INSIGHTS+ ¦ Social Norms Theory – in Collections [Behavioural Series]

Implementing Social Norms Theory within a collections function can significantly enhance the effectiveness of debt recovery strategies for creditors.
Social Norms Theory, is grounded in the idea that individuals' behaviours are influenced by their perceptions of how others in their social group behave and can be strategically employed to improve debt collection outcomes.
This article explores the key elements needed to implement Social Norms Theory in collections, why it is important, key considerations, potential benefits, and examples of its successful application.
Why Social Norms Theory
Social Norms Theory posits that people's actions are heavily influenced by their perceptions of societal norms. In the context of collections, leveraging this theory can help in motivating debtors to conform to positive financial behaviours. By highlighting that the majority of individuals in similar situations are successfully managing their debts, creditors can nudge debtors towards similar acti...