It seems like the entire business landscape shifts every decade or so. We're talking about one giant movement that affects all businesses regardless of industry or niche. In fact, one of these shifts is occurring as we speak.
While we aren't yet on the other side of the transition, it's clear that something incredibly permanent is happening. We're leaving the old business model of offering standard product selections behind and embarking on a new business model where personalization rules the purchase process.
How We Got Here
It may seem like a new movement to some, but the reality is this shift has been in the making for 40-plus years. Throughout the 70s, 80s, 90s, and early 2000s, business experts pointed to a future of personalization. Well, it's finally here.
According to Made for One, mass customization--which is what many call this newfound strategy of creating individualized product selections--is described as "enabling a customer to decide the exact specification of a product or service, and have that product or service supplied to them at a price close to that for an ordinary mass produced alternative."
In a 1997 Harvard Business Review Article, B. Joseph Pine and James H. Gilmore referred to this type of mass personalization as "collaborative customization." In other words, it's a process where the business engages with the customer to help them articulate and fulfill their needs in a cost-effective manner.
Later in 1992, and again in 2000, Pine published books that suggested customization would fundamentally change the structure of the American economy. And while it's taken a while, it looks like we've finally arrived at a point where this rings true. If you look at the top brands in the world, they all thrive on personalization.
3 Companies that are Leveraging Personalization
In order to understand what personalization and collaborative customization looks like in practice, it's best to study what's currently being done. Here are three companies that are effectively leveraging personalization in today's marketplace.
Nike has long been at the forefront of the battle for personalization. This is largely because of the philosophy of CEO Mark Parker, who understands the importance of being nimble and meeting customer demands.
"One of my fears is being this big, slow, constipated, bureaucratic company that's happy with its success," Parker says. "Companies fall apart when their model is so successful that it stifles thinking that challenges it." What do Parker and the company do to continue being successful? They move with the marketplace. In 2016, this means offering highly personalized product offerings.
If you log onto Nike.com to purchase a shoe, you're given the option to customize your own sneakers with different colors, textures, materials, shoelaces, and sizes. It's something that's been incredibly profitable for the athletic apparel giant.
Coca-Cola has also invested in personalization. This is the inspiration behind their ongoing "Share a Coke" campaign that allows people to purchase personalized bottles with different names and words. The idea is that, by allowing customers to personalize bottles, they'll encourage a different type of purchase. It's worked thus far. Sales were up two percent after just a few months.
- Pandora Radio
Although a totally different product category and business model, Pandora Radio has also been quite successful with personalization. By allowing users to listen to only the music that interests them, they've tapped into a market of no-nonsense music listeners who are tired of switching from channel to channel to find a good tune. Since Pandora's launch, dozens of other competitors have emerged.
Reasons to Personalize Your Product Offering
The question many businesses ask is, "Why should we begin personalizing?" This is often framed with a discussion of how the existing business model is successful and profitable. The easiest answer is that personalization is the future. Do you think Nike and Coca-Cola were struggling to make ends meet? No--they simply saw an opportunity to grow.
Here are some specific reasons why your business needs to consider personalization and customization in the coming months and years:
- Attract. Personalized product offerings help you attract new customers via word of mouth and excitement. It's a simple way to grab the attention of customers who otherwise have ignored your existing offerings.
- Retain. It's not all about new customers, though. Through personalization, you also give existing customers a reason to make repeat purchases by enhancing the value perception of your products.
- Collect. Finally, personalization allows you to collect customer information that can then be used to launch new products in the future. This is perhaps the biggest advantage.
There are many different reasons to pursue personalization, but these three stand above the rest. If for nothing else, collaborative customization needs to be a priority if you want to attract, retain, and collect.
How Your Business Can Use Personalization
What does personalization look like for your business? Once you recognize the importance, you then have to turn your attention towards identifying opportunities and implementing strategies that allow you to present personalized product and service offerings. Here are a few ideas.
- Physical attributes. Sometimes personalization is as easy as allowing customers to alter the product's physical attributes. For example, Nike lets customers play around with colors, sizes, and materials. Car manufacturers offer different colors, trim levels, and automated features.
- Packaging. Outside of the product's physical attributes, there are also opportunities to personalize packaging. This is what Coca-Cola is doing with the "Share a Coke" campaign. The product itself--the carbonated drink--is still the same, but the packaging makes it more appealing.
- Ancillary services. Giving customers the option to purchase a supplementary service can be another method for personalization. For example, a car dealer may offer a car buyer the opportunity to purchase lifetime maintenance for an additional fee.
"The focus on the personalization of customer experience is only going to grow in importance..." says John Bertino, Co-Founder and CEO of The Agency Guy. "Marketers and entrepreneurs alike should consistently challenge themselves to deliver a more relevant marketing message and an experience that adapts in real-time to client needs and behavior. From personalized UI/UX in e-comm, to programmatic advertising, to in-store mobile engagement; personalization turns latent buyers into engaged prospects while developing more authentic brand connections and improving client retention."
Looking Towards the Future
Business personalization isn't a fad or trend--it's the way of the future. It's taken decades to get here, but we're finally at a point where collaborative customization is affordable for both businesses and customers. If you haven't recognized this yet, you're already behind. Begin brainstorming ways you can move your business model towards personalization.