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Technology and financial services get simpler

By Frances Gordon

This article uses case-studies of Philips and Old Mutual to show how simplicity can impact on brand, business and product strategy.

The reason that the technology and financial-services sectors (among others) are embracing simplicity as a brand positioning is obvious: who hasn’t been put off by the small print and jargon of an insurance quotation? Who hasn’t bought a technical product and struggled to install or use it?

Companies are recognising that simplicity is a powerful concept, especially in an environment where consumers, tired of endless choices, are searching for ways to save time and energy.

The technology industry

For the technology industry, the concept of simplicity is both essential and risky:

It is essential because new technologies are unfamiliar – which inherently makes them complex. This, coupled with media convergence as well as increased accessibility of technology, means that complexity can become a very real barrier to buying.

In 2002, a poll run by the Consumer Electronic Association showed that 87% of people said ease of use was the most important factor when it comes to new technologies (Tischler, 2005). According to Philips research (2004), around 30% of home-networking products are returned because people can’t get them to work. And 48% of people they spoke to had put off buying a digital camera because they see them as complicated.

Simplicity is also risky: simple products may be perceived of as the opposite of innovative.

We often see brands based on features and functions of technology rather than on user needs. This is because there is often no longer an incremental cost for each new feature to be added ¬– so companies feel that they have to add more and more features – and aggressively market them - just to keep up with the competitors.

Can technology companies reap the rewards of simplicity without becoming prey to these risks? Two of the world’s most successful technology brands – Philips and Google – show us how.

Philips’ sense and sensibility
Somewhere along the way, the promise of the digital revolution to make our lives easier, simpler, better, is not being delivered. In fact, in many respects, it’s only made life more complicated. We must start making things easier for consumers or we will never see the real promise of the digital revolution come to life. And we must do it now.
--Gerard Kleisterlee, CEO Philips, Consumer Electronics Show, Las Vegas, 2004

According to the Chairman of Philips South Africa, Ian Murdoch, it was a piece of branding research that catalysed an entirely new brand positioning. The research led to Philips having to face up to a serious problem: its brand did not have a clear value proposition. Its leaders asked themselves: What is Philips really about? On hearing the brand name, what concept should appear in the consumers’ minds?

It took over 1 500 interviews with people from the UK, the US, France, Germany, the Netherlands, Brazil, China and Hong Kong to come up with simplicity as their definitive answer. www.philips.com reads:

‘’What we discovered was that people around the world – regardless of where they live – want the benefits of technology without the hassles… Our research showed that we had a unique opportunity to answer your need for simplicity, while strengthening our brand in the minds of consumers and customers everywhere. ‘’

Since the launch of the Sense and Simplicity campaign, Philips has moved from 65 to 53 in the Interbrand and Business Week study.

Simplicity as a focus for product design

What is most impressive about the sense and sensibility campaign is its strategic framework: For the ‘new’ Philips, every product, every patent, every business initiative must pass through these filters before it sees the light of day.

Filter one: Designed around the user. The design concept must originate from what Philips calls a ‘Consumer Insight’ (and not from the minds of its designers or marketers). The designer ‘co-designs’ with all stakeholders, including the user.

Filter two: Easy to experience. The focus is on the entire experience, rather than a narrow set of features. Packaging is as important as the product itself.

Filter three: Advanced. For Philips, simple really does mean smart - a concept that is simple but does not make use of advanced technology, will probably remain just a concept.

So how does Philips ensure that these filters are applied? It has its very own ‘simplicity police’: an independent Simplicity Advisory Board comprised of simplicity experts in fields from computing to architecture to fashion design.

The search engine everyone can use

Despite, or perhaps because, Google uses some of the most advanced technology concepts in the world, its website proclaims the benefits of ‘focusing on the user and all else will follow’.

Its corporate profile boasts of refusing to make any changes that do not benefit users. Above all else, this applies to one of the most valuable pieces of real-estate in the world: the Google home page. Even if it would benefit shareholders to put advertising on the interface, Google puts its energy into keeping the interface clear and simple. According to an article in Fast Company (Tischler, 2005),for Google, less is more. It offers six services on its home page. MSN promotes more than 50, and Yahoo, over 60.

Marissa Mayer who is responsible for the Google home page says:

‘’Google has the functionality of a really complicated Swiss Army knife, the home page is our way of approaching it closed. It’s simple, it’s elegant, you can slip it in your pocket… A lot of our competitors are like a Swiss Army knife open – and that can be intimating and occasionally harmful.’’ (as quoted by Tischler, 2005)
Brand positioning moving into business positioning

Simplicity creates a relationship between Philips’ three product groups: healthcare, lifestyle and technology. So, for example, healthcare can interlock with lifestyle through the application of simplicity as happens with HeartStart – a defibrillator designed so anyone can use it without any specialist training.

