Personalization is nothing new. The best retail sales associates have always kept what they called “black books” to keep track of clients’ preferences and buying habits, helping them to personalize future visits. For years direct marketing pros have been using personalization—targeting customers for special offers based on customer lifestyle or life stage, or customers’ past transactions. These savvy sales and marketing people weren’t thinking about helping customers to manage a relationship, they were simply trying to get a larger share of each customer’s wallet.
Personalization is one of the hottest buzzwords in marketing and, as used today, it is most often associated with technology. With the swift advance of technological solutions, personalization has moved from the selling floor and the envelope to the Web, to e-mail, to voice messaging, and to multimedia. But what does personalization mean to CMR? Before we can answer that question we have to define personalization and customization and understand the difference.
Personalization and customization mean vastly different things to different people. Some say personalization is the ability to call a customer by name and make offers based on the customer’s profile. Others add the capability of predictive modeling to formulate offers based on a customer’s past transactions. Personalization is not including headline features of general appeal in your e-mail. It’s not announcing sale items of the day, even if they are targeted offers. It’s not achieved in what one expert called “no-brainer cross-sell:” You bought the handheld video camera, here’s an offer for a carrying case. Personalization is a process of reorienting each transaction around a customer’s implicit preferences, rather than simply pushing out canned offers that seem relevant.
The Personalization Consortium, an international advocacy group (www.personalization.org) defines personalization in this way:
Personalization is the combined use of technology and customer information to tailor electronic commerce interactions between a business and each individual customer. Using information either previously obtained or provided in real-time about the customer and other customers, the exchange between the parties is altered to fit that customer’s stated needs so that the transaction requires less time and delivers a product best suited to that customer.[1 ]
For the purposes of CMR we would expand the definition well beyond electronic commerce to include all interactions between a company and its customers. Nevertheless, in simplest terms, personalization is driven by the computer, which serves up individualized offers based on a coding of algorithms derived from statistical models. It is a passive process for the user, a process one writer compared to a delightful experience like walking into a restaurant and being called by name or having your favorite bookseller pull out a copy of a book he just knew you would really like.
By contrast, customization at it’s best is under direct control of the user. The user explicitly selects between certain options. In talking about customization on the Web, Michael Rosenberg, a contributing writer for ITworld.com, offers this description:
Customization involves end users telling us exactly what they want, such as what color of fonts they like, the cities for which they want to know the weather report, or the sports teams for which they want the latest scores and information. With customization, the end user is actively engaged in telling the content-serving platform what to do.[2 ]
On the Web, customization occurs when the user can configure the interface and create a profile manually, adding and removing elements. Everyone equates customization with the Web, but customization goes far beyond the Web.
In a relationship with a retailer, customers might indicate their preferences to help the retailer tailor messages to their interests. The Neiman Marcus story in Chapter 6 is an example. In a business-to-business relationship, customers might specify only the specific product categories they will find of interest. Customers should also be able to choose the level of service that best fits their needs.
Customization is a dialog in which the user is actively involved and begins to control certain elements of the relationship. Both personalization and customization offer benefits for the customer and the company, and these benefits are worth reviewing.
[1 ] “What is Personalization?” personalization.org, January 26, 2002, p. 1.
[2 ]Michael Rosenberg, “The Personalization Story,” itworld.com, January 26, 2002, p. 2.