Effective usability testing and the future of UX

In an age of rapidly evolving technology and short attention spans website usability testing has taken on increased importance. Our websites have grown from humble landing pages to complex and responsive digital shop windows and we have seen a number of new and exciting usability techniques emerge in response to this.
At IFF we believe in being human first and that is why we believe people should remain at the centre of website user testing.

Techniques:

There are a wide range of techniques and methodologies at our disposal when it comes to understanding how people will engage with and navigate websites, with the ultimate goal of improving customer experience.

Eye tracking technology has grown in popularity over recent years but we feel it has its limitations. This form of testing certainly doesn’t come cheap and there is good chance it won’t always deliver design teams the actionable insight they require – i.e. how does the customer or user really feel about the website they are using. Indeed, one of the criticisms levelled at this method of testing are that the data can be hard interpret and does not give a true reflection of the issues or opinions felt by users.

In our experience the most accurate and insightful method of gathering user feedback is through one to one moderated research sessions. Depending on the aims and objectives of our clients we frequently recommend moderated research sessions:

In a lab or viewing facility – allowing wider stakeholder and design teams to watch user reactions to the website /scenarios being tested in real time. We often accompany this with interactive analysis sessions with our clients.

“Accompanied surfs” whereby we arrange a time and date to visit a research participant in their home/office and ask them to explore the website as they would if they were genuinely using it – talking through what they are doing and why. We carefully note their reactions to the design as they are going through the process. This recreates a ‘real’ a scenario as possible for participants (a drawback of a lab environment is that it can fell less human to the respondent).

Remote user testing – similar to the approaches described above but conducted through Skype – a cost effective way to reach a large number of participants over a relatively tight timescale. One consideration to bear in mind is that people less comfortable with using the internet may be less inclined to take part in remote testing (because we ask them to log in/use software from their own computer).

We are also often asked about the role focus groups can play in website design and testing. These are particularly effective at the ‘ideation’ stage of website design, where respondents can develop ideas for layouts and information hierarchies. However, wherever our clients are looking to test live websites we will usually recommend that one to one sessions are undertaken.

While there is no right or wrong methodology when it comes to website usability testing our clients tell us that they prefer the personal / one to one approach and we feel that this delivers the best insight – which in turn helps improve user experience.

We are sure to see more website usability testing techniques emerge in the future but in our view there is no substitute for the human element.

How policy change is impacting retirement saving

Much of the discussion at the Westminster Business Forums ‘Savings and Investments in the UK’ event was focused on the intersection of long-term saving with retirement planning, with a particular emphasis on the lack of either among the UK’s general population. At IFF Research we have been taking a particular interest in the evolving pension landscape, and recently undertook a syndicated piece of qualitative research exploring the current opinions of those able to access their pension savings (aged 55+), that also have at least £50k of DC savings accumulated. Whilst only able to provide the full report to subscribing clients, we are able to share some key insights around attitudes to retirement saving among this group.

Defaulters v.s. Diversifiers

Methods for retirement saving tend to fall into two camps. The first, ‘Defaulters’, tend to save into whatever pension in offered by their employer, usually sacrificing however much of their salary as their employer is happy to match. Disengagement is the prevalent attitude, even for those in the lead-up to retirement, and few have any real concept of how their pension is invested or how much capital they will have access to at retirement.

The other group are the ‘Diversifiers’, who tend to have some form of employer pension, personal pensions / SIPPs, as well as regular savings and investments. However, these savers tend to have built up a range of different savings due to not having regular access to an employer-provided pension, rather than any inherent desire to engage with retirement saving. It is engagement due to not having an easy default option available.

Neither group feels that, even at this late stage, they are making any substantial sacrifices to save for their retirement. Worryingly, this lack of urgency to save is being driven by an underlying cynicism about the options they have available to utilise their savings. When asked to consider each of the financial products they could potentially use, to weigh up the pros and cons of each as a way to secure a retirement income, there was no standout product which was felt to offer excellent value for the consumer. Why bother being serious about saving when your options are effectively trying to make the ‘least worst’ choice, and you cannot identify an effective way to use your hard-earned cash?

In tandem with the lack of standout products available, constant policy changes and the subsequent media noise is driving further disengagement for pension saving. There is a strong feeling that savers cannot plan their retirement as the options available can change at a moment’s notice through Government policy, when everything to do with pensions and retirement saving is already far too complex for the layman.

Unless the financial sector can work with Government to address these barriers, we are not going to see large numbers of engaged, self-directed retirement savers any time soon.

