By Ivan Bojanic, Senior Integration Architect and Susan Scarlet, Vice President, Strategic Branding
Almost a century ago, Henry Ford famously proclaimed that his customers could have a car painted any color they wanted – “so long as it is black.”
A lot has changed since then. Today, individually tailored products are nearly as common as the long-established digital norms of individually tailored messaging and packaging. But still, even the greatest organizations struggle with balancing consumer centricity and profitability.
With a healthy mix of over 40% of our work for clients in the CPG space, it’s no wonder we’re following the trends. Trends aside, we are a front-row passenger in an era where customization represents one of the most important and valuable opportunities in CPG alone. And, it’s not surprising that this is especially pronounced in millennials whose participatory expectations are shaped by the interactivity of social media and ubiquitous on-demand services. According to Deloitte, while nearly half are attracted to personalized goods, one out of five seek personalized packaging.
Are today’s organizations giving into the whims of consumer demand to their own detriment?
It would be enticing for insights teams to believe that consumers were largely in the driver’s seat, but personalization isn’t just fueling loyalty, it’s fueling profit. In the short term, bottom lines are being bolstered with 71% of consumers willing to pay a premium for personalized products. And, as drivers of loyalty, personalized products and packaging are arguably fueling longer-term business growth.
Beyond revenue, customization yields substantial softer benefits that augment such growth:
• Increased website stickiness, purchase frequency, and customer advocacy
• “Free” design consultation, ideation and co-creation; an inside look at customer creations to steer future product development
• Less waste and lost profit associated with mass production (e.g., only 30% of traditionally mass-produced clothing is actually sold at retail); and fewer returns
With this in mind, consumer-centric organizations weighing a customization offering should recognize it as an imperative. Its rapid growth and increased viability—coupled with consumers’ innate desire for it—makes it essential to establish a customization strategy and offer customization as part of a product portfolio. And, before you think that personalization is not “research-able,” today’s insights teams can dutifully decipher which custom avenues will result in purchase intent; and social data can quickly give analyst’s a read on what messages are marketable and which are not.
The Emotionality of Personalization
There’s a simple principle behind the appeal of customization. Human beings are emotionally hardwired to imagine and be expressive; and we are drawn to what we create. Scientific research has shown that not only do we enjoy having an active role in co-creating a product—but that this enjoyment actually increases the product’s perceived value. And while most of us have known of this as the “Ikea effect,” today’s buyers want more than just a packet of tools to feel empowered. According to one study, consumers were willing to pay up to 20% more for custom-created products.
Our emotional connection to custom-created products goes beyond perceived value, though. Research shows that when we have an active role in creating something, it further generates feelings of control, ownership and immediacy; there’s a much closer emotional bond than with something simply selected from a shelf of product clones.
The process of selecting our own components prompts thoughts of how it would feel to eventually own it. For example, a major fast-serve food chain tested a customization platform for online ordering. It found that conversion was higher when customers were shown onscreen images of their choices than when seeing only text descriptions. The “virtual meal” provided the emotional trigger that made customers visualize, and eventually order, their made-to-order selection.
Customization Crosses Sectors
Beyond one-off promotions and seasonal campaigns, dramatic advances in customizing technology across industries and processes—production, packaging and content—have not only made it profitable to adopt, but its end products are cost-competitive with mass produced ones.
Direct-to-fabric printing is taking the fashion industry by storm, growing an estimated 25% annually. It eliminates the months-long wait to screen print fabric and makes runway fashions immediately accessible—at the same per unit cost for one custom-printed piece as one thousand.
Customized packaging is a simple and low-cost way to reinvent a familiar product, allowing consumers to see it with fresh eyes again. Companies like Birchbox and Barkbox deliver monthly custom-curated combinations of beauty and dog products, respectively. And, digital printing allows consumers to design custom packaging, like Oreo’s ‘Colorfilled’ holiday campaign, to commemorate special occasions, create meanigful gifts, or add a personal touch to annual traditions.
In the automotive industry, customization is longer limited to luxury brands. Mainstream manufacturers like Fiat and Skoda offer sophisticated customization configurators for new vehicles, while Mini Cooper drivers can use an online tool to design a unique rooftop graphic for their car.
Companies that commit to customization have great flexibility in determining the approach that best fits their personality, resources, and long-term strategy. For instance, as the examples above suggest, it need not be a year-round offering; many brands, like Oreo, focus on special seasonal customized offerings. Digital printing offers low-cost, high-visibility potential; custom-printing a Mini Cooper roof design does not require a substantial rethinking of the production process.
The age of the passive consumer, the type who was happy with an off-the-shelf, one-size-fits-all product is decisively over. B-to-C organizations have transitioned into a new “mass” production model—one that’s based on participation, interaction, and co-creation; and one that has blurred roles in the supply end of the process. Digital technology and social media have altered consumer expectations, where we expect to be a co-conspirator in brand, having earned a voice in the process of product development and packaging design.
Customization takes this model to its next logical level: as production technology has caught up with the innate human need to create, it enables consumers to go beyond suggesting what products they’d like to see and become the actual co-creators. It’s a powerful shift that has unleashed a wealth of opportunities across industries well beyond CPG.
Organizations that commit to customization and make it easy and fun for us to express ourselves can count on increased engagement, loyalty and advocacy. It’s not because they’re enabling us to do something far removed from our genetic make-up. Rather, because they’re finally letting us do what we’re conditioned to do—create, and personify who we are as individual humans.
This means that we can finally break free of the model of choosing products off the shelf that were designed for us; and not by us. It suggests that consumers won’t merely have more choices, but that the choices we have are authentically meaningful to us. It is a distinctly different way of thinking about consumer centricity, and it gets to the heart of what that concept really means.
The future of decision intelligence lies in truly honoring consumers as the humans they are—with deeply felt needs of individualization and expression. Organizations that get this right through “mass customization” will paint new opportunities of growth in every color…as well as black.
From insightful research to decision intelligence, we stand at the ready. How can we help you?