say, look, let's think about every single step that somebody goes through. And we outline the barriers, the psychological barriers and the logistical barriers. And these are different things. We all know that one time we did an experiment. We removed one open field, text field and increased page over page conversion by 40%. Very nice.

[00:13:01] Kristen Berman: And some are cognitive barriers, whereas in the Credit Karma space, you may be overwhelmed or have uncertainty about if this credit card is going to be right for you. By the way, for that study, we increased recurring deposits by 18%. People choosing it in the signup flow by changing the choice architecture there, which is just making it simpler for people to make a decision that aligns with what they want to do. They're signing up for the card. They want to use the card at this stage of the funnel.

[00:13:32] Kristen Berman: And then we think about these in this behavioral diagnosis. Where are the places where we can make it more motivating for somebody to do something today? I think we always think tomorrow is a better day to do something. And today is the right day if you're in a sign-up flow and need to complete it.

[00:13:52] Andrew Michael: Yeah. I think it's very interesting sort of the different ways in which we can motivate or relieve stresses as well from users without even realizing. I think a lot of times in marketing as well, you might look at a web page and a really high converting page and you see some key things on there, but you don't realize, understand what the rationale was behind including those. And I think for me, learning firsthand, sort of one key question I was always like, I loved the story when I was working in Hot Jar was that when you collect feedback, it's not great to collect feedback just from your general website population, but it's much, much more and more powerful to actually like ask the question immediately after sign up, what almost stopped you from signing up today?

[00:43:30] Andrew Michael: And in that question, sort of you're getting the immediate response from somebody who's just gone through the action, who just maybe had experienced some of those behaviors that are highlighting. And as you mentioned, I used that in my previous startup and some of the things that came up was like, "I'm not, I wasn't sure if this service was secure," or "I wasn't sure what was going to happen with my data." And then just understanding those concerns from the end user and just putting that like 100% secure GDPR compliance. And we increased as well our conversions by 15 to 20% I think on a single landing page. Just from understanding sort of those intrinsic motivators that are going to get them over the edge when they're really thinking about making the decision or choice.

[00:15:06] Kristen Berman: Yep. And uncertainty is one of the biggest cognitive errors that especially if you're asking people to do something they haven't done before, it's a new startup. Most ideas are actually quite new or novel or have it change the mental model in some way. And so people are bringing uncertainty of if this is the right thing for them, what will happen after they sign up, what the price is. And so decreasing some level of uncertainty is likely to have this type of effect. And I think guarantees actually mitigate this a lot where you're giving people some sense of it's not cheap talk that this is going to work for you. And when companies do things that are less cheap talk saying this is amazing product and actually put some teeth behind it, you can find real wins there.

[00:15:48] Andrew Michael: It also reminds me of a previous episode where we had Sean Klaus at the time he was at Atlassian. And one of the things they found out quite early on was the timing of when they asked for, to invite your friends to join the account really mattered. And what they came to the conclusion was like, sending an invite to your teammates is quite a big investment in your social capital if you're not sure about the product or service yourself.

[00:16:11] Andrew Michael: And almost in every single SaaS product, the first like stage or second or third step in the signup flows invite your colleagues or friends. And what they really realized was, okay, like maybe that's not the perfect moment. The perfect moment is when they've established a value loop and they can see in that there's a more meaningful reason to actually invite your friend, your colleagues now, because there's a task to do together or there's something to work on together. And just...

[00:16:33] Kristen Berman: Yeah, I think this is, this is obviously intuitively correct in the idea that you don't want to pretend you're on a third date when you're on a first date with somebody. And Dropbox anecdotally has said they found that when they, the intuition was like, hey look, we have two buttons, one's a buy, one's a free trial. Why don't we just remove the buy and give everyone a free trial? It doesn't make sense that we would have people buy when they could obviously have a free trial. It's the same, we're giving them two weeks free. And they reversed that.

[00:17:02] Kristen Berman: And the theory behind this is that you actually do have a small percentage of users, especially with enterprise, that are ready to buy. And they don't want to go through this free trial. They don't want to get approval from their manager on using a credit card and like doing this convoluted expense reporting thing. They just want to buy now. And so it's also likely that some small percentage is actually like, "I'm ready to use. I'm going to invite my team because I was tasked to do this thing this week and I'm on it."

