The global pandemic has made it clear to organizations of all sizes and industries that people need to shore up their savings. As organizations are rethinking their offerings, helping people save for the next emergency and build their financial health will be paramount.
How can you design your own savings interventions to help your employees, customers, or members? As an industry expert in BlackRock’s Emergency Savings Initiative, we have worked with a variety of institutions to design and implement savings interventions.
Below, we highlight the most important elements of the Common Cents Lab process to help you determine the need and scope of what you’d like to do – without scaring you off with our prohibitively rigorous and technical academic commitments to the field of behavioral science.
Step 1: Be clear about the problem you want to address.
An essential first step to designing an intervention is understanding the problem you want to solve. At Common Cents Lab, we use data to confirm our intuitions and make educated assumptions about the current issues in a given group of savers. To design your own savings intervention, start by asking your stakeholders (e.g., your customers or employees) a few questions with a survey. Sample questions might be:
- Do you generally feel prepared to face the current financial challenges?
- Do you generally feel prepared to face the financial challenge of an unexpected expense, for example, a $400 car repair?
- Would you face that unexpected challenge by: a) putting the expense on a credit card, b) pulling money from a savings account, c) seeking help from friends or family, or d) some other means?
If the answers you see tell you that your group feels underprepared for an unexpected expense – or feels prepared only because of access to credit or family help – it’s reasonable to believe that an emergency savings intervention is worthy of consideration.
Step 2: Focus on an action.
Now focus on a specific action that could make it easier for people to solve the problem your survey identified. For example, if you’re an employer, you might focus on the action of having employees set up split-direct deposits, where a portion of their paychecks goes directly into a savings account. In designing your own emergency savings interventions, here are some examples of the types of actions you might want to create:
- Enrollment: e.g., an employee enrolls in an employer benefit program with a savings option
- Conversion: e.g., a customer deposits the unused balance on a gift card into a savings account
- Commitment: e.g., a community member, in a faith-based or other group, commits to a personal savings goal at the same time as pledging a donation to the institution
Your challenge now is to focus on identifying one doable action that increases an individual’s savings. Prioritize actions that would help the most people increase their savings or, in many cases, actions that would make it easier to convert non-savers into savers.
Step 3: Diagnose your options.
Now that you have decided on the action you want the members of your group to take, you’ll need to take a look at the options you have in front of you. The key here is to leverage the resources you have available to you as part of your organization. Customer loyalty programs, rewards programs, and even recurring charitable contributions offer existing channels you can deploy to make it easier for your group members to save. For example, if you’re an employer, do you currently offer benefits that allow employees to set aside savings automatically from their paychecks? How many employees participate in those benefits, and are the benefits working as intended for those employees? If you don’t currently offer a benefit like that, could you? Here are some other ways to foster savings, depending on your organization type:
- Employers: Use an annual benefits drive as an opportunity to set up a one-click portal for employees to enroll in an emergency savings benefit. If you’re setting a default retirement contribution, sponsor plans that recommend setting a 1% contribution from each paycheck to be directly deposited into a savings account as the default option for new participants.
- Providers: Create a savings pocket within a customer loyalty program, encouraging members to round up their purchases to the nearest dollar and automatically deposit that amount into the savings pocket.
Step 4: Test assumptions and design a pilot.
Hopefully you’ve identified a program or channel for your intervention that can drive your action. But before you set a team of designers or engineers loose to build some shiny new functionality – or sign a check – take a moment to check your assumptions. In our work, we accomplish this in a couple of ways:
- We review lab studies, publications, and other literature to see if others have tried something similar to our idea.Did someone try it and find it ineffective? Or worse, did it have an unintended consequence or backfire in some way? On the flip side, maybe someone tried it and it was a home run.
- We design a pilot or a simplified version of the full plan to see what happens when a smaller number of people participate in the experiment. Was there a step we hadn’t accounted for? A dropoff point we missed? We use both the literature review and simplified testing to improve and refine our idea before we’ve committed all of the necessary resources to bring the full vision to life, saving time and effort.
When designing your own emergency savings interventions, you might consider:
- Conducting a set of interviews with the people who use the program in which you intend to situate your intervention. Ask them how they’re currently using it, as well as what they think works or doesn’t work.
- Reviewing internal data about program usage and habits for hidden obstacles or opportunities to improve your plans.
Step 5: Implement and test your design.
This is it. You’ve confirmed where your employees, customers, or members are struggling with saving. You’ve identified a savings action and something you can leverage to make that action as easy as possible. You’ve diligently challenged your own assumptions. Now the time has come to ask yourself, “How will we know if it really works?” The metrics you decide to use should not just show if something made a difference, but also whether or not that difference is meaningful to your business. Where possible, you will serve yourself greatly by continuing to test the intervention against a control, giving you crucial insight into what is and isn’t working about your design. In our work, we commonly test using randomized controlled trials for a number of reasons, including:
- Resources: Saves time, money, and effort to experiment early and often
- Mission: Assures us that we are helping, not hurting
- Confidence: Confirms that things worked as we expected
- Specificity: Allows us to pinpoint what worked best
- Strategy: Guides decisions about scale rollout or further refinement
Now you can finally assemble the pieces into a full intervention and implement it. Remember: No intervention is so perfect that it can’t be improved. As your hugely successful emergency savings intervention hums along, keep track of where you see participants dropping out of the process or doing things you hadn’t intended. Consider what refinements would make it even easier to save using your intervention. If you would like to learn more about creating a savings intervention in your organization, please contact our team to discuss how you can work with BlackRock’s Emergency Savings Initiative.
BlackRock’s Emergency Savings Initiative
BlackRock announced a $50 million commitment to help millions of people living on low to moderate incomes gain access to and increase usage of proven savings strategies and tools – ultimately helping them establish an important safety net. The size and scale of the savings problem requires the knowledge and expertise of established industry experts that are recognized leaders in savings research and interventions on an individual and corporate level. Led by its Social Impact team, BlackRock is partnering with innovative industry experts Common Cents Lab, Commonwealth, and the Financial Health Network to give the initiative a comprehensive and multilayered approach to address the savings crisis. UPS, Uber, Mastercard, Etsy, Brightside, Arizona State University, and Acorns have joined BlackRock’s Emergency Savings Initiative to help their employees, customers, gig workers, and college students take the essential first step toward long-term financial well-being.