Companies are investing time, people, and money into trying to determine just how customers make decisions. The end-goal for many is to cull that data, come up with actionable insight, and implement it in order to drive higher revenues and maintain a quality customer experience.

Businesses aside, trying to dig inside human behavior can take on entirely new meanings — one example is the recent economic crisis from which we are still recovering. One of the foremost thinkers and researchers on the topic, professor Richard Thaler, spoke to attendees at SPSS Directions 2009 North American Conference today about how recent research in human behavior — behavioral economics — can be utilized to improve human decisions in this realm.

(Editors’ Note: Check our Web site later for more news from a morning panel discussion among company executives updating attendees on the progress regarding IBM’s acquisition of SPSS in July.)

Drawing heavily from the conclusions drawn in the book he coauthored with Cass Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness, Thaler explained there were two goals for the book:

• apply techniques from the psychology of decision making and behavioral economics to improve decisions without limiting choices; and
• create a framework for thinking about public policy while bridging “the enormous gap in the U.S. between the left and right [sides of the political spectrum].”

After many lost a significant amount of their retirement savings and other assets following the near-collapse of the global economy in 2008, Thaler said that individuals should take a serious look at how they have been making decisions, and how they viewed the economic system in place. “People should have lost some faith in notion of efficient markets after living through last year,” he said.

Thaler believes one approach to solving this problem is libertarian paternalism — the act of devising policies to maintain people’s freedom of choice while helping people make better, smarter choices as judged by themselves. Essentially, a nudge to give individuals the data and other information necessary to make the best choice without feeling as though their hand was forced.

This evolution isn’t unlike the same one going on right now, arguably, in CRM. Speaking specifically about customer service and contact centers, there was a time in which many companies would push consumers to only utilize specific communication channels — Web self-service, interactive voice response, or email — even if that was not the customer’s preferred mode. Remember GetHuman.com?

Now that consumers hold more power over companies looking to retain valuable customers at any cost, the emphasis is shifting toward a more holistic multichannel strategy. Allow customers to contact you on their own terms, not the other way around. The delicate balance businesses must strike, though, is ensuring that all of the channels are integrated so customers do not get lost in one channel and then feel constrained anyway.

What are you doing to give customers the power of choice back, yet in a fashion that will also benefit your organization?