Perspective: The Definition of Consumer Personalization Varies

Yesterday, we shared a general definition of personalization. However, each organization thinks of personalization a little differently. While some organizations think of personalization as an advertising approach, others approach it as a strategy for customizing products and services for “markets of one” – and still others consider it to be both. Different organizations look to apply personalization broadly, while others limit its application. Diverse personalization approaches have wildly different costs and operational impacts: personalizing a product offer, for example is far less complex and costly than personalizing a product itself. Some forms of personalization are being driven by consumers, while others are being presented to consumers by organizations looking to create new business models or competitive advantages. There is no single characterization.

Innovation Exchange members explored a number of factors that add complexity to personalization:

“I often think of three basic types of personalization: active, passive and progressive. Active personalization asks consumers to take action up-front to ensure they get the product or experience they want. You go to Starbucks and order that nonfat-extra-hot-no-foam-whipped-latte, or you configure a product such as a smartphone. With passive personalization, the product matches itself to a consumer’s preferences without the consumer having to do anything. A company uses demographic data, consumer behavior, or other clues to serve up something designed for the consumer. Amazon’s “people like you purchased these books” is a good example of passive personalization. Progressive personalization is when a product or service gradually customizes itself to a consumer as that person makes choices over time. The difference between progressive and active personalization is that active requires consumers to invest their time up-front to get the degree of personalization they want. With progressive personalization, a business learns about a consumer as the consumer experiences the brand.”
Eckart Walther, Chief Executive Officer, CardSpring

“For some business models, it is most important and relevant to address product personalization, even if that increases the complexity of product delivery. Since restaurants make many products to order, customers already expect to be able to customize. And many chains now make that the centerpiece of their brand experience. Our self-ordering solutions already allow for this in markets where customization is supported operationally. Putting more sophisticated tools in the hands of customers exposes them to more options and gives them the tools they need to express their wishes. As we learn more about customer preferences, we become more responsive.”
Melody Roberts, Senior Director of Consumer Experience Design Innovation, McDonald’s

“User-directed product personalization is an interesting dimension that touches on the self-service point. In this context, you empower the consumer to make something your brand delivers intensely personal. One of the best examples is Apple. A consumer buys a generic off-the-shelf product – everyone gets the same bundle of functionality in an iPad, iPhone, an iPod, whatever. But, when I add my music, my photos, my context, my groups, my social networks, it becomes my phone, my technology. And I perceive that Apple gave that to me, even though I did all the personalization.
Larry Drury, Chief Marketing Officer, First Data