[00:17:26] Kristen Berman: And so, you know, behavioral science gets a bad rap for saying reduce choice in all instances. And actually what we mean is reduce uncertainty, reduce cognitive overload, make it easy for people to do the thing they want to do. And sometimes choice is actually a part of that because you're helping people understand the options they have and giving them the right thing for them.

[00:17:43] Andrew Michael: Yeah, I totally agree with that. And I think that's definitely something they worked into the flow of understanding of how the signup eventually went and are you new or do you like a couple of questions before then eliminated some further down the line.

[00:17:56] Andrew Michael: Nice. So walk us through then like what the analysis on your part would look like to understand in Credit Karma's case. Let's take that as an example now where you've been tasked with trying to increase the activation of the cards. You're going about first step you mentioned is looking at the literature, what already exists, trying to understand from that perspective. How do you then go and sort of map this out? Are you doing any other further research yourself? And if yes, like what are you looking at and who you're speaking to?

[00:18:22] Kristen Berman: So we are people who use the app. So basically the first thing that we would do when we're working on any project or problem is actually experience it ourselves. And this is because as behavioral scientists, we're looking for different things. We're looking for the uncertainty, we're looking for the optimism bias, the recency bias, the information aversion, all these things kind of are things we're thinking about as we go through the flow. So, you know, and then we map that flow and this could be like a 200 page PowerPoint deck with screenshots where we're thinking each step, right, is like what is the psychology that's affecting somebody at that step?

[00:18:58] Kristen Berman: And then it's a prioritization exercise to say which is the one that's the biggest one preventing them from doing something. And these are all hypothesis, right? So our team doesn't say this is correct. We say, look, we have a lot of reasons to believe. This is our biggest assumption that we're making and potentially where the biggest leverage point is. And so by using the word hypothesis, by picking a key behavior, by outlining the 50 ways that are preventing them from doing something and then narrowing it down versus saying this definitely has to be the step. I think we get to something that's more theory-based and saying the theory here is uncertainty and there's going to be a lot of ways to reduce uncertainty and how would we do that?

[00:19:35] Kristen Berman: With the Credit Karma opportunity, if you've been in any kind of fintech or cards, we know that it's important for people to have money before they can spend. This is just kind of an intuitive nature. So we said, look, there's an opportunity here to ask people at the right time for when they would do this action. And you could imagine there's probably two right times. One would be during signup flow, where you're trying it out for the first time. It's high friction. We're asking people to sync their bank accounts, to trust us.

[00:20:08] Kristen Berman: And so the other opportunity was after they've made one payment, or they've used the card once. And at that point, then, they're in the app. They're using it. And the opportunity to say, hey, actually, let's just continue and do recurring deposits. That was a nice point. And at that point, then we said, great, there's lots of ways to ask the question.

[00:20:24] Kristen Berman: And we did a four condition experiment to try to figure out what is the best way to ask people to set up either direct deposit or recurring. And we did one button versus two. We did a bigger button versus a smaller button. And really the one that won was two options, one with recurring deposits as a larger button, and one was set up direct deposits as a smaller button. And by doing this, this caused the increase of this 18% in recurring deposits.

[00:20:56] Kristen Berman: And choice architecture is a small thing, but it's a big thing. It's how people make decisions. We're helping people understand the counterfactual of what they could do. If you have a child, you know that you would never say something like, would you want to put on a raincoat? The child will say no. You say, would you want a raincoat or a winter coat?  And all of a sudden we forget no and we say we have two options. And I think same with humans is that the choice architecture really influences our likelihood to say yes. And I think from a rational point of view, that's crazy. But from kind of this irrational point of view, where we're actually making a relative decisions most times, it feels very natural.

[00:21:35] Andrew Michael: Yeah, I love that example with the child. I've definitely used it in my little four year old. Whenever there's a decision needs to be made. It's much, much easier just to sort of give two options that, you know, like the outcome is what you're trying to get to and see from their responses or they're much more, when more willing likely to choose one of the options, then instead of go for the opposite, like, "No, I'm not wearing a coat." It'll be like, as you said, like, "I'm going to know where the winter coats I'm going to know with the raincoats."

[00:21:59] Andrew Michael: And I'd like to maybe like a step further in sort of what are some of the questions and the things you ask yourself. So if maybe we could take like an example of a signup page and you're evaluating that single stage of the user journey. What are some of the questions and maybe biases and things that you're going through on it? If there's a checklist from your perspective that you work with on your team and how you come up with a hypothesis for each sort of stage of the user journey, trying to understand each time. Do you have a list of things that you go through each time or is it just more like let's take a look and see what comes to us as we're discussing?

