Using social norms to activate pension plan members: insights from practice

Activating pension plan members to think about their retirement, and to take action when needed, is a challenge that many pension funds and financial services providers from around the world are familiar with. Behavioral finance and marketing research have been recognized as valuable sources for ensuring more effective communication in activating and engaging people. One of the most famous behavioral marketing principles is the use of ‘social proof’, also referred to as ‘social norms’. Social norms have been shown in many instances and across various industries todirect a person’s behavior in the desired direction. However, contrary effects are also not rare. Therefore, before assuming that social norms can easily be applied in pension communication, it is important to first establish whether social norms are effective in the pension sector. Additionally, although social norms can be an efficient tool, with a small investment (change of a few words or pictures) leading to big increases in conversion, the application is subtle and should be done correctly. This paper first provides an overview of why social norms influence behavior in general,then discusses four studies in the pension sector in which social norms are applied, and finally develops a list of dos and don’ts when applying social norms.