Customization on the Cutting Edge

Every day, I meet retailers who are eager to learn how they can add a co-creation, customization, or personalization feature (collectively “Customization” with a capital ‘C’) to their existing offerings.

They often start the conversation off with an overview of their current products and quickly move to a discussion about which of them cater to the “customization” demographic — and then finally how and where they want to add this new “feature” to the limited set of SKUs where it makes sense. Customers know exactly what they want — or so they think.

I love what comes next. If you look at the data, you see very clearly that while content is demographic-specific, Customization adds value to all consumers; far from being a feature, Customization is a product strategy. It impacts how customers perceive their relationship with both a brand and its products.

For those who “get it,” it’s revelatory. Customization is not a feature; like product quality or ease of use, Customization is a fundamental dimension of the customer experience.

The IKEA Effect

In 2011, prominent behavioral economist Dan Ariely, along with colleagues Norton and Mochon, published groundbreaking research demonstrating just how much impact Customization can have on the perceived value of a product. They called it the “IKEA effect.”

Participants were asked to engage in a variety of construction tasks including building IKEA products, folding origami and building Legos. In at least one experiment, participants valued their creation twice as much as the same product created by another participant, the researchers found.

How is it that additional labor on the part of the consumer creates value? Presented properly, it is not labor at all. Instead it is engagement; and this is the key to success.

Yearning for Creativity

Customization fulfills our innate desire to be creative and productive, and those positive emotional qualities are attached to the product in the Customization process. Personalization — true one-to-one product delivery — extends the value even further by imbuing the product with personally relevant content in addition to the value attached from the creation process.

The prospect of implementing Customization can be daunting. There are numerous technical, legal, supply chain, and other various implementation considerations — and that’s after you’ve convinced the business to head down this path.

However, for those organizations progressive enough to take the “first mover” advantage, it can translate into game-changing growth. The good news is that there are several methods to engage the customer in Customization, and some require quite a light touch:

• Crowdsourcing: A distributed problem-solving and production process that involves outsourcing tasks to a network of people, also known as “the crowd.”
• Co-creation: Enlisting individual consumers to become content creators, crowdsourcing without the crowd.
• Mass Customization: The repurposing or decoration of standardized product with one or several features selected by the end-consumer.
• Personalization: Producing products, which are one of a kind and made by specific request of the consumer. Highly personalized products are characterized as being relevant to only the end consumer.

Each of these Customization methods represents a progressively more complex and higher value-added engagement. You can use this progressive scale to ease into Customization. In fact, you can gain tremendous value without ever disrupting your existing supply chain.

New Intense Dark

Ghirardelli’s 2010 New Intense Dark campaign serves as a good example of this. Ghirardelli collected 14,000 flavor entries, but rather than build a personalized chocolate supply chain capable of producing all these distinct combinations, it simply introduced the most popular combination.

After more than 232,000 votes, the winner, Hazelnut Heaven, was produced in 2011. This didn’t require a new supply chain or automated manufacturing. Ghirardelli just added a new SKU to its standard lineup; it’s a simple way to get started.

Retailers are able to charge a premium for personalized products. Not only that, but they end up with more-satisfied customers who are more engaged with their products, as well as the retailer’s brand.

Imagine what a revenue bump from more-engaged customers can mean to your business.

In the words of Forrester analyst JP Gownder, “mass customization is [finally] the future of products.”