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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Couldn’t have said it better myself

29 10 2010

Successful people in all lines of work pay close attention to how they communicate.

They understand that how you communicate affects how people perceive you, and how people perceive you affects how they interact with you.

But don’t take my word for it. Check out what these 10 intellects and leaders have to say about the power of words:

“Communication — the human connection — is the key to personal and career success.”
Paul J. Meyer, businessman, author, philanthropist

“You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere.”
Lee Iacocca, businessman, author

“Precision of communication is important, more important than ever, in our era of hair-trigger balances, when a false or misunderstood word may create as much disaster as a sudden thoughtless act.”
James Thurber, author, cartoonist

“Words are, of course, the most powerful drug used by mankind.”
Rudyard Kipling, author

“Communication is a skill that you can learn. It’s like riding a bicycle or typing. If you’re willing to work at it, you can rapidly improve the quality of every part of your life.”
Brian Tracy, author

“You write to communicate to the hearts and minds of others what’s burning inside you. And we edit to let the fire show through the smoke.”
Arthur Polotnik, editor

“We take communication for granted because we do it so frequently, but it’s actually a complex process.”
Joseph Sommerville, communication consultant, author

“Easy reading is damn hard writing.”
Nathaniel Hawthorne, novelist, short story writer

“Communication can’t always follow the top-down model. With the fluidity of information in business today, leaders need to be masterful listeners; they need to be able to receive as well as send.”
Joseph Badaracco, professor of business ethics at Harvard

“Regardless of the changes in technology, the market for well-crafted messages will always have an audience.”
Steve Burnett, marketing communications executive