Improving Customer Understanding Through Research.

Using research to inform how you write your communications is an important opportunity to assess the communications effectiveness. This is particularly helpful in understanding whether changes you’ve made have indeed improved customer understanding.   

Within the FCA’s Consumer Duty, the consumer understanding outcome is crucial. Not just as a standalone outcome but also as one that underpins the other three Outcomes - Products and Services, Price and Value, Consumer Support.  

Defining what a ‘good’ Outcome looks like is a firm’s responsibility and bespoke to the specific communication, business and customer.  There is no threshold level for understanding that regulators expect to see, different products, communications and concepts will by nature have different levels of understanding. Instead, it's about continuous improvement as part of a long-term journey. You must be able to substantiate your efforts to improve customer understanding levels, which is why exploring the different types of research methods is so important.  

Qualitative Research:  

Qualitative research provides invaluable insights into the nuanced and complex nature of customer behaviour and perceptions. It delves into the ‘why’ behind statistical trends, offering insights into actions and attitudes. This method is particularly adept at reaching out to hard-to-reach or vulnerable customers. 

Quantitative Research: 

Quantitative research focuses on trends and experiences at a population level with sample sizes ranging from hundreds to thousands, depending on the methodology. It can be used to show what proportion of customers understand your communications when designed with comprehension questions. Results can then be expressed using analytical or ‘mathsy’ language, for example “50% of customers understood which option was cheaper”. 

Randomised Controlled Trials (RCTs): 

RCTs are the most robust of the quantitative testing methods. Independently conducted RCTs showed that the Plain Numbers Approach doubled the number of people who understood communications from five sector leading organisation. 

RCTs can deliver robust evidence that changes you have made to a communication have or haven’t improved understanding in a way qualitative methods cannot. The randomised allocation of participants is vital, ensuring an unbiased outcome.  

The selection of appropriate outcomes measures is crucial in RCTs. If your outcome measure is customer understanding, it should involve comprehension questions that participants can answer based on the information they need to know from the communications being tested. It is important to design these questions with simplicity and clarity, aligning them with the objectives of the communication.  

It's important to distinguish between testing for understanding and testing for other factors. For instance, if a company claims that because many people found something clear or liked its layout/tone, this indicates improved customer understanding, they would be incorrect. These indicators don't reflect understanding itself. 

Mixed Methodologies: 

While RCTs represent best practice for comprehension testing, they may not always be practical or feasible, especially when dealing with vulnerable or hard-to-reach demographics. Striking a balance between rigorous methodologies and practical considerations is paramount. Qualitative studies can serve as valuable supplements, offering insights into comprehension levels among specific audience segments. 

Employing a mixed-methods approach enables businesses to gather comprehensive evidence, driving positive outcomes for both business objectives and customer satisfaction. From focus groups and in-depth interviews to ethnographic observations and deliberative research, each method offers unique perspectives that collectively contribute to a holistic understanding of customer comprehension.

By committing to continuous improvement and leveraging diverse research methodologies, businesses can be more confident that their work on continuously improving customer understanding is effective.