Behavioural Profiling: going beyond traditional approaches

Edgar Allan Poe once said that everything we see and seem is but a dream within a dream. The American writer was not so far from scientific reality, because it is now proven that the reality we perceive is different from the “real” one: the perception of our actions, of our state of mind and of the quality of our life is basically a construct of our mind.

In this regard, behavioural science has helped us to understand that individuals are not truly rational beings, on the contrary, they tend to follow simple, intuitive rules, which are often the result of moral and cultural barriers.

In profiling clients, it is therefore essential to determine not only their objective features, but also those related to their behavioural singularities. How? Through something that is called Behavioural Profiling. This type of knowledge helps creating an enormous competitive advantage both in pre-sales and post-sales phases, during the study of products, in the design of marketing campaigns and, more generally, in the company-consultant-customer relationship model. Let’s see how.

 

What is Behavioural Profiling?

Behavioural Profiling is made of data, algorithms and software that are grounded on solid academic theories. Basically, it represents the key tool which allows us to discover, on a solid empirical and scientific base, those emotional, psychological, cultural and social mechanisms that underlie human behaviour.

Thanks to this type of profiling, companies can consider those factors of psychological nature and use them to their advantage both in the acquisition of new customers (both online and offline) and later, in the up/cross-selling phase.

They seem vaguely abstract concepts but, for example, when an insurance agent or a financial advisor and a client meet, their relationship is always regulated and motivated by emotions, whose weight varies from individual to individual.

Very interesting, yes. But in practice? What can the financial industry do with the “Behavioural factor”? How do you improve the quality of investment or insurance services thanks to these ideas? How can distributors be better supported?

 

Behavioural Profiling in finance: the science of knowing your customers

We know that the regulations recently put in place are increasingly strict and are centred around a single, great paradigm: “Know Your Customer, Know Your Products”, a dogma that obliges the world of wealth management to identify the needs and objectives of customers on time, forbidding the placement of products outside the “target market”.

In practice, all of this risks are interfering with the sales process, increasing the cost of acquiring new customers due to the industry’s lack of ability to focus on the real needs of people.

Behavioural Profiling, when it comes to the financial industry, can indeed provide that degree of transparency and personalisation required by European legislation and, above all, by today’s customers.

 

Behavioural Profiling: how to build it

Behavioural profiling can be constructed with different tools:

  • questionnaires and surveys (the MiFID questionnaire is an excellent starting point if conceived in the right way);
  • gaming situations (quizzes, tests, etc.);
  • analysis of navigation data and chatbot conversations;
  • biometric surveys.

As you can easily guess, not all methods are feasible in the current “day-by-day” of a financial intermediary. A precise and organized process is needed, starting from individual data and then integrating them with other useful information in order to have a full picture about each customer or prospect one.

It is right here that a company differs from the others in terms of effectiveness in profiling: combining individual data with those of a larger sample population implies the use of “data enrichment” methods that lead to enriching a certain database with information external to it.

 

All-round profiling to reinforce trust in customers

Are you still thinking that knowing the emotional aspects of customers doesn’t help you much in terms of sales and profit? Well, you are wrong, because apart from being the focus of the current European financial regulation, personalisation will also be the divide between those who are going to survive the current customer-centric transformation and those who will not.

Identifying these fundamental psychological attributes is therefore of great importance, as these information feed all downstream business processes, in various touch points, offering precise indications for customizing every business action.

And this is exactly what we are doing here at Virtual B. Working together with the Behave Lab of the University of Milan, we have learned to numerically identify behavioural aspects through Behavioural Profiling – and the use of Artificial Intelligence – putting information at the service of companies and their relationship managers. We offer an integrated process that goes from segmentation of customers to customization of sales in order to provide a costumer experience that is truly tailored to the real needs of people.

Request our White Paper about Behavioural Profiling at the link below and find out more about our solution and how it can add value to your business.

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