No two customers are exactly alike. But you’d think they were, given the products you’ll find on offer at your local grocer or in the pages of your suppliers’ catalogues. Thanks to the “miracle” of mass production, for decades consumers and businesses have been forced to put up with goods that don’t meet their exact needs or to give up on some purchases altogether—both to the detriment of the companies that want their cash.
But now a new miracle is being performed by progressive firms across the business spectrum: mass personalization. Also known as mass customization, it’s the process in which companies allow clients to tailor products—from jewelry to pet food—to their personal needs without paying “custom-made” prices. And it gives companies new opportunities to differentiate their products and claim customers that won’t settle for “one size fits all.”
Several factors are driving this trend. The rise of broadband Internet has made it easier for consumers to access online customization tools and upload personal graphics or photos that can be applied to their purchases, while technological advances are making it cheaper and easier to custom-make goods. (Consider BMW, which allows Mini Cooper buyers to upload their own graphics to the Mini website for printing onto labels ready for the roof of the car.) Meanwhile, the rise of user-generated content coupled with the proliferation of on-demand, iPod-style purchasing—which allows customers to buy exactly what they want; nothing more, nothing less—has fuelled both the demand and the expectation for customized products.
Frank Piller, a professor at RWTH Aachen University in Germany and the co-founder of Cambridge, Mass.-based think-tank MIT Smart Customization Group, says mass customization got its start in the 1990s, thanks to flexible manufacturing processes that applied digital technology to produce one-off orders efficiently and cheaply. But, he says, recent technological developments have spurred a more significant takeoff: “It was the broader development of online configurators [which allow users to upload photos and select designs online] that made mass customization happen on a larger scale.”
Vancouver-based PNI Digital Media Inc., which provides the technology platform on which retailers print photos for their customers, has seen 70% year-over-year growth in personalized products such as calendars, coffee mugs and photo books in the past couple of years. “Personalized products account for 30% of our revenue today, compared to 1% about seven years ago,” says CEO Kyle Hall. “It’s a very important trend for us.” Over the next three to five years, Hall expects personalized products to account for more than 60% of the firm’s business.
Indochino is another Vancouver company in the mass-customization vanguard. It produces business suits based on measurements customers provide online, delivering the finished product within two weeks at a price as low as $300. Launched in late 2007, it now has more than 50 employees and claims to be the largest online retailer of custom suits in the world.
Robyn Waters, a Minneapolis, Minn.-based consumer trends expert and former vice-president of product development at Target, says mass personalization is still underused in one key sector of the economy: the service industries.
“Banking and financial planning are still dominated by generalized investment products rather than personalized tools that help people realize their dreams,” she points out. For instance, she says, most corporate retirement savings plans lack any form of customization.
Another area of opportunity is personalized marketing and promotions. Waters says entrepreneurs can use the personal information available on sites such as Facebook and Twitter to inform custom marketing and promotions packages for third parties. Another possibility is to provide the technology allowing retailers to analyze customer receipt data and provide incentives based on a customer’s most frequently purchased products.
Dave Gardner, a San Jose, Calif.-based mass customization specialist, recommends looking at sectors that are dominated by a few large players. “Few players means few choices for the consumer,” he says. For instance, he points to cable television, which forces customers to buy bundles of channels rather than only the channels they choose: “You want to provide an iPod-style alternative.” Still, there can be too much of a good thing. You don’t want to overwhelm customers with too many choices. And make the customization process easy, says Robert Smith, president of Dartmouth, N.S.-based Kameleon Jewelry, a maker of customizable jewelry. If it’s not, he says, “Customers aren’t going to buy.”