Imagine walking into a dress shop. In the shop window, mannequins sport fashionable outfits. But in the store, there are no pre-made dresses hanging from racks, ready for you to try on; the only things on display are a selection of in-season fabrics and stylish sewing patterns.
After the dressmaker takes your measurements, they advise you on choosing the most flattering pattern for your body type. Then you select a fabric style, along with embellishments. When your dress is ready, you’re delighted. You see the dress as a truly special piece, not only because it is uniquely yours, but also because, under the guidance of the dressmaker, you had a major hand in the creation of it.
The above made-to-order scenario may sound like an old-fashioned shopping experience, but some of the most forward-thinking retailers today are adapting tailored, self-selected products to the digital age. They understand that customers have a special connection with items that they take part in the creation of, and facilitating that creation leads to more revenue and loyalty.
Let’s take a look at what makes customerization a smart, scalable company strategy for modern retailers. We’ll also share examples of leading retail companies that put customerization at the heart of their business strategy and buying experience.
What Is Customerization?
At its simplest, customerization can be defined as a method that puts the customer in the driver’s seat of a buyer-centric experience. This is accomplished by giving the customer pre-selected options, guiding them through the design of their own final product, and then building it to their specifications. A customerization strategy means meeting customer expectations through personal interactions.
“Many companies now offer highly customized products in a wide range of categories, including sneakers, coffee, dental products, newspapers, vitamins, bicycles, cars, golf clubs, eyeglasses, garden design, cosmetics, and greeting cards,” said Jerry Wind and Arvind Rangaswamy, authors of Customerization: The Next Revolution in Mass Customization. “Customerization exploits a ‘build-to-order’ mass customization process to deliver a product or service that best fits the needs of the customers.” Wind and Rangaswamy coined the term “customerization” in their 2001 conceptual paper published in the Journal of Interactive Marketing.
While the term “customerization” may be relatively new, the “bespoke” buying experience — the customization of products for customers — has existed for centuries. It just fell by the wayside when the large scale of mass-production made ready-to-use products more favorable and affordable than tailored products.
In the 1980s and 90s, customerization saw a new resurgence as a unique buying experience in retail stores like Build-a-Bear Workshop and the kitchen and bathroom design sections at Ikea. Today, you can see customerization in e-commerce websites like Warby-Parker and Nordstrom-owned Trunk Club.
Customerization vs. Customization and Personalization
Customerization, like personalization and customization, should be thought of as a part of the overall customer experience. Customerization begins with understanding the diversity of your target customers’ needs and offering options that will give them the most success or happiness with your product.
However, unlike personalization or traditional customization (which are critical aspects in the process), customerization aligns production closely with sales and digital marketing to accomplish these goals.
Let’s break down what each term means:
- Customization: Customization means a customer can alter an existing product to meet their needs using a set of pre-selected options. For example, when you first set up your Twitter account, the service asks you to pick a few topics you like from a list of options. Then, Twitter customizes your feed based on your preferences.
- Personalization: Personalization means a seller can alter an existing product to meet an individual customer’s request. For example, when you order a picture frame from Things Remembered, you have the option to get it engraved with a personal message.
- Customerization: Customerization means that the producer and consumer are both involved in the production of the final product. The experience can have elements of both customization and personalization, but the focus is on guiding the consumer to have the best outcome based on their goals. For example, Warby-Parker’s app guides customers on finding the right type of frame for their face shape before offering product options.
Benefits of Customerization
When you experience customerization, not only do you come away with a product that’s uniquely yours but also, the customer interactions that led to the creation of that product make it all the more special.
On the business side, the potential benefits mean that highly customized buying experiences may increase the lifetime value of customers. Deloitte found that 1 out of every 5 customers is willing to pay 20% more for a personalized or exclusive product. Customerization can decrease churn and improve customer satisfaction.
Plus, customerization helps improve customer loyalty and gives your company a competitive edge. If customers can get the exact item or service they want from you, they will come back again and again.
“Customerization of the product or service adds so much value and strengthens the relationship that the price becomes a less important factor. (Of course, if the price is out of touch with reality, customers may begin to substitute less customized products.)” — Jerry Wind and Aravind Rangaswamy
Omnichannel Marketing Technology Is Essential to Customerization
One notable aspect of modern customerization is the way your buying experience follows you from channel to channel.
You can start your shopping experience with a live consultative chat session with a sales associate, who follows up with a link to a digital lookbook full of personalized recommendations based on your preferences. Then you can use a mobile app to select your options and place your order.
This kind of omnichannel shopping experience requires that you adopt a unified customer relationship management tool (like Endear!) so your marketing, sales, support, and production teams can easily access your customer’s preferences and selections at any point in the buying process.
5 Different Types of Customerization (with Examples)
The name-your-own price model was once considered revolutionary. After all, it’s traditionally up to the seller to propose a price for a service or good and see if the buyer will accept it.
With the advent of ecommerce sites like Priceline.com and Hotels.com, it’s now common for customers to propose prices they’re willing to pay for products like air tickets, hotel rooms, and even mortgages. The sellers determine whether they’ll accept them.
While this approach is most often seen in the travel and hospitality industry, if you sell manufactured goods that people can buy anywhere, a name-your-own price model could help you stand out from the competition.
Electronics ecommerce portal Greentoe is a great example of how to apply the name-your-own price experience:
- The customer names a price they’re willing to pay for any product on their site
- Greentoe notifies Manufacturer-authorized retailers
- If an offer is accepted, the retailer sends product directly to customer
Subscription boxes are a big hit, especially in the era of social distancing, when people are reluctant to shop in-person. While many customers love the surprise element of curated items arriving at their door, others would prefer to have more control over what goes in their boxes each month.
Subscription companies are solving this problem by offering customers ways to build their own subscription box from a selection of seasonal or curated products.
An example of this is FabFitFun. At FabFitFun, customers can pre-select one item to arrive in their seasonal box. That way, they get a mix of recommended products and hand-selected items.
One of the most delightful and popular approaches to customerization gives the customer the ability to control what goes into the product itself.
With a design-your-own-product approach, the seller has all of the elements necessary to create the product, but it’s up to the customer to choose the right configuration of those elements for their specific needs.
While this type of customerization can be used for anything from toys to apparel, it’s particularly popular for health and wellness products.
An example of this is Function of Beauty customizable shampoo. At Function of Beauty, customers take a hair quiz to determine the best types of products based on their hair care goals. From there, customers can select the fragrance, color, type, size, and frequency of their hair product subscription.
Like subscriptions, the ability to try before you buy has been a huge selling point for customers who need to shop from home.
Enterprising retailers are capitalizing on the desire to try out products by offering sample sets that customers build and try out, leading to a larger sale in the long run.
In some cases, the customer pays a small fee for the service of assembling and shipping their sample set, which is later applied to the cost of their order should they decide to buy.
This is a great model for companies that sell products that depend on personal taste or fit factors, like apