Cognitive fluency and the bottom line

27 07 2011

“Simplicity works wonders. It’s satisfying, motivating and seductive.”

So says Ken Segall, the advertising whiz who is responsible for many of the campaigns that have played a huge role in transforming Apple into one of the most successful and influential companies on the planet.

Nearly a year ago, I wrote a piece on Segall and the power of simplicity in marketing and business in general.

Since then, the term “cognitive fluency” — which goes hand-in-hand with the power of simplicity — has been popping up more and more in the media and business circles.

Cognitive fluency became a hot topic among psychologists in 2009. In its simplest form, cognitive fluency means this: people prefer to think about things that are easy, rather than things that are hard.

Seems like an obvious idea.

But where it gets interesting — for psychologists and for business — is the extent to which cognitive fluency influences people’s behavior.

A recent study compared the stock returns of public companies with easy-to-pronounce names with those of companies with hard-to-pronounce names. Tellingly, the companies with easy names significantly outperformed those with difficult names.

The study’s authors concluded that just the complexity of a company’s name influenced people’s willingness to invest in the organization. Simple names attracted investors. Cryptic names turned investors off. And it’s not even a conscious decision; it’s just the way the human mind works.

Another widely cited example involves 401(k) offerings. Conventional thinking among companies used to be that the more investment options they included in their retirement plans, the more likely it would be that employees would enroll. Not so.

The data shows that when consumers are faced with an overwhelming array of investment options, they’re basically paralyzed by the sheer number of choices, and many end up not enrolling at all. By simplifying their offerings and making their plans easier to digest, companies have seen increased participation in 401(k).

The power of cognitive fluency applies to all facets of business: your products, your services and your communications. When you are trying to influence the behavior of consumers, employees, shareholders, or any of your other publics, substance and simplicity are key.

Your website should be simple, clean-looking, and easy to navigate. Your sales proposals should get right to the point, making clear your value proposition. Your employee communications should be focused and free of complexity.

Human beings crave simplicity, and they recoil from complexity. By applying cognitive fluency to all facets of your business, you’ll do a better job of connecting with your audiences, you’ll avoid sabotaging your ideas, and you’ll reap the benefits in profitability.

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2 responses

28 07 2011
Marian Thier

Absolutely. In my work on listening, the research supports your findings. People tend to listen to others who have a similar style. The trick is to develop skills that will enable an individual to hear what anyone is saying in any context to avoid lack-of-listening-fluency.

28 07 2011
Alex Mitchell

That’s an interesting point, Marian. Thank you for sharing. During my time as a newspaper reporter, I learned a lot about how listening is a skill you have to work at. Many people are good talkers, but a lot fewer are good listeners, which is a shame, because it’s a skill that will serve you very well.

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