Meet the author – Chris O’Brien

Chris is an Associate Director in IFF Research’s Financial Services and Regulation team. In early 2016 he developed and launched IFF’s new Retirement Choices research – syndicated qualitative work designed to explore the views and strategies of people aged over 55 with DC pension savings a the new regulatory environment. His decade’s worth of research experience has covered all retail finance sectors, and he previously directed Ipsos MORI’s suite of syndicated surveys amongst the UK’s Personal Finance and City media.

The Lifetime ISA impacts

The Governments latest budget has been the subject of much scrutiny over the last week. Some of the changes introduced include the reduction of Corporation tax to 17%, capital gains tax from 28% to 20% and the introduction of the Jamie Oliver tax, otherwise known as the sugar levy on soft drinks.

Last July we considered the impact of the Budget on the research industry and this time around our Financial Services team look at one of the major considerations for the finance sector, the new Lifetime ISA.

The impact of the Lifetime ISA

Pensions remained untouched once again in this Budget but we have seen the introduction of the Lifetime ISA as the Government looks to promote long term saving. From April 2017 those under 40 will have the opportunity to open a Lifetime ISA which aims to help those looking to save towards a home and/or retirement. This new incentive will allow those who save £4,000 each year to receive a 25% contribution from the government. There are restrictions on this however, such as a 5% penalty on withdrawals and the inability to allow employers to make direct contributions but it is a generous return none the less.

The lifetime ISA is an interesting proposition, and should hopefully encourage retirement saving amongst the self-employed – the group that have been left unaccounted for by the pension auto enrolment policy. However, despite the attractiveness of the Government contribution, it lacks one of the key characteristics of auto enrolment – that of harnessing the ‘power’ of consumer inertia and acceptance of defaults. Consumers will still be required to actively participate in saving for their retirement, something which has been a considerable issue in the past. It remains to be seen whether the carrot of a 25% Govenrment match will be enough to encourage younger consumers to sacrifice what they are able to now, for a distant future payoff.

The future of pensions remains to be seen but the introduction of the Lifetime ISA certainly paves the way for the possibility of a pension ISA in the future and opens up some interesting questions about the impact on auto enrolment and the decision making process for those under 40.

EU referendum

With the EU referendum only a few months away the latest findings from our Business Omnibus reveal exclusive insight into the stance of businesses in relation to the EU referendum. Read here

For more information on our financial research options contact our Financial Services team below:

Email: financialservices@iffresearch.com

Phone: 020 7250 3035

Offering Private Medical Insurance as a benefit

IFF’s exclusive research sheds light on the opportunities for providers.

For a long time now Private Medical Insurers have been wondering what they have to do to appeal to the business market. A major obstacle for providers has been communication and knowing what can be done to convince business owners of the benefits to taking up private medical insurance schemes for their employees.

Of the 500 businesses we spoke to as part of our latest Business Omnibus 88% of do not provide PMI for their employees, a statistic that is somewhat surprising if you consider the increasing pressures being put on NHS resources. With waiting list’s getting longer most employees would surely welcome the introduction of this type of benefit but there seems to be a stigma around the value of these schemes from an employer perspective and doubts around the level of uptake that would be seen from employees if PMI was to be offered.

What do businesses want from PMI providers?

Our findings have shed some light on the reason for this viewpoint as well as looking at what might convince employers to start offering PMI as a benefit in the future. Of those businesses not offering PMI 1 in 5 said they would consider doing so if the provider specialised in working with companies of their size. Small and micro sized businesses (those with 1-9 and 10-49 employees respectively) made up the majority of those calling for this change suggesting a tailored approach to SME’s could see them increase their uptake.

The research carried out also shows that better communication, greater transparency and top quality customer service would convince those not offering PMI to employees to do so. Customer service was most important to large businesses (those with over 250 employees) with 20% of those not offering PMI consider top quality customer service a factor that would convince them to offer this benefit.

A clearer explanation of the benefits to offering medical insurance was identified as a key factor suggesting more needs to done to communicate directly with businesses and educate them around how PMI works and its importance.

If you are a Private Medical Insurer looking to appeal to the business market carrying out bespoke research will give you an understanding of what matters most to this market. To contact a member of our Health and Wellbeing team use the details below:

Call: 020 7250 3035

Email: info@iffresearch.com

The dangers of caution in retirement planning

A ubiquitous finding for anyone conducting research on UK pensions or retirement planning is that people find the subject complicated, or boring, or both. To compound this, the inherent complexity of funding retirement with a limited supply of money has only increased since the liberalisation of the UK’s pension regulations, with retirees now facing a far wider number of choices on how to utilise their savings.

