How to assess the risk that people might misunderstand numbers in your communications
In the communications we all receive, numbers are everywhere – interest rates, fees, projections and more. Organisations often throw these numbers and financial concepts at customers and hope they’ll understand. But what if they don’t?
Getting the wrong end of the stick when it comes to numbers can lead to poor financial choices, harm for customers, and potentially hurt an organsiation’s reputation.
By thinking about how numbers are communicated, organisations can prevent misunderstandings, help people achieve their financial goals and build trust
Why misunderstanding the numbers matters
Consider a customer chooses a mortgage deal because they see a ‘low’ interest rate advertised – but they don’t understand the implications of it being “variable” and interest rates subsequently skyrocket. Or perhaps they don’t fully grasp the fees that come with a credit card deal.
These misunderstandings can have serious financial consequences for customers. For businesses, it can mean complaints, loss of trust and potential regulatory trouble.
When deciding if your communication could present a risk of misunderstanding numbers, it’s about more than just whether the communication is complicated or contains lots of numbers. It’s more about how important those numbers are to a customer’s outcome.
Asking the right questions can help gauge where the risk lies and focus your mind on clearer, more customer-centric communications.
How to spot a communication where confusing numbers are most risky
Start with these simple questions:
Do customers need to understand these numbers to make a choice?
If a customer’s decision hinges on understanding the numbers, you need to double-check for clarity. The risk is usually higher for decision documents than comms that just need to inform.
Does the best outcome rely on using the numbers?
Is it possible to get a good result for the customer without looking at the numbers? If not, the risk that comes from not understanding them is higher.
Could financial harm result?
Misunderstood numbers around debt, payments, or fees can hit customers where it hurts - their wallets. If there’s potential for harm, clarity is non-negotiable.
By centering an assessment of your communications around these questions, communicators can evaluate the risks and take steps to minimise confusion.
Situations where misinterpreting numbers poses risk
Many situations meet the criteria for a risk of misunderstanding. Some common communications include:
Choosing the right product:
Many financial products - such as loans, credit cards, and savings accounts - are chosen by customers based primarily on the numbers, like interest rates, fees, and limits.
When these numbers drive the decision, it’s essential that they are communicated simply and unambiguously. For example:
Interest rates: Explain the real difference it makes to the customer – for example, higher interest rates make borrowing more expensive.
Fees: Don’t bury costs; lay them out where customers can see them with the right prominence relative to their importance
Rates: use real pounds and pence figures to make the costs clear.
Communicating changes:
When numbers change – like an interest rate hike or a new product term – customers need to understand what’s happening and what it means for them.
When communicating such changes:
Interest rate changes: How will this affect their payments or savings?
Expiring terms: Make sure they know their options before a loan or mortgage term ends and the real impact of taking those options
Insurance renewals: Draw attention to what’s changed rather than the general information – especially making the price change stand out.
Helping with financial decisions:
Big decisions that alter someone’s financial situation, like paying off debt or consolidating loans, will always rely on understanding the numbers. Clear communication can make all the difference.
Customer-initiated decisions that alter their broader financial situation, such as consolidating debt or making overpayments, often hinge on numerical clarity. For example:
Debt management: Be clear about which kind of circumstances different options are suited for and what the downsides are.
Mortgage Overpayments: Explain the benefits and potential penalties clearly in equal prominence
Retirement options – stick closely to the factors that guide the decision and avoid overloading the customer with too much information
Conclusion
Ensuring customer understanding is as high as possible is essential to effective and responsible communication.
By prioritising clarity and focusing on customer outcomes, communicators can help customers make informed decisions, reduce the likelihood of financial harm, and strengthen trust.
However, practically speaking, no firm can improve all of its communications at once. With thousands to work on it’s important that firms prioritise effectively. When it comes to implementing best practice from the Plain Numbers method, thinking about whether numbers drive a decision, how reliant the outcome is on understanding the numbers and the potential for harm are important factors to making the choices for your firm.
In practice, clear communication serves both the customer’s interests and the organisation’s reputation, making it a foundational component of risk management in customer service.