[00:22:32] Kristen Berman: I would say we use our 3B framework quite religiously even though the surface level seems very simple. At the deepest level it's pretty profound in how we can assess what's going on. I'll give an example of One Medical. So we worked with One Medical, which folks may know is basically an easy way to set up an appointment with a doctor. It's basically an app that Amazon bought it, but it hasn't yet changed where you just log in and you have, you know, within a day, you could go into virtual appointment. Nothing revolutionary, it's just healthcare is hard and they've made it easy.

[00:23:03] Kristen Berman: One of their problems was that they were selling through to employers. Imagine your company says, look, you have an opportunity to set up One Medical. It's a free benefit. These people then aren't that invested. Their employer's just given them a free benefit. And so One Medical said, look, we want to increase doctor bookings for folks who have signed up through their employer. They're a different population than people who've come through a search process.

[00:23:26] Kristen Berman: And so when we did this, the question was, how do we increase bookings for folks who are not yet engaged with the app or not as fully engaged? And if you looked at One Medical's sign up flow, they asked you pretty reasonable questions, and then they would drop you on a homepage that said get care. And you click get care, you'd see a long list of providers that you could book today. Seems pretty reasonable. The problem is that the mental model for One Medical wasn't yet set for these folks. Like what is One Medical? Like it's intuitive once you know it, but not intuitive before.

[00:24:00] Kristen Berman: And so when we think about sign up flows, some of the job of sign up flows is to increase the knowledge or the understanding of the mental model of the app. You can do this in many ways. You could, if you're a bill pay app, instead of saying you're a bill pay app, you could say how frequently would you like to pay your bills? When would you like to pay your bills? Now this all of a sudden signals the capabilities and the features without actually having a carousel that people swipe through.

[00:24:24] Kristen Berman: And so for One Medical, we took that approach, which is we asked questions to basically infer and help people understand the opportunity for the app. I would also say once you land on this get care thing and you have a long list of providers and doctors, this has no real help for me to make the decision. I would have to click on each provider, understand who they are, and then understand my preferences for that provider and then make a decision. This is just a really long flow for somebody.

[00:24:55] Kristen Berman: When we're thinking about that, we're like, okay, we have to start the mental model and get people to understand this. And we have to make it easy for people to make a decision about what doctor they're going to see. And so by combining those two things, we basically took over the signup flow and asked people a few questions about their health, what they were concerned about, and then recommended them a doctor to see.

[00:25:15] Kristen Berman: One doctor. And they could obviously click to change. We recommended a few time options that were within the day or next day. We also pushed it to be remote so that people wouldn't have kind of the barrier of going to the appointment. They could obviously click see more to look at other times and options. But we made it easy, cognitively easy and logistically easy to do the thing that One Medical wanted them to do while also learning about the function of what. So even if people who didn't click to set up appointment, now they understand that this is kind of the point of the whole thing. And by doing this, we increased bookings by 20%.

[00:25:53] Andrew Michael: Very nice. So essentially, you went to the first sort of look at this was one of the barriers to entry was people just didn't really understand the benefits of the product or what it served and really focusing on that. And I see that as one big barrier for adoption and activation. What are some of the other common barriers that you see across different industries and products and there will be like sort of your go to when starting to look at a product or service?

[00:26:22] Kristen Berman: I think folks just really underestimate how hard things are. So if you were to think about getting people to do anything today, you have to disrupt my current routine. You have to get me to click an email, log into an app, and I have 50 other things I want to do. And so we basically say you have to decrease the barriers for something. And when we're brainstorming, some words we use are like, how could we completely default this whole thing for someone. Now, obviously, most things you can't, but it pushes our thinking to say, how would we make it really drastically easier?

[00:26:50] Kristen Berman: Again, kind of an easy idea, but big companies are formed on this. So Uber is just an easy way to call a taxi. One Medical is an easy way to get a doctor's appointment. And so by fundamentally decreasing the friction, you can really get to some nice innovation. And then the second question is this, how do we make it more interesting, motivating, compelling to do this today? I love apps that give me deadlines. This raises the likelihood that I would pay attention and prioritize it against all the other things that I'm doing in my life.

[00:27:22] Kristen Berman: Like healthcare works by deadlines. We wouldn't sign up for taxes works by deadlines. We wouldn't do these things unless there was a reason to do them today. And so we would say deadlines are a gift, but you can give anyone a reason to do something today and help with their prioritization.

