These are crucial steps, but such an investment often takes precedence over other more hidden aspects of branding. Crucially, how do you make differences in the way in which your product offerings are organized readily understandable to customers? How can your naming systems (i.e. nomenclature) play into a larger strategy that reflects your current and future goals?
Let’s first look at differences in the way your products are organized – commonly known in our lingo as an organizing principle.
To understand how organizing principles work, simply go to the website of a brand you know and navigate to a product that you’re looking for. Most car brands will organize their products by types of vehicles (SUV, crossovers, etc.), many banks will either organize theirs by types of products (checking, savings, loans, etc.) or by size/type of customer (personal, small businesses, institutions), or some combination of both. And a big tech company, like Samsung, would organize their offerings by application (TV & Home Theater, Mobile, Computing, etc.).
These principles may sound like common sense, but the nuances matter as companies expand and introduce more products and smaller sub-brands. An organizing principle that is not cleanly executed from the get-go will probably to start to get bloated, convoluted, and sticky. Products could be offered under multiple categories. One category name may be confused with another. The list goes on.
Let’s take Chase as an example:
Given that Chase for Business targets budding entrepreneurs who aspire to start their own ventures, the site should be intuitive and easy-to-follow. It isn’t. They don’t really have an organizing principle – you’ll have online banking, business lending, merchant services, business services, and so forth. What is Chase QuickPay® and how is it different from Chase’s other product, ‘Quick Deposit’? How is ‘Payment Solutions’ under the ‘Merchant Services’ category different from ‘Online Bill Pay Services,’ under ‘Online Banking’? Confused yet?
Some companies flex a little more muscle in creating a cleaner, more intuitive organizing principle. Consider Square, the mobile payment company, as an example:
Square is famous for its card-reader; after all, it empowers the businesses of small enterprises, such as coffee shops and barbershops. Most of Square’s revenues come from these readers, but they also sell other services, too. And those peripheral services are growing rapidly. What’s driving that growth? My money is on Square’s ingenious organizing principle: business life-cycle.
On its balance sheet, and in investor reports, Square splits its business is into 3 segments: Payments & POS Services, Financial Services, and Marketing Services.
However, customers will see Square split differently as it goes to market. What they see: ‘Start,’ ‘Run,’ Grow.’
The ingenuity of this segmentation is that it allows Square to up-sell and cross-sell its customers on products they otherwise wouldn’t think necessary for their businesses:
Under ‘Start,’ Square sells a ton of its hard products (chip reader, stand, invoices, dashboard).
Under ‘Run,’ it provides point-of-sale solutions, but also employee management, which some customers wouldn’t normally consider.
Under ‘Grow,’ it houses an oddball of other things that don’t quite relate to the Square reader, but are very much in line with Square’ mission to grow small businesses: customer engagement services, ‘Square Capital,’ a money transfer app, and ‘Caviar,’ the premium food-delivery app. After all, if you’re a restaurant using the Square platform, wouldn’t food delivery be part of your growth initiative?
Square’s approach doesn’t just make its products easy to find, it also positions and organizes its offerings under stages of a business life-cycle that feels modern. And that’s probably how Square has been able to grow its peripheral marketing services exponentially.
To make a good organizing principle shine, you’ll also need a great naming system.
Here are 2 classic examples:
1. Apple has one of the cleanest and most intuitive organizing principles. It’s also rigorously enforced, and has been for over 20 years. Apple’s various iterations of its software names used to follow one system: animal names (Panther, Tiger, Leopard). This has now morphed into another: nature attractions (Yosemite, El Capitan, Sierra). Any minor, ‘under the hood’ upgrade doesn’t get a new name; instead, it gets a modified one. ‘Snow Leopard,’ for instance, is a minor upgrade of ‘Leopard,’in the same way that ‘High Sierra’ is a minor evolution of ‘Sierra.’
2. BMW is another classic. Beyond type of vehicle, BMW organizes its cars by performance tier (good-better-best): 2 Series is the most basic vehicle-type, while 7 Series is its most premium sedan offering. And any vehicle that doesn’t fall within the classic progression is assigned into a different group (‘X’ for crossovers; ‘M’ for highly-engineered race cars). And within each vehicle type, there are variations: 740 is slightly more premium than 730; the designation of the ‘Li’ suffix indicates a longer wheelbase vs. the standard ‘i,’ which indicates a regular wheelbase.
A counterexample is Kia, whose organizing and naming system still needs work. For instance, Kia’s ‘Cadenza’ model is three times as expensive as its ‘Rio’ model, but does Cadenza sound more expensive than Rio? I’m not sure. Also, out of nowhere, Kia has a model that uses alphanumeric naming — ‘K900.’ What’s that all about?
Lastly, how does Kia differentiate its SUV and Sedan models? Beats me. Kia’s SUV brands are named Soul, Niro, Sportage – there’s nothing clear about that approach, and customers probably struggle to identify one vehicle from another. This isn’t wrong with a lack of clarity, but Kia would probably need to spend more on each brand to build its familiarity among customers.
Don’t underestimate the importance of a good organizing principle and naming system. When executed thoughtfully and judiciously, the payoff makes the world of a difference.