Personalisation & Mass Customisation

Mar 08, 2019

Yesterday GDR CEO Kate Ancketill appeared on Evan Davies’ BBC Radio 4 show The Bottom Line to discuss personalisation and mass customisation. In this blog post she defines what makes these approaches distinct and highlights the challenges facing retail, brands and hospitality.

 

This week I joined representatives from the biotech, automotive and banking industries to discuss the rise of personalisation and mass customisation across our respective sectors. It was particularly fascinating to hear about the amazing things happening in genetically individualised cancer treatment. I was there to highlight the implications for retail. It came as no surprise that everyone agreed the trend towards personalisation is growing inexorably. (You can click here to listen to the show.)

 

Kate (far right) with Evan Davies and her fellow guests on The Bottom Line

 

In this article I want to explore what personalisation and mass customisation mean in retail, and what the opportunities and challenges are for brands, retail and hospitality. You should note that the lines are blurry: there is no generally accepted definition for either term, and sometimes they can be used interchangeably, so I have taken a view from the trends seen in the industry as a whole.

Personalisation

In retail today, personalisation typically means finding ways to replicate what went on for hundreds of years in shops and markets. You spoke to your local store owner about what you liked, they drew upon their expertise and recommended products or services from their catalogue, or even made them bespoke for you – like a sommelier recommending a wine, or a Saville Row tailor making you a suit. So I think of personalisation in retail now as offering something that is uniquely selected or created for the individual, often with the application of expertise by the vendor. Tech now allows this on a far wider scale, and no longer just for the rich.

Today, retailers are finding ways of using technology to recapture these personal relationships both online and in stores in a world where retailers can’t possibly know all their customers personally. They do it with data capture, analysis of online behaviour and previous purchases, robotics and modern equipment.

 

Lip Lab

 

It can be fun and hands-on, like with the Lip Lab in Australia where, working alongside a beauty consultant, you identify and mix your own unique lip colour, add your preferred scent and choose your case. Or it can be done algorithmically with an online service like Stitchfix, which asks you a few questions about your fashion taste, then sends you a box of clothes chosen for you on a regular subscription. Stitchfix are particularly interesting because they combine both the old and new way of doing things: they say every box created by the algorithm is still approved or amended by a real human stylist.

Health and wellness is a strong player in developing truly personalised products and services. Habit, which is owned by Campbell’s Soup, is a data-driven nutrition service from the west coast of America that uses machine learning to offer personalised diet plans based on its customers’ genetics. After paying about $300 you get a kit in the post with finger prick blood tests, a saliva swab for DNA and a ‘metabolic challenge beverage’, which is nutritionally akin to a fried breakfast in a glass. You take a blood test before and after drinking the shake and post it to a third-party laboratory.

 

Habit

 

Your gene variants are assessed, along with your ability to handle glucose and cholesterol, resulting in an app-based personalised diet plan emphasising the ‘hero’ foods you need to base your diet around. For an additional cost, customers can sign up for one-on-one telephone consultations with a nutritionist to discuss their plan and progress in more detail. The next step is rumoured to be a home delivery meal kit service.

Of course, retailers are playing catch up to the tech companies who are ahead at this – for example Amazon’s ‘people who bought this, also bought this’, or how Facebook can offer a completely unique news feed for billions of users. But with questions abounding about “Big Tech” and their (over) use of personal data, perhaps there is an opportunity for retailers to get ahead by offering a more privacy-friendly approach. Whether customers will be happy for a soup company to hold their genetic data remains to be seen; it will likely depend on whether brands can offer them both genuine lifestyle benefits and cast-iron reassurances on security.

 

Mass Customisation

Our view is that mass customisation refers to the ability to deliver something that feels tailored to the individual, but at high street prices. It’s usually done by a process of modularisation, where customers can combine a number of fixed options to create a unique end product – like choosing cherries, almonds and coconut flakes to be added to your oat base for muesli, or customising your trainers with Nike ID.

