Behavioral Design: How Startups Can Increase Engagement

Sometimes, product development hits a growth wall: A/B tests, user interviews, and other initiatives yield only marginal results, barely justifying the spend. Thankfully, there is a powerful and efficient way to get back on the growth track: Behavioral Design. Simply put, Behavioral Design looks into when and why customers use a product. Behavioral Design initiatives contributed to the growth of companies like Google, Walmart, TikTok, Facebook, Microsoft, PayPal, Lyft, and others.

For example, in a case study of a Brazilian bank, IrrationalLabs helped create a short prompt to deal with the problem of late payments by increasing autopay adoption. For bank clients, late fees could be easily avoided by using an autopay feature, but the majority barely signed up for it. What was the behavioral problem? Limited attention and status quo bias. When users come to an app, they already have a goal in mind. The status quo also sways users into staying with the default option. After the behavioral study, a short prompt was designed for a pop-up with an autopay option. Instead of passive “activate auto debit” or “not now”, the suggested option demanded a more active choice from the user: ‘YES – activate auto debit’ or ‘REFUSE – I’ll remember to pay manually later.’ An active prompt resulted in a 73% increase in users who signed up for autopay.

In many case studies, Behavioral Design initiatives produce relatively small but clever tweaks to the product, yielding impressive results. 

What is Behavioral Design?

Behavioral Design is all about designing choice environments to influence users’ behavior in an ethical manner. This often involves utilizing nudges and subtle changes to guide towards the desired behavior. Like in the case study of the Brazilian bank, users missed out on an action that was good for them due to psychological biases. These often lead to irrational decisions and stem from cognitive shortcuts, emotions, or social influences.

The process of behavioral design consists of these stages:

• Define the problem
• Map users behavior
• Develop interventions
• Test and tweak

In addition to nudging, UX designers also use the following behavioral design techniques:

• Progressive disclosures. It mitigates biases such as cognitive overload, decision fatigue, choice overload, decision avoidance, present bias, ‘principle of least effort’ and a few more related to ambiguity and anxiety. 
• Building on patterns. This also helps to address cognitive overload and ambiguity aversion. In addition, it deals with error avoidance bias, attentional bottlenecks, task abandonment, heuristic substitution, system-1 thinking, automaticity bias, and others.
• Price anchoring. It works as a reference point for how users evaluate and perceive the product. Price is a large chunk of context. As such, price anchoring helps to mitigate context absence, decision paralysis, analysis fatigue, framing effects, and such.
• Mitigation. This is more about fighting against biases the designers have, their assumptions about how certain design elements are perceived and processed by users. After all, imagine a large healthcare company hiring a designer for their digital product. The socio-economic status of that designer, their assumptions, and experiences are not likely to fairly represent the majority of healthcare patients of that healthcare company. 

Autopay at Brazilian Bank: The Behavior Design Process

Problem: In the case study of the autopay in the Brazilian bank, the problem was clear: users generally would want to avoid late fees, but they kept paying manually and missed deadlines.

Mapping user behavior: Then, the discovered biases – limited attention and status quo – were a result of a careful mapping of user behavior. 

First, they must have mapped things like:

• Place where autopay opt-in appears;
• Screens before and after autopay;
• Steps for autopay opt-in;
• Timing in the app usage where users are offered to opt-in for autopay.

It is likely that this analysis led to the discovery of the limited attention. Autopay must have been offered when users pay the bill or complete other urgent tasks. These moments are when they are already actively thinking about something else. Hence, cognitive overload.

Then, the team that did the mapping might have analyzed the behavior analytics: 

• Number of users who see the autopay option and those who activate it;
• Drop-off breakdown for autopay opt-in steps;
• Activation of autopay for existing users VS new users;
• Number of manual payments, etc.  

Through this analysis, they should have seen that the more users do manual payments, the less likely they opt in for autopay. As such, status quo bias. 

Interventions: There is thorough research done specifically into financial decision-making and interventions to improve that by Common Cents Lab. There are many ways to address identified issues, but in this case study, the focus was on finding a low-cost solution. Hence, a pop-up prompts hypotheses. 

Test and tweak: Usually, one needs a control group, option 1, and option 2. 

Result: a solution that increases the opt-in for autopay by 73% (the passive version offered a 40% improvement over the control group). 

Healthcare Case Study: Behavioral Design and Engagement

For most startups today, driving the adoption of new behaviors and engagement with them is a daily struggle. The Global Innovation Index shows a 42.6% increase in computational power between 2014 and 2024. This is a new historic high, and it means faster product cycles, new interactions, and new capabilities. Startups build their new offerings on top of that. In this context, behavioral design is soon to be a must-have knowledge for every startup.

RecoveryOne: Digitizing Physical Therapy

Problem: Suffering from back pain or neck pain is rather the norm than an exception these days. Whatever the cause, an injury, surgery, or a sedentary lifestyle, physical therapy is a sure way to fight it. RecoveryOne, which offered a great solution, faced low adoption and poor engagement of those who enrolled.

Mapping user behavior: One needs to step into a patient’s shoes and map out the process of signing up for physical therapy. The questions patients are asked, the decisions to be made, the flow of it, and the information to be provided. As a result, IrrationalLabs discovered two major biases:

• Status quo bias along with uncertainty aversion,
• Present bias.

RecoveryOne is the digital version of the physical therapy (PT) done in person. However, in-person therapists are usually there to guide the actions. They might also motivate patients to get through uncomfortable sensations and prompt noticing positive change. Doing something unfamiliar, such as online PT (status quo + uncertainty aversion), which does not bring immediate rewards (present bias), seems unnecessarily hard and, thus, might not be worth the effort now. 

