How Simplicity Drives Brand Loyalty
Studies about brand behavior have become increasingly popular as companies seek out ways to compete in the modern marketing ecosystem.
One of the largest and most interesting for our purposes was conducted by Siegel & Gale, a global brand and design agency. It ran a six-year study that consisted of a survey completed by over 12,000 consumers in eight countries.
In it, consumers were asked to evaluate 585 brands by rating the simplicity and complexity of their products, services, interactions and communications. Analysts then compared these results to industry peers and correlated simplicity to overall financial performance.
In doing so, Siegel & Gale uncovered something profound. A stock portfolio comprising the simplest brands in their Global Top 10 outperformed the average global stock index by 214 percent. That’s domination, plain and simple.
The report goes on to state that “the brands that rise to the top of the rankings are those that truly understand what their customers want—and make getting it simple. In addition, simplicity pays for brands that embrace it—garnering greater customer loyalty, fostering innovation among employees and ultimately increasing revenue.”
Digging into the numbers, the advantages become even more clear. 69 percent of respondents stated they are more likely to recommend a brand because it provides simpler experiences and communications, and 63 percent said they are willing to pay more for simpler experiences.
As the report concludes, “Consumers live in a world of limitless choices. Brand experience is the road to loyalty. Simplicity will get you there faster.”
Simplicity Is The Driver Loyalty
Our final piece of evidence explains why such simple and empowering brands succeed.
Twenty years ago, global management consulting firm Bain & Company found that a 5 percent increase in loyalty often leads to an increase in profit that ranges from 25 to 100%. By comparison, a 5 percent improvement in any marketing metric—clicks, conversions, laughs from a Super Bowl ad—doesn’t do anything remotely close to doubling bottom line profitability. Loyalty matters much more than any other metric, except financials.
Loyalty enables brands to acquire customers at a much lower cost through word-of-mouth marketing. It decreases the need to find new customers because the installed base grows naturally.
It also increases employee retention because job satisfaction increases. But most importantly, it creates a snowball effect because increased profits enable the brand to invest more in customer loyalty.
Bain was not exactly humble about its work. It said its findings were for the business world as “fundamental as the Copernican shift to a sun-centered solar system was for astronomy.” (Copernicus Pictured)
Friction Is The Enemy Of Loyalty
Nonetheless, the study is highly valuable for us, because it shows how critical friction is to the loyalty equation, stating that, “Customers defect at the alarming rate of 10 to 30 percent per year. With this much friction, it is no wonder that productivity and economic growth are languishing. Business is being conducted among strangers, trust is low and energy is sapped.”
Nobody in the business world wants to admit it, but despite the trillions of pieces of data available, it’s impossible to accurately tie marketing activations to bottom line metrics. Most attempts to do so have been cooked up by those who sell advertising.
The research teams cited here stepped back to look at brand platforms, not marketing activations. Each of the teams used different nomenclature, like “simplicity” and “endearment.” They used varied methodologies. Yet, by triangulating the results of their work, we can see a clear pattern emerge: removing friction creates a distinct competitive advantage with a massive and direct impact on financial performance.
Contributed to Branding Strategy Insider by: Jeff Rosenblum and Jordan Berg, excerpted from their book Friction: Passion Brands in the Age of Disruption, published by powerHouse Books
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