[00:27:37] Andrew Michael: Yeah, I love that. And it's actually one of my favorites, I think, on boarding stories from the show is with Janna Bastow from ProdPad. And when they originally had a 30 day trial period and they said like, why do we give 30 days, let's make it 15. They cut it in half and then they saw conversions double. And then like, well, what if we cut it in half again, what's going to happen? They kind of often, then they saw it again, like increase significantly.

[00:27:57] Andrew Michael: And it was just sort of this notion of giving this urgency where like, before I had 30 days to try this product out, now I have seven. And then they did something even smarter afterwards where they said, okay, well, if you do the key actions we want now, we'll give you extra days in your trial. So into your credit card and have an extra three days. And I found that very fascinating sort of how they use that scarcity and motivation, like getting people to, okay, you only have a certain amount of time now to actually get things done.

[00:28:22] Kristen Berman: And I think people look at this like it's a dark pattern and are like, you know, how would you decrease or give me more urgency to act today? And you know, kind of sadly, this is just how humans operate. It's abstract, it's far in the future, we're not actually thinking or integrating this into what we will do or evaluating it in a way you would need to evaluate if you wanted to make a real decision. And if it's not present for you, then you'll just do it tomorrow and then tomorrow becomes never.

[00:28:50] Kristen Berman: And so it's just kind of, there's some nice research on how long you should give for a coupon and the same finding holds. Whereas if you give a long 30 day window for a coupon versus a shorter... I believe it was like a week, more people activate the coupon. This is like an easy work she just did. Even having a deadline versus an incentive can work, whereas you could pay people to do something, but if you give them a deadline, you can also drive the same type of action. So we need something to bring the decision closer to us versus far in the future in something we will do tomorrow.

[00:29:27] Andrew Michael: Interesting. Are there any other sort of motivators and drivers to drive behavior?

[00:29:33] Kristen Berman: I think on the flip, I would say, if you want someone to do something, make it easy. If you don't want them to do it, make it harder. We worked with TikTok. They asked us to decrease the spread of misinformation. And there was a real question of, this is actually a pretty hard challenge to do. People are in the moment in this hot state, seeing something that triggers them to want to share. It turns out, again, this is part of the reading thing where there has been existing research here.

[00:30:00] Kristen Berman: David Rand and Gordon Pennycook at MIT did research around, we do have a value of accuracy. Most people, when they're sharing something, do actually value the accuracy of it. The problem is in these hot states, you forget. And so the question, I think, for many product managers or marketers could be, is your person in a hot state in the moment they're signing up or taking action with you? If they are, maybe that's okay. You want them to continue. In TikTok's case, we want to slow them down and say, actually, we can put a label on the video, but we also put a pop-up that said, are you sure?

[00:30:32] Kristen Berman: And just by putting this pop-up up, we've reduced the shares of misinformation by 24%. So one in four videos weren't shared when you just got people to stop and think for a second. And so this type of understanding that we want to do something and we may in the moment be doing something different and that friction could slow us down. It can also speed us up and make us do something that we don't want to do. This is our classic Facebook red icon that in the moment we may do more of social media than we want to do. But it works both ways.

[00:31:05] Andrew Michael: Yeah, absolutely. And again, like the friction sort of ads reminds me of another favorite of mine with Eleanor Dorfman, its Segments. In the early days, sort of they just let people get started with their product and use it. And what they found out was that actually they needed to add friction and they needed to slow them down to actually think about how they were going to do the implementation and how they would structure their events. And there's notice  a significant increase in activation and long-term retention just by making people go slower and think through the steps before they allowed them to proceed and get set up and running. So a lot of times you hear like get them to value as fast as possible, but it's not always going to be in the best benefits for the end user by doing so. Yep.

[00:31:44] Kristen Berman: And the other benefit, by the way, with slowing people down is that you get a self-selection effect. So Noom has famous for their long sign-up flow. And the people who make it through are going to stick around because they've just basically weeded out everyone else who's not that interested. And now you have a really committed base who the product team can invest in because they basically signal they are interested and they want this. And so self-selection really, especially for long sign-up flows can be a benefit to the product evolution.

[00:32:16] Andrew Michael: Yeah, I love that. Because a lot of times people say, oh, but if we add an extra field, it's going to slow us down, or it's going to slow users down, it's going to decrease conversions. And you also got to ask yourself, do you really want that conversion? And if they didn't have the time of day to spend an extra 30 seconds to fill in the form field, maybe their intent or their problem wasn't that big enough they needed solving to be able to go through that sort of moment in time.

[00:32:36] Andrew Michael: So I think it's always like it's a balance, I guess, with these things of trying to figure out what are the pros and cons at the end of the day? Cause we can spend our lives reducing the friction on the form fields, but then that's not always going to be the best thing for ourselves and for our users at the end of the day.

[00:32:50] Andrew Michael: One of the things we haven't shared a little bit about, and I think this is definitely in Nir Eyal's book, Hooked, we had him on the show previously was habit forming products and how you go about thinking about building habits. And I think this is a foundation of behavioral science. And I'm keen then to think, okay, we've talked a little bit about sort of the activation period and getting people started with products.

[00:33:12] Andrew Michael: And I think that is probably the best place to start building habits. But then how do you start to think about it from the next step onwards? Like once you've got people activated, once they've got started, how can behavioral science be applied to help build stickier products?

[00:33:26] Kristen Berman: Yep. So, my perspective on habits is, you know, if it was possible for all of us to change our habits, we should do that. And it's a very motivating idea to say that, you know, if I try hard enough, I can be somebody who runs. I can be somebody who walks every day. It turns out it's very difficult to do this. Most research has shown that most interventions fail at long-term habit change because we are sticky creatures. We have the status quo. It's hard for us to change to do something different.

[00:33:57] Kristen Berman: There is some uplifting news to this. It's not all bad news. A few interventions do work. And do work very, very well. I'll first say an analogy and then go to kind of one resounding finding in the field. And the analogy is if I want to get you to walk every day, I could build an Apple Watch. I could nag you. I could set up a mobile app that would track your steps. Very nice and does have some effect, especially kind of the more recent digital apps with giving people goals, 10,000 steps too much, but lower tends to have some effect.

[00:34:31] Kristen Berman: Very, very difficult, small percentage of people actually do this and keep it going. What would be a better intervention for me to do for you would be to try really hard, put a lot of effort into it, maybe even pay you and ask you to get a dog. If you get a dog, now all of a sudden you're walking twice a day and you like it. And so it could be very difficult for me to convince you to get a dog, but it could be easier than trying to nag you every day to go for a walk or go for a run.

[00:34:58] Kristen Berman: And so that's kind of the analogy and the goal that we want to look for is what is the one time, and by the way, that's a Credit Karma, why one of the behaviors is reoccurring deposits. You make one time terrible hard action. We have to sink your bank account, and all of a sudden now you have a reoccurring behavior. And so in the field in behavioral science, a lot of, I would argue, or this is maybe less debated, is that we wouldn't really have a retirement savings in the US if it weren't for these one time behaviors.

[00:35:26] Kristen Berman: So automatic enrollment is at the point that you're signing up for a company, you now are automatically enrolled into retirement savings. When that was introduced, the findings is it went from around 40% to around 90% of people who have retirement savings. This is just fundamentally allowed the US to have some kind of cushion in old age. And so those are the types of things that we wanna look for is what is the one time thing, especially in enterprise products where you do have an admin setting something up, this becomes much more possible where they're going to do one thing that's going to set up everyone for success versus kind of having to nag and notify people daily to do actions that align with their interests anyway.

[00:36:07] Andrew Michael: Yeah. I really liked the example of the dog sort of, right, trying to make it more enjoyable. I think as well for myself, there's one aspect, like I think that's getting the joy and enjoying the process as well as going to be making you more highly, more motivated to do it again. I think what I've also found and more recently as well, like I started actually running now about a year ago. You're doing almost every day religiously now training for a marathon in a couple of months.

[00:36:30] Andrew Michael: And one of the things I actually found for the first time to be extremely motivating. And if coach Bennett's, if anybody knows coach Bennett's out there from Nike training, love to have them on the show to chat about this, but I think what got me in the beginning was whenever I've tried to start running in the past, I'd always just get out there and I give full effort the first days and then just get home and feel like death and like, I don't want to do this again. And like maybe you get myself to that for a week and then I'll be like, Oh no, there's easier ways to do these sorts of things.

