Graham McGregor on how to use the simplify principle to boost sales

OPINION: Im a big fan of products and services that are simple to use.
A great example is Uber and other ride-sharing services

Uber has done amazingly well around the world by making their service super simple to use.

You unduh the Uber app on your smartphone and book an Uber driver.


Uber's app is backed by Google, integrated into Google Maps, and available on the major smartphone platforms. It allows customers to order a ride through their smartphone based on their location. They can see who their driver will be, and then track the arrival of their car.

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Fares are set by the user's smartphone tracking their start and finish location, and the time the journey takes.

Other advantages include the fact that the user pays via the app, so no cash is required.

Uber is now available in over 400 cities around the world and one of the reasons it is so popular is because of how easy the service is to use.

And I was reminded of this idea of make things easy to use when I reread an excellent book by Richard Koch the best-selling author of The 80-20 Principle.

The book is called Simplify-how the best businesses in the world succeed.

Richard co-wrote this book a few years ago with venture-capitalist Greg Lockwood

Let me pass you over to Richard for his comments on why he wrote the book

DAVID WHITE/STUFF
McDonalds a business built on simplification.

It turns out that nearly all the great success stories of this century and the last one are stories of simplifying.

This is the secret of Ford, McDonalds, IKEA, Honda, Walt Disney, Penguin books, the Boston Consulting Group, Bain & Company, Southwest Airlines and its European imitators, Sony, Dyson, Tetra Pak, Charles Schwab, Vanguard, Apple, Amazon, Google, Facebook, and Uber.

Simplifying is the way to offer incredible value for money and make a market grow thousands or even millions of times.

There are two ways to simplify, as described in the book Simplify.

Price-simplifying.​


This requires cutting the price of a product or service in half, or more sometimes over a number of years the price can be cut to a tenth of its previous level.

If the price of a product is halved, demand doesnt double. It soars.

And if the product or service is simple enough, it can be sold everywhere around the world.

When Dick and Mac McDonald cut the price of a hamburger from 30 cents to 15 cents in 1948 and Ray Kroc held that price constant until 1967, despite high inflation the hamburger market exploded, so that it is now measured in billions.

Yet price-simplifying only makes financial sense if you are able to make the product simpler to make and therefore cut costs by at least half.

This is not easy.

As Oswald Spengler wrote, the simple notions are always the most difficult.

Julian Finney/Getty Images
The flat-pack came in because half the cost of furniture comes down to transport.

But it can be done as demonstrated by Ford, McDonalds, budget airlines, mini-steel mills, IKEA, Penguin and Kindle books, online brokerage, index funds, personal computers, and many other mega-successful ventures.

And there is a reliable method followed by nearly all price-simplifiers, which can in principle at least be applied to any product or industry.

It usually involves using radical product or service re-design, restricting variety and creating a universal product, cheaper materials, new technology in the broadest sense, massive scale, reorganizing an industry around the innovators business system, and co-opting customers so that they do much of the work.

McDonalds wasnt the first business to spawn an entirely new industry using the Price Simplifying method.

Henry Ford focused on very simple design and functionality his Model T was made out of four components where traditionally it had been made out of 100 and got the cost down to 20 per cent of what it had been.

He then distributed on a scale never contemplated before. Traditionally, only rich hobbyists were motorists so he made cars available to the middle and skilled working classes. The market size exploded, and the worlds geography changed dramatically with freeways, malls and so on. Fords market share, meanwhile, surged from nine per cent in 1908 to 61 per cent in 1921.

A more contemporary example is Ikea:

Its completely changed the furniture industry, making it on a scale that no one ever had done before.

The flat-pack came in because half the cost of furniture comes down to transport. By co-opting the customer to drive to one of the megastores and do the assembly themselves, theyve made prices 50-80 per cent lower than comparable items elsewhere.


They have a lot of categories but limited range within them.

They get manufacturers to make the stuff for them on a scale they couldnt previously have done because there was no one to take the product.

Their huge stores and non-ownership of the manufacturing process enable a massive increase in volume.

Then, like McDonalds, theyve internationalised it.

Ikea currently boasts 298 stores in 26 countries, and $36bn (25bn) in revenue per year.

The major commercial benefit of Price Simplifying stems from a rule of thumb: as long as you at least halve the price without compromising the basic commodity you wont just double sales but increase them up to 100-fold.

Proposition-simplifying​


Proposition-simplifying works if you can make the product a joy to use, because it is easier to use, more useful, and more beautiful.

Think of any Apple device the Mac, the iPod, the iPad.

Steve Jobs biographer, Walter Isaacson, noted that Jobs made devices simpler by eliminating buttons; software simpler by eliminating features; and interfaces simpler by eliminating options.

As with price-simplifying, there is a common proposition-simplifying formula.

It involves hiding incredible complexity through extremely clever product design, and a relentless focus on making the product both more useful and simpler to use.

Whereas price-simplifying is all about making it simpler for the producer, proposition-simplifying is all about making it simpler for the customer.

Stuff-co-nz
Graham McGregor is a marketing advisor.

What the Two Simplifying Strategies Have in Common​


They are different ways to provide value for money either because the product becomes so much cheaper, or because it becomes so much better.

And one thing that the authors state, is that when a product or service is radically simplified, market size mushrooms and most market share also goes to the simplifying innovator.

The result is that market value of the simplifying firm can increase by thousands or hundreds of thousands times.

I really enjoyed rereading the ideas in this book by Richard and Greg and recommend you read the book yourself.

The ideas in it are timeless and can be used by many different types of business.

Action Step:​


How could you use the simplify principle in some of your own products and services?

Graham McGregor is a marketing advisor. You can get his free marketing guide The Plan B Sales Solution at www.simplemarketinganswers.com

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