Murdoch claims, ‘’thanks to simplicity, we have a clearer global strategy now than we’ve had in 30 years’’. The brand positioning is used as a framework for growth plans, and also for streamlining processes and merging business units into what is now called ‘One Philips’.

The financial services industry

In South Africa, a number of financial services companies have incorporated the concept of simplicity into their positioning. The short-term insurance industry, from Auto & General to OUTsurance has boasted of plain language in its advertising and delivered it in its policy documents.

The long-term insurance industry has been slower off the mark. However, in the last year, both Old Mutual and Liberty Life have introduced simplicity into their brand mix.

As with technology, there is both a benefit and a risk associated with positioning an insurance brand around simplicity.

The benefit is shown in research that proves that small print, jargon and complex products alienate many consumers from financial services brands. The risk is to go against the conventions of an industry that has traditionally included highly-complex products, and communications focused more on legalities and internal requirements than customer needs.

Candice Burt is a plain-language attorney and co-founder of Simplied, a consultancy that helps organisations simplify their communications. She points out:

‘’If customers understand – and can believe – what you are telling them, then you have taken a first step to being worthy of their trust. As South African insurance brands become more cognisant of this, we can expect a greater focus on developing products and communicating them in a more straightforward way. But first, the industry has to get over the hurdle of believing that one needs impenetrably complex language to be legally sound.’’
Old Mutual’s simple solutions for success

Like Philips, Old Mutual says that it was its research findings that persuaded it to incorporate simplicity into its brand: the research showed that customers found financial services to be complex and shrouded in an air of mystery. Customers could understand neither the language used in the industry, nor the terms and benefits of the products. In fact, complexity of its offerings was highlighted as one of the major causes for mistrust.

Industry research backs up Old Mutual’s findings. According to Markinor’s recent customer loyalty survey (Second Annual Financial Services Loyalty Survey, Markinor, 2006), across all sectors, ease of understanding or use of the product is one of the top drivers of loyalty. And an easy-to-understand policy document is the top factor in the long-term insurance sector.

Stephen Cahill, General Manager of Marketing at Old Mutual, says that the positioning reflects Old Mutual’s goal to ‘’demystify money matters in the minds of customers, not only through the way in which we communicate, but also in the range of products and services that we offer’’.

The Everyday Account is a specific effort to express the theme of simplicity in the banking sphere. The customer brochure boasts of ‘’simplifying your banking charges – and your life’’. It is well-known that life insurance is one of the more complex financial services products – the Greenlight brochure attempts to explain the basics in a summarised, plain English form.

Perceptions of simplicity

Does simplicity appeal to all customers in the same way?

According to Old Mutual, pre and post-campaign testing has shown that the positioning appeals across the income spectrum, to both corporate and retail customers.

Philips is on a massive drive to introduce its simplicity campaign into emerging markets. Various ‘simple’ products developed for specific markets have already been launched; for example a blender developed for the Indian market has heavy-duty blades and motors to grind seeds for spices. It also has a discrete attachment so the user doesn’t have to hold the lid in place while the blender is on.

Closer to home, Philips is exploring low-power solutions for lighting in townships by using advanced LED technology.

However, even if the notion of simplicity applies equally to different target markets, the perception of how important it is – or what exactly it is – is unlikely to be the same. Sometimes the reality is counter-intuitive. Candice Burt points out that in her experience it is often the more educated, higher-income sector that demand simplicity in written communications more than the less educated, lower-income sector.

Simplicity gets out of the box

The brands mentioned in this article have sophisticated views of what simplicity is: to them, simplicity goes beyond principles of plain speaking or usability heuristics.

Simplicity starts with a rich understanding of the user and reflects not only usability but also experiential factors.

Although simplicity is far more intrinsic to the Philips brand positioning than to that of Old Mutual for example, both companies claim that the concept has gone far beyond an advertising campaign or even a brand evolution: it has gone right into the heart of their business philosophies. What they need to explore next are the subtleties of how different market segments perceive the concept of simplicity.

References

Tischler, L: The beauty of simplicity, Fast Company, Issue 100, November 2005

Markinor: Second Annual Financial Services Loyalty Survey, 2006

About the author: Frances has worked in the field of simplified communications for over ten years. She has consulted to leading companies in South Africa, for example, Discovery, Liberty Life, Hollard and Telkom. She has also a wealth of international experience. As Senior Content Strategist for Siegelgale in London, she contributed to projects in the UK, Europe, the Middle East and the US. In 2006, she co-founded Simplified, which helps companies transform complex messages to clear and effective documents and websites.