[00:36:57] Andrew Michael: And this time round, I think it was a complete opposite. Like you'd get out and there's a coach, the Nike training is very excellent for this would be like, okay. And the goal is not to run fast. The goal is to have a good, enjoyable pace. You want to come home, you want to be feeling good. You don't want to feel like this is the end of it. It's like the best part of your run needs to be end of your run. So like coaching you through this whole sort of process when by the time you get home, you weren't destroyed and you felt okay, good enough. Okay.

[00:37:20] Andrew Michael: And we move out the next day and the whole idea is just like building it step by step as opposed to going straight on. I found like for the first time it was like, got me past that hump to the point where like now it's become a habit and I've enrolled it like don't see myself stopping for a long time now because I'm really enjoying it.

[00:37:35] Andrew Michael: But I think there's also sort of that way of activating users as like it's really important to get them to that stage where they actually find joy in it first and that it's not as painful and a lot of times products feel extremely painful in the start, but maybe like getting them step by step and getting them onboarded slowly, as opposed to all at once, can be really, really powerful to keep them entertained.

[00:37:55] Kristen Berman: Yep. So two things here. First, I would say you actually did make a really smart one-time decision, and I would bet you made two one-time decisions. The first is to sign up for a marathon. So at the point that you've signed up for this, you've pre-committed your future self to try. You may not make it and you may not get there. But that one time, sorry, yeah, I did not mean that about you. I meant that in general, the collective view. You're definitely gonna make it.

[00:38:24] Kristen Berman: But the second decision you've made is talking about it with other people. The idea that you've said this now in the podcast or you've told other friends is some kind of social accountability to do the thing and kind of keep in line. We don't like cognitive dissonance. So if I were to say something and then do something different, this we don't enjoy that that feeling.

[00:38:43] Kristen Berman: So those kinds of one-time decisions I think can have a really big effect on the likelihood that something like using an app that actually gets you over the hump would work. I don't know if the app without those two things would have enough effect to drive you for consistency. That said, I like the app having this idea, you know, most exercise is difficult and it's painful. I'll share a quick example of something analogous that we did with Google. This is the one study that we can share.

[00:39:16] Kristen Berman: Basically, AdWords is a really difficult product. All advertising is not just AdWords. If you sign up for Facebook or TikTok, it's very difficult for the florist in Kansas to figure out keywords or conversion tracking. And so you kind of have to stick with it because you're paying a lot of money. And over time, you should have a higher ROI. That's the promise. If you give up after a few ads, you're just not going to get to the promised land. That's what people were doing in any kind of hard product running the same. People give up when you hit some walls.

[00:39:50] Kristen Berman: So, Google, we took over their call center and had an experiment where half of the reps were basically saying, hey, welcome to AdWords. This is the three-month AdWords expert program. There was zero additional training for the reps. There was no skill-based additional training. It was just that the mental model changed from today, we will help you, to this is a three month program. And the reps put things on people's calendars to signify when they should check back in. They had a tree that was growing to signify growth and a longer term mental model.

[00:40:24] Kristen Berman: And so what that did is increased retention by 14%. No additional changes to the skills that was being taught, just the change in the mental model from short to long. I think what you're saying really is about running is, and exercise is very correct, is that if you have a short-term mental model, you may run as fast as you can, you may tire yourself out, you may do it every day versus consistent and sustainable pattern versus like I'm going to be in this, I'm going to do this for a while, it's going to be hard initially and then I'll succeed.

[00:40:57] Andrew Michael: Yeah, I know I can definitely buy this who conscious decisions made. I think for sure that's been a big intrinsic motivated to keep me going and keep me motivated. I definitely shared early on that this was going to be a goal of mine and we're getting closer to the day. Now I'm getting excited for it. So, but I think that's also one of the things that worries me a little bit is that I've read a lot of people that decide to do marathons is that when they finish the marathon, there's sort of this like void and missing gap because they've been training for so long to get to the same goal and then what.

[00:41:29] Andrew Michael: So I'm sort of like trying to mentally prepare myself to figure out what's going to be next and making sure like, because I really loving the feeling I get like all of this energy and motivation. It's just about making sure that you can sustain it and you can keep going and you can keep finding joy in it as well. If you have any tips.

[00:41:45] Kristen Berman: Yeah, I think you need another. Buy a dog. Just kidding. Walking is not as much a door for an eye. But I think it's okay to keep signing up for events like this. I think it gives us some structure, gives us some progress, some feedback. So I would say try a sprint try or try something different that could kind of maybe a trail half marathon or something that would drive a little bit different behavior enough to make it continually interesting for you.