 

Bentley Inspirator

 

An example that resonated with many of our clients was the Bentley Inspirator app that recommends a customised Bentayga model for each user, based on their unconscious facial expressions as they watched a video. Who knew that your reactions to horses running on a beach, or ballet dancers doing their thing could accurately determine whether you’re a red leather car interior person?

The same principles can be applied to any sector; Alp Stories in Croatia and New York-based Function of Beauty translate this concept to beauty, allowing customers to create their own personal blends. At launch, Function of Beauty revealed that it offered 12 billion different combinations of shampoo and conditioner, at salon product prices.

 

Vita Mojo

 

In fast casual food, London restaurant Vita Mojo allows you to customise the calorific value of your meal by dragging a cursor up or down for each constituent ingredient. An advantage of this method is that by allowing the consumer to make recipe or design decisions, it builds a deeper sense of ownership and trust in the end product.

 

Frilly

 

Frilly is an online fashion brand that allows visitors to customise key elements like hem and sleeve length, neck style etc. The price of the garment fluctuates as changes are made, and creative customers are rewarded with a 10% discount if they manage to create a combination that hasn’t been seen before. Surprisingly they still offer a full refund if you’re not happy with the end result.

 

The Challenges

Clearly both personalisation and mass customisation have huge potential for retailers, but there are also pitfalls to be aware of. I think the two most important are the potential loss of brand control, and the minefield of data privacy.

 

Loss of control

Speaking about what makes Coca-Cola so iconic as a brand, Andy Warhol famously said (paraphrased): “A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good.” In other words, Coke may be offering a completely generic product to all its customers – but it allows them to make it a timeless one.

There’s a danger for established brands that they’ll erode brand equity if everything is tailored to the taste – possibly the bad taste – of every individual. You can’t be iconic if everything is customised; a brand that is all things to all people risks becoming a watered-down experience.

We’ve already lost an element of social cohesion from the fragmentation of media channels – “water cooler moments” are fewer and further between now everyone has a completely personalised media experience. So there’s an extra complication for brands if the product itself is becoming fragmented as well as the channels through which it’s being advertised. Established brands, especially, must work out how to carefully balance offering customers the personalisation they crave without destroying what made them so good in the first place.

 

The data problem

Given the importance of data in each of the executions I’ve mentioned, the other big challenge is to ensure you’re adding value without impinging on customers’ privacy or appearing creepy.

The nightmare scenario is the (possibly apocryphal) tale of a teenage girl outed to her parents as being pregnant by her supermarket, when the loyalty scheme mailed her ads for maternity products based on the subtle change in her spending patterns. Whether true or not, it’s certainly not a stretch to imagine it happening.

Even with recent regulatory changes like GDPR that strengthen the rules on customer privacy, relying solely on the standards isn’t enough. As Target’s statistician Andrew Pole said, “Even when you’re following the law, you can do things where people get queasy”. The key is to ask customers what data they are comfortable with you using and how they’re happy for you to use it. Customers should feel that there’s a clear value exchange and that they’re getting a premium service while being treated like an individual.

 

Focus on China

Accordingly, both the best retail and worst privacy scenarios are in China, where ‘New Retail’ is developing at the speed of light. ‘New Retail’ is Alibaba founder Jack Ma’s phrase describing total integration of physical and digital retail, creating a single value chain for everyone involved.

In China, the duopolistic tech companies Alibaba and Tencent, under the watchful eye of the government, have a “God’s eye view” of consumer’s behaviour through ownership of social media, online shopping and payment platforms – and far less legal or social restrictions on what they can do with it. They use this to make stores fully reactive to each individual walking through the doors, as well as optimise inventories for the local population based on their online searches and previous purchases. This creates a highly experiential and completely optimised shopping experience, which is almost certainly the way forward for retail in general, but hopefully with more privacy considerations for the western version when it arrives, as it surely will.

For those interested in this area I recommend the influential new book: ‘The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power by Harvard Professor Shoshana Zuboff.

 

If you’d like to talk to us about how your brand could learn from these principles and use them to improve your product or service offer, this is exactly the type of project we work with our clients on. Drop me an email at kate@gdruk.com.

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