We are still very much at the start of the UK pensions experiment, and there is still little consensus on how the tripartite regulatory change of auto enrolment, DC pot liberalisation and State Pension simplification will play out in the longer term. However, recently released information shows that there has indeed been a change in behaviour amongst those who are able to access their pension saving (i.e. those aged 55+). These include:

  • Consumers are taking advantage of pension pot accessibility: Since the changes came into effect in April, the ABI believes that £4.7bn of DC retirement savings has been accessed either for a cash lump sum payment or income drawdown product – with a relatively even split between the two options (£2.5bn cash vs £2.2bn drawdown).
  • Smaller DC pots are being taken as cash, whilst larger pots tend to be used to secure an income: Of those looking to secure an income 40% has been used to purchase an annuity, whilst 60% for a flexible income drawdown product.

So, while it is not the predicted ‘death of the annuity’, a substantial number of more affluent consumers are using draw-down products, opting for the greater freedom these afford over the security offered by an annuity.

Before liberalisation of the pensions rules came into effect, one key concern was that upcoming retirees were going to blow all their cash on ill-advised purchases, and would use the money they’d spent a life-time saving on treats, rather than for long-term financial security. However, this appears not to be happening, and those retirees that have larger pension pots are being quite cautious with how they are using their pension savings. In fact, they are being so cautious that now more commentators are becoming concerned about a different (albeit less dramatic) issue; that retirees are not using their money effectively, and that their quality of life may suffer due to their caution or lack of confidence.

Behavioural economics would suggest that this may be due to bias which causes us to give greater credence to fear of losses (i.e. running out of money in retirement and living in poverty) than to achieve positive gains (i.e. investing money to grow capital or receive a higher income). The recent changes, and subsequent noise in the media, may well have contributed to a degree of anxiety about the best financial choices to make. While there has been plenty of interesting behavioural research about how to encourage consumers to save for retirement, and also help them access advice at the point of retirement, there is still little understanding in the new environment of how behaviour and outlook evolves from the point of being able to access pension savings through to transitioning into retirement, and finally making ongoing financial decisions as a retired person.

The point here is that many retirees are not sophisticated financial planners, and many of them recognise this. This lack of confidence may be causing them to make more cautious decisions about the amount of pension saving accessed and how they go about their financial planning for retirement. There are plenty of tools available for consumers to use, but companies and Government need to be making the case that overly-cautious financial behaviour can have nearly as detrimental an impact on your retirement finances as over-spending. At the moment it is a very inexact science, with few heuristics or rules of thumb to aid consumers to make non-advised decisions, but consumers must be encouraged to use their cash in a way which provides an appropriate balance of risk and reward, rather than causing concern and anxiety. The key purpose of the pension liberalisation is to provide consumers with the freedom to make their own decisions. It would be a shame if the outcome for consumers is to eke out their retirement while they have the finances to live more comfortably.

In response to this lack of new insight about the current retirement journey IFF Research is launching a new programme of syndicated qualitative research exploring the decision making process amongst affluent consumers aged 55+. This programme will identify new ways for clients to have conversations with potential customers, develop a greater understanding of retirement decision-making in the new regulatory environment, and provide clear recommendations on the kind of products and services these valuable customers now need.

How are pension reforms changing retirement?

Pension reforms mean new opportunities for those in Financial Services, but what choices are available to the retirement market and how will the spending habits change?

We are still very much in the early analysis phase when it comes to drawing conclusions about the impact of pension reforms on the spending habits of those in retirement. Changes allowing those over the age of 55 greater access to pension pots came into effect in April 2015 and many, from Financial Service providers to consumer watch-dogs and regulators, have been watching on intently ever since.

How will this money be spent?

The new retirement journey has been a topic of much discussion and according to the ABI over £4bn has been withdrawn from DC pension pots since April 2015. The question on everyone’s lips now is how is this money be spent and how are consumers making their decisions?

The options now faced by those aged 55+ include:
• Ensuring a fixed income over time through the purchase of an annuity.
• Leaving pensions to grow until a later date.
• Drawing-down income from their pensions pot A combination of different elements from the above.