[00:42:14] Kristen Berman: But I wouldn't avoid, I wouldn't just say, oh, now naturally I should behave in this perfect way where I was training for the marathon, even though I don't have a marathon. I would start to design your environment, hack your contacts to be able to get the same outcome.

[00:42:29] Andrew Michael: Same, definitely. Right, I see we're running up on time now. So last question, ask every guest. What's one thing that you noted about training retention that you wish you knew when you got started with your career?

[00:42:42] Kristen Berman: So, for me, I started as a product manager even before QuickBooks Online. I was at Quicken Online, and this was back in the day before Intuit bought Mint. These are personal financial management tools. We were attempting to get people to use the product, and the execs came down and said, look, Mint over there has figured something out. They show people this beautiful pie chart of what your money looks like.

[00:43:10] Kristen Berman: And as product managers, we said, "Okay, we'll build this." And so I think at that point, it was the hardest that I've worked in my young product life. And we finally got it done. And we brought people in into it as these very nice walls where you can watch people as they use the product for the first time. And we were watching them. And they would sync their bank account, because it was actually a working prototype. And then they would see their money displayed in this pie chart for the first time, showing them all the expenses in a nice visual way.

[00:43:40] Kristen Berman: And the first person covered their eyes. It literally just went, you know, oh my gosh. And we thought it was a fluke and we said, let's bring more people in. We brought more people in and there was still the look of surprise and sadness, horror, you could say. And the question is, what was happening? And in that moment, we weren't aware, I wasn't a behavioral scientist at that point, but you were just showing people how much money they were losing in a very visceral, strong way.

[00:44:07] Kristen Berman: And you look at that you don't want to see that. You may want to see it once, but you don't want to see it up close and personal. It's not good news. For most Americans, it's not good news. It's surprising you may not trust it. As a behavioral scientist, we would never have built that product because it's just so demotivating to show people the things that they are losing and then ask them, by the way, to log in every day to look at it. It's never going to happen.

[00:44:33] Kristen Berman: And so I think early in my career, missing the behavioral science idea of what psychologies are driving people to act or not act, I ended up making a lot of these mistakes where we would say, let's go talk to customers, see what they want, build it. By the way, budgeting in the FinTech world is the same thing. People say they want budgeting. We did a really large scale study to show that budgeting actually does not work. People do not log in and it does not change their spend. As behavioral scientists, we know these things and we can really have a, call it a shortcut. There's lots of shortcuts you could take if you understand someone's psychology.

[00:45:05] Andrew Michael: Very nice. Well, Kristin, it's been an absolute pleasure chatting today. I've definitely picked up a few pointers and tips that I'll be applying in the future in products and services myself. Thank you so much for joining. Is there any final thoughts you want to leave the listeners with before we drop off today? Or how can they keep up to speed with your work?

[00:45:22] Kristen Berman: Yeah, if you go to Rational Labs, I would say sign up for a newsletter, irrationallabs.com. And we also have, if you're interested in behavioral science, we do have a boot camp to kind of get your feet wet with it. And if you're interested in working with us, feel free to email as well, irrationalabs.com and just hit that contact form.

[00:45:40] Andrew Michael: Awesome. Well, we make sure to leave everything we've discussed today in the show notes so you can pick that up there as well. And thanks again for joining, Kristen. I wish you best of luck. Cheers.

[00:45:48] Kristen Berman: Yeah.

[00:45:57] Andrew Michael:  And that's a wrap for the show today with me Andrew Michael. I really hope you enjoyed it and you were able to pull out something valuable for your business. To keep up to date with churn.fm and be notified about new episodes, blog posts and more, subscribe to our mailing list by visiting churn.fm. Also don't forget to subscribe to our show on iTunes, Google Play or wherever you listen to your podcasts. If you have any feedback, good or bad, I would love to hear from you. And you can provide your blunt, direct feedback by sending it to Andrew@churn.fm. Lastly, but most importantly, if you enjoyed this episode, please share it and leave a review as it really helps get the word out and grow the community. Thanks again for listening. See you again next week.


Kristen Berman
Kristen Berman

The show

My name is Andrew Michael and I started CHURN.FM, as I was tired of hearing stories about some magical silver bullet that solved churn for company X.

In this podcast, you will hear from founders and subscription economy pros working in product, marketing, customer success, support, and operations roles across different stages of company growth, who are taking a systematic approach to increase retention and engagement within their organizations.


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