According to research specialist HKLM Confluence director Michele Sohn, the South African financial services sector needs to appreciate how low the levels of understanding of financial concepts are when communicating to consumers.
The project was aimed at understanding the user-friendliness of legal documents, and the impact that these documents had on perceptions of the organisation. One of the key findings of the study was that financial service companies grossly over estimate the levels of financial literacy of the bulk of South African consumers.
“A big ‘tune out factor' was that communications just go over these consumers head. They lack the basic building blocks to financial literacy, yet the documents being used by financial service providers are filled with financial jargon and assume prior knowledge that just does not exist.
“It was therefore clear that there was a definite need for a far greater degree of ‘transactional equity', where consumers are clearly aware of what they are buying, and who they are buying from. The only way to level the playing fields is to make sure that all documents clearly communicate the intended meaning. Companies that do not do this run the risk of being picked out by regulatory bodies for misrepresentation. The only way to ensure that these documents are understood is to test them.” relates Sohn.
A take out was that financial service providers need to focus the same efforts and energy on their functional communications as they do on their advertising material, and build trust through consistency.
Functional communications include documents such application forms, statements, invoices and contracts. All of these send messages to consumers - and when these contradict the promises of advertising - trust is broken and the potential for damage to the brand is real.
On the up side, companies that get it right will have a real competitive advantage. The study showed that perceptions of the organisation vastly improved when consumers could understand the documents clearly.
A core problem is that these documents have traditionally been the domain of departments where things like tone of voice and brand continuity are alien concepts. Statements are often filled with jargon so complex that all they do it turn consumers off.
Another result highlighted the vast differences in financial literacy levels across the South African population - which stretch from functionally financially illiterate to sophisticated and aware consumers. Developing material that only speaks to the lowest common denominator runs the risk of alienating the educated and informed. A way to talk to all audiences in an appropriate pitch is through the creation of accurate customer databases which segment customers into categories of financial literacy, based on a number of predetermining factors.
Until the levels of financial literacy for the whole population improve, this is probably the only viable solution. Sohn cautions, however, the costs of this exercise are huge - as material is duplicated.
The trick is to focus on duplicating a few key documents, and bring the bulk of the material to a basic level. For example a report on performance of an investment would probably have to talk to two audiences in different tones, and with different content - but a policy document should be simplified to ensure understanding by the lowest common denominator.
“To ensure that consumers feel empowered in the process, the model would feature an opt-in or self-select approach, where users can choose which tone of voice material best matches their needs. Think about it like standard or higher grade and pitch literacy levels based on their current level of understanding,” she explains.
In this manner, consumers can also ensure that they receive communication which is tailored to their current situation, making it relevant to their needs. Comprehension increases when the relevance of the communication is clear. And with increased comprehension comes increased confidence - and a higher propensity to purchase.