Early indications

We have already seen a move away from annuities with just 12,000 sold over the period April – June 2015 compared to 90,000 in the same period last year. It is probably too early to predict whether a shift away from this kind of income product will continue or if it is simply a knee jerk reaction from pension holders that will balance out over time but it certainly suggests an opportunity for those offering savings, investment, comparison and advisory services to stake their claim during a period of change.

Learning more about this market

In response to these changes IFF Research are offering a syndicated program of qualitative research to help Financial Service providers gain an insight into the thought process of consumers approaching retirement. For more information including methodologies and costs see our dedicated webpage here.

To discuss the product with project lead Chris O’Brien call 020 7250 3035 or email chris.obrien@iffresearch.com

How banks can help Britain’s small businesses?

First, how about some good news? The latest results of the IFF business omnibus shows that a substantial proportion of businesses think that banks in general are trustworthy (46%), and that they trust their bank in particular (65%). However, before anyone starts congratulating themselves we should draw attention to the fact this overall data masks the fact that banks are letting down one group in particular; the UK’s entrepreneurs, start-ups and small businesses.

For companies with over 10 employees, perceptions of business banking services are fairly positive. Over half of these companies feel that their bank understands their business, treats them fairly and offers good service.  Now, I’m not claiming that there is no room for this to improve – there are still a substantial minority that do not feel this way – but it paints a broadly positive picture of the way banks are working with businesses in an improving economic environment.

Small business shouldn’t mean small service

The story changes when we look at companies with under 10 employees however. These businesses exhibit lower scores for all three measures – but in particular show lower scores for their bank ‘understanding my business’. It seems that banks are spending less time getting to know and understand businesses that are smaller, with lower turnovers, and while smaller enterprises represent the majority of businesses, banks may have decided it will be more profitable to focus on bigger businesses. This issue is compounded when we look at what they said would increase their trust in their bank. The top responses are not really actionable – ‘Improve image’ (more of an outcome than an action point) and ‘Offer better interest rates’ (difficult with the current 0.5% base rate). The next two suggestions are more interesting – ‘More understanding / flexibility when things are bad for business’ and ‘Customer service’.

What constitutes good service for businesses?

Good service is comprised of many elements in business banking

  • The branch experience
  • Remote / online services
  • The banking relationship managers (RMs) tasked with looking after individual business customers.

Recent research has shown how remote / online services are generally now just expected to work well, and the branch experience is expected to be efficient and professional, but what often cements a longer-term relationship is the interaction between businesses and their RM. I think this is where small businesses are getting (and feeling) the raw end of the deal. RMs working with smaller clients have more of them to look after than those working with medium-sized businesses. They therefore have less time to get to know and understand the intricacies and challenges these smaller clients are facing, and may be less prepared to spend time building rapport with these smaller clients, and being prepared to support them when times are tough.

This feels like a missed opportunity, and one which could be taken up by any banks looking to expand or enter into the business banking market. Experience shows that, for the time being, businesses do not tend to switch account providers due to inertia. So any bank that puts serious consideration into the needs of smaller businesses and start-ups may well be cementing profitable relationships that will last well into the future. From my perspective there are three initial areas banks looking to increase and keep share amongst small businesses could focus on:

  1. Create a reputation for understanding, supporting and growing smaller businesses. This is especially necessary when they are going through a tough time.
  2. Give RMs the time to get to know the clients they look after – the time investment is necessary to create loyal and profitable business relationships.
  3. Make sure remote services are easy to use and tailored to the needs of smaller companies.

At the moment Britain’s smallest companies are not feeling valued by their banks. There is an opportunity for someone to put themselves at the forefront of the market and be seen as a trusted guide and business partner for Britain’s entrepreneurs.

For information on how to join IFF’s next Business Omnibus collecting the vews and experiences of UK businesses click here

Support, don’t sell: Banks must add value if they wish to rebuild trust

Positive steps are being taken but do banks have their customers best interests at heart?

Throughout the financial crisis and the subsequent global slowdown, consumers and the media have pilloried the nation’s banks for being grasping, irresponsible and too driven by short-term profit. Whilst there has been a trend that customers trust their own retail bank more than ‘banks in general’ the view remains that banks are more likely to act in their own interests than in the interests of their customers. It is recognised that if the banking sector has any ambition to change this perception, it will need to start making some serious changes.

