Experiencing Livongo: Reaching More Members Through Behavioral Economics
Livongo Member Enrollment
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Behavioral economics uses ideas from psychology and economics to explain how people make decisions. You can see examples of behavioral economics every day. One real-world example applies to when someone is selling their house. In many instances, a homeowner will receive offers for the house that are close to, but not quite at, their desired selling price. The homeowner usually contemplates the offers but may decide to pass and hold out for their asking price. What the homeowner fails to take into account, however, are the other costs they are incurring, such as the mortgage payment, insurance, and time spent with the realtor trying to sell. If they tallied these costs against the difference in the offer from the asking price, the homeowner may come out even or possibly ahead. So why does the homeowner hold out for their original price? Enter: the endowment effect.
The endowment effect describes how an individual who already owns an item attributes more value to it than does someone who doesn’t own the item. When buying a home, the potential buyer has no connection to the property and is more easily able to make factual decisions regarding its value. But the homeowner attaches much more value to the property and so can’t make the same unbiased decisions.
After understanding the potential impact of the endowment effect, our Livongo growth marketing team wanted to see if we could get prospective members to experience the value of being in the Livongo program — and if we could inspire prospective members to feel that value, whether we could motivate them to enroll.
Testing the Endowment Effect
The team set up an A/B experiment to test two different kinds of direct mail assets. Prospective members would receive one of these two marketing flyers in the mail, and our team would measure the response rate to see which piece performed better.
As you can see here, the first mailer was a traditional tri-fold brochure that contained information about Livongo and our smart meter.
The second mailer contained a cardboard cutout rendition of our Livongo blood glucose monitor. On the back side was a sample Health Nudge™ that an actual member might receive on their Livongo meter. The idea here was to invoke the endowment effect by simulating what it would feel like for a person to own and use an actual Livongo smart meter. By helping them experience the value of the meter and the Livongo program, the individual would be prompted to enroll.
It may sound obvious now, but the cardboard cutout mailer drove better results than did the traditional tri-fold brochure. In fact, the team found that prospective members who received the cardboard cutout saw a 35% higher enrollment rate than prospective members who received the brochure.
By optimizing our enrollment techniques, we make our clients’ offerings more effective overall and increase the number of people who benefit from our programs.
Our growth marketing team now uses the cardboard cutout in all standard enrollment campaigns. In fact, it’s one of the strongest-performing assets in any campaign. We’ve also taken the idea of “owning” something and implemented it in another campaign that also yielded higher performance. Clients who elect to participate in A/B tests will always have the strongest-performing assets used in their enrollment campaigns.
Livongo’s growth marketing team is always dreaming up and testing new and exciting campaigns. We’ll be sure to report back with interesting results as they occur.
To make sure you’re getting the most out of your Livongo offerings, reach out to your client success manager.
 Ariely, Dan. Predictably Irrational. 2008.