Interventions:

We observed Status quo bias in the previous case study of the Brazilian bank and its autopay feature: users just tend to do what they have been doing for years. For that, users need to be brought to a choice with a more active approach. 

Uncertainty aversion and present bias can be overcome with specific nudges and progressive disclosures. 

So, IrrationalLabs offered:

5-question interactive quiz that provides personalized benefits for each user. So, the solution was progressive disclosure and making benefits tangible and personal. 

Result: a 64% increase in adoption.

High-Impact Use Cases for Behavioral Design

Behavioral Design can benefit any digital product, yet to a different degree. The most opportunities to make a positive change in user behavior for consumer-facing products are in these sectors:

• Food & beverage (delivery apps, grocery discounts, or meal planning);
• Consumer product (e-commerce, apps for refilling consumables, subscription for product boxes);
• Health & Wellness (fitness apps, telehealth, mental health apps).

Overall, even if your app category is not on the list, you can still consider using it if the reasons below apply to your app. After all, behavioral design isn’t just simply about increasing feature adoption and engagement like in the case studies above. Behavioral design is a powerful strategic growth lever. Basically, any app that can be leveraged for habitual or routine use can benefit tremendously from applying it. Behavioral design is a key to:

• Boosting adoption,
• Increasing engagement,
• Strengthening retention.

Let’s first look at the reasons why the mentioned sectors are such a fruitful ground for Behavioral Design. 

Reason #1: High potential for forming habits & low-stakes decisions

In consumer products like beauty boxes, purchasing items for the household, and food, purchase decisions are routine. Making a conscious choice about each of the items is exhausting, which is why they naturally move to automaticity. People start defaulting to the same purchase decisions.   

Additionally, those decisions are easier to get into default habitual mode as they are low-stakes.

Reason #2: New habits occur frequently, driven by lifestyle trends

People are often exposed to new trends, information, and models when it comes to health & wellness. It is an evolving field, and people tend to want to adopt new and better routines, be it exercise, nutrition, or taking supplements. Plus, there are quite a few innovations, which people generally want to adopt. 

COVID-19 was also a powerful disruptor that opened opportunities for new routines and behaviors. And many companies in health &wellness, food&beverage, and marketplaces jumped on the bandwagon. During that time, companies like Unilever, with its Lipton Immune Support tea, and spice manufacturer McCormick saw double-digit growth as consumers became more health-conscious and willing to form a habit of cooking at home. 

Reason #3: Many touchpoints that can be targeted by Behavioral Design

Just like physical consumer products, digital ones offer a variety of touchpoints to introduce better engagement strategies. They can be:

• an app onboarding process, 
• push notifications, 
• prompting users through modals, 
• delivering personalized recommendations, 
• introducing reward loops, and 
• more salient app features like defaults and information architecture, microcopy framing, and what have you.

So, consumer digital products are even more malleable when it comes to engagement strategies and changes needed to introduce those. 

Reason #4: Consumer apps are resonant with Perception of Self, Values, and Self-Image

When users subscribe to receiving beauty boxes, enter a fitness marathon, or sign up for a mindfulness app, it creates high emotional involvement. Engagement strategies always incorporate elements of benefits for self-improvement, work with guilt, motivation, and tradeoffs of today versus a longer-term future.

Reason #5: Habits for business model building

In most consumer apps, there is always an action that users can learn to perform daily. Engagement strategies often focus on introducing microbehaviors. For instance, if it is a grocery ordering app that users engage with a couple of times per week, there can still be a value-adding microinteraction. For instance, suggesting a recipe and tweaking the grocery list. 

Meal-planning and fitness apps are naturally suitable for daily actions: logging meals daily or tracking fitness goals like daily steps. If it is a beverage ordering app, you can still engage users with prompts like “Have you boosted your immunity today?”, suggest the health-beneficial smoothie of the day, or track daily hydration goals.

With these engagement strategies, startups can build a mental connection between their apps and users’ wellbeing routines as well as link those to users’ moments of self-improvement. For instance, morning resets, afternoon energy boost, or evening wind-downs. Increasing engagement through Behavioral Design benefits business and helps users build healthier habits and make health-conscious choices.

Should You Use Behavioral Design in Your Startup?

If you are not sure whether you should utilize Behavioral Design in your app design process, answer the questions below. First, though, the basic question is “Does your app require a one-time use?” If yes, then behavioral design might not make much difference. If your app is built on repeated actions, then:

• What is the expected frequency of usage? Daily, a few times a week? Here, you can use Behavioral Design to increase frequency and introduce micro-actions.
• Will forming a habit around your product improve business and user outcomes? For instance, on social media, the more users come to the platform, the more advertising and sponsored content they consume along the way. 
• Does lack of routine contribute to drop-off rates? 
• When user choice matters, can your app offer multiple options? One of the possible options is often adding a third decoy option to strengthen the possibility of choosing between options 1 and 2. 
• If you could reduce cognitive load, would it improve engagement?
• How many touchpoints are there toward value-creating action? The more the better.
• Does your app require counterintuitive actions? Is this a new mental model for your user? Here, Behavioral Design can make a huge difference. 
• Analyse the emotional-motivational component. Does the behavior break down after missing a day? Is there a need for motivational factors (health goals, keeping to a budget, etc) In these cases, Behavioral Design has quite a few opportunities for impact.

Final Words

Behavioral Design is a powerful growth tool. It offers tailored engagement strategies to boost a number of metrics for consumer-facing products. Behavioral Design can boost adoption, decrease drop-off rates, and increase engagement frequency. 

There are certain app categories that can benefit from Behavioral Design more than others. They are mostly B2C apps such as in food&beverage, marketplaces, and healthcare & well-being.

FAQ: Behavioral Design: How Startups Can Increase Engagement