However, there are some positive steps being taken. This year the Banking Standards Board is conducting a review of seven banks to test whether the internal employee culture actually lives up to that purported by the management team. In addition there are moves within the industry to create simple products that have no hidden charges or features, and are therefore trustworthy, and kite-marks issued to products which are proved to encourage beneficial financial behaviour. Despite these initiatives, we cannot escape the simple fact that some customers still expect banks to be more likely to try and sell (or miss-sell) them products for profit, rather than provide them with effective and tailored solutions for their financial needs.

This is something which is going to have to change from the inside-out, and to my mind some banks are starting to take this point on board. Recent research by the Money Advice Service has highlighted the importance, for good or ill, of particular life events on personal finances. They’ve termed these ‘Milestones’ or ‘Millstones’ depending on whether they have a positive or negative impact, although recognise that having children or  buying a home has the potential to go either way. Now, obviously many people getting in touch with their bank may just want to open a current account or achieve some kind of simple administrative service, but there will also be those in the midst of a major life event. It’s not pleasant to consider the impact of a serious illness, divorce, redundancy or bereavement, but these things do happen, and when they do they can have a dramatic impact on emotional and financial well-being. Reassuringly, some banks are starting to recognise the importance of these events, and set webpages up to provide guidance for customers aligned to these themes.

Now, the cynic in me (and I’d imagine others) may just see this as banks trying to find new ways to sell products to customers, so they are going to have to be careful to demonstrate a genuine desire to help rather than turn a profit. As such, it will be essential bank staff do the following:

  • Ensure they fully understand the customer’s individual situation and needs – do not just assume that you should be trying to sell a product or service just because the customer is in contact.
  • Ensure any product or services offered are appropriate and aim to have the greatest positive impact on the customer’s situation, even if it means less profit for the bank.
  • Be sensitive to the customer’s emotional situation and act as a trustworthy, supportive guide.

Insurance companies are used to dealing with customers at times of crisis, and have long understood that it is these times of stress which can make or break a customer relationship. If banks recognise this, and provide the service that customers require, then perhaps they can deepen relationships with enough customers to begin rebuilding their reputations from the ground up.

IFF Report: Annual Tax on Enveloped Dwellings

Another one of IFF’s high profile studies for HMRC has been published analysing the impact of the Annual Tax on Enveloped Dwellings (ATED).

The ATED was introduced as part of the Finance Act 2013 ensuring that people enveloping residential property in corporate envelopes (and not using them for a commercial purpose, such as renting) pay their ‘fair share’ of tax.

This report involved 40 in depth interviews with findings suggesting that ATED was successful in discouraging the initial enveloping of properties. In situations where envelopes already existed few took the option of de-enveloping as the ATED rate does not warrant losing benefits such as Inheritance Tax and privacy protection.

To view the full report Click Here

Improving Financial Literacy

Can people be prevented from sleep-walking through important financial decisions?

At IFF we are often called upon to test financial literature to make it as engaging as possible to consumers. For a supposedly ‘dry’ topic it often elicits strongly emotional reactions from customers – sometimes the research discussion is the first time in years that the customer has really engaged with thinking about the financial products they hold and whether they are really appropriate to their needs.

It’s not unusual to see customers upset after having to really think about the decisions they’ve made and what it means for their future. Sometimes these decisions are not as rationally made as they would ideally be, with customers having ‘sleepwalked’ into some dicey financial circumstances simply through not having engaged properly with the products on offer and how these tally with their requirements.

How do customers end up in this position and to what extent is the quality of the financial literature at the root of this?

IFF’s Financial Services team certainly do see examples of financial literature that could be more user friendly. Sometimes it’s clear that, in making sure all the legal requirements have been met in describing what the product will and won’t do, the consumer has been left with a gnarly forest of technical jargon to fight their way through and it’s no wonder that only the most meticulous will bother to do so.

How can this problem be solved?

When we take these types of documents out for testing with consumers, we make recommendations about how to express the key information in an accessible way, and place it firmly in the foreground (while the more detailed information sits in the background, for those who really want to know!).

This isn’t always enough to overcome barriers to consumer engagement. One can’t help feeling that some consumers simply lack the tools to digest this sort of information and make informed decisions about it. To address that, there’s a need to equip consumers with the skills from a much earlier age.

Financial literacy is now a statutory part of the National Curriculum for the first time, as part of citizenship education for 11-16 year olds, and as an element of the Maths curriculum. Let’s hope that in the next ten years, we start to see a generation of more financially capable consumers in our research discussions, so that our own efforts to make financial literature more accessible is matched by consumers who are better able to digest and interrogate them.

For more information on the work carried out by our Financial Services team click here.