The Predictive Power of Simplicity
By Brian Rafferty, global director of Customer Insights for Siegel+Gale
When we embarked on conducting the first Global Simplicity Brand Index in 2010, my colleagues and I were trying to prove that simplicity had value, not only for brand perceptions but also for the bottom line. And I for one was happy to see that indeed, simplicity did pay. Consumers were willing to pay more for simpler brand experiences, and a stock portfolio made of public companies in our top 10 global brands outperformed the major indices.
The 2011 index has revealed to me an even more valuable finding: not only does simplicity pay, but knowing if a brand is simple or not can actually predict its future success. Let me share an example to illustrate this.
We collected the data for the 2011 study between the end of August and mid-September of last year. This timing coincided with major news from Netflix, our #1 most simple brand in the United States. Among the announcements was a badly received rate hike and the now-aborted announced plan to split its offline rental business into a separate unit called Qwikster (a desperate naming attempt to counter impressions of snail mail?).
Netflix’s stock price took a precipitous plunge. So when our findings showed that Netflix was still the number-one simplest brand for the second year in the U.S., many here were perplexed.
On the other hand, Groupon was the talk of the town with a hyped, high-valuation IPO. Our study showed that consumers’ views of Groupon were not as hot as Wall Street’s: the company ranked only #42 on our list—not a bad score but by no means a shining star. When we looked at the open-end responses qualifying some of Groupon’s more negative ratings, we saw that many complained of hard to redeem offers.
So let’s fast forward a few months. Netflix has rebounded, showing stronger-than-ever numbers and demonstrating that consumers still crave what it offers. Groupon, on the other hand, has reported that many of its users do not come back a second time and find that the promise of Groupon deals is much better than the experience of trying to redeem them.
These isolated examples are obviously not enough to truly claim that brand simplicity predicts the future. However, one can safely venture that based on our data, simplicity does breed brand loyalty, with 82% of people globally more likely to recommend a simpler brand.
So investing in simplicity and making it a core principle for how brands interact with their customers will generate long-term financial benefits—and it could help any company make it through the rough patches.
Published: March 29, 2012 By: