Comment: Consumers are both critics and creators

Personalised products and services have been around for years, but with the improvements of technology, and with consumers continuing to expect personalised products, it is clear that we are on the cusp of a new age of mass personalisation.

Empowered by social networks and their digital devices, consumers are increasingly dictating what they want, where they want it and when they want it. They have become both critics and creators, demanding a more personalised, bespoke service and expecting to be given the opportunity to shape the products and services they consume.

The opportunity is there for retailers to capitalise on this trend. In some categories, more than 50% of consumers expressed interest in purchasing customised products or services, and a fifth of these would be willing to pay a 20% premium for them.

This is not confined to younger consumers either: the over-55s are more likely to book a personalised holiday than millennials. Given the cross-generational demand, it is clear that retailers and service providers that do not incorporate an element of personalisation into their offering risk losing revenue and customer loyalty.

For many B2C businesses, the demand for personalisation runs counter to the dominant model of providing high-volume products en masse. The move from mass production to mass personalisation can have considerable cost implications, so decision-makers have a challenge in understanding the net benefits to a shift in the business model.

Economies of scale have helped to alleviate some of these cost concerns. Innovations and new technologies, such as digital commerce and content, data analytics and artificial intelligence are all making personalised product and service offerings more cost efficient. Flexible manufacturing and 3D printing enable mass customisation at lower costs and can also allow manufacturers to rethink their supply chains radically, to the extent that businesses are now delaying production until the last possible moment in the chain in order to provide customisation.

The growing use of analytics means that product and service providers are getting better at knowing what customers want – and do not want. This means they can adapt their operations and product range to respond according to current tastes. Big data and analytics is a critical component of the personalisation process; matching the right consumer to the right product or service for them. It has never been more important for retailers to mine their data for rich insights on their customers. Customer relationship systems (CRM), website cookies and loyalty schemes will be key tools for the capture of this valuable data.

Offering personalisation will certainly require investment in technology, both to facilitate the design and manufacture of customised products and to execute personalised marketing campaigns. It is important to consider that consumer demands will be the key driver for an evolution of business models and operation processes: individualised products will ultimately trump an all-for-one product. The use of customer data, too, will almost certainly require an increased level of data governance in order to give customers control on how their data is used.

It is important to realise that delivering personalised products and services can provide benefits for both the business and the consumer. Consumers are not only willing to pay more for these services, but they are also keen to be actively involved in the customisation process. This is a key driver for long-term customer loyalty.

Additionally, businesses that embrace personalisation will be competitive: by definition this is a differentiated proposition that may command a price premium and improve consumer traffic and conversion. As alluded to previously in the context of analytics, personalisation could lead to improved efficiency, reduced wastage and costs.

It may seem daunting, but in order to retain and grow their customer base, retailers and service providers will need to get personal with their consumers.

For more information, take a look at the Deloitte Consumer Review: Made-to-order: The rise of mass personalisation