Over the last 2 years we have been working with Social Housing providers across the UK to explore how the application of behavioural insights could increase revenue and reduce costs.
In line with our commitment to evidence-based practice, we encourage the use of randomised controlled trials (RCTs) wherever possible. This case study showcases an RCT that resulted in a 9% increase in rent payments, simply by adding on extra sentence to a letter.
One sentence increased rent payments by 9%
This trial focused on adaptations of arrears letters over the first two stages of the escalation pathway. These stages are entirely automated for the organisation in question and include letters, texts and phone calls. This trial applied minor changes to the existing actions based on two well-documented behaviour change principles: Fear Appeals and Social Norms.
- Control Group: Existing arrears communications.
- Norm Intervention As per control, but with additional message: “99.8% of all rent due in your neighbourhood is collected on time.”
- Fear Intervention: As per control, but with additional message: “Last year, 177 people lost their homes because of rent arrears.”
- Tenants in the Fear group were more than twice as likely to make a payment than those in the control group, after all other variables had been factored out. Tenants in the Norm group were nearly twice as likely to make a payment than the control.
- Both the Fear intervention and the Norm intervention brought forward 7% more revenue than the control.
- The Fear condition resulted in 17% less contact than the control, with the Normcondition delivering 13% less, in line with the behavioural objective to reduce the cost associated with contact handling.
- At least one intervention group was more effective than the control on all metrics apart from one (agreements). On 4 out of the 8 metrics, both intervention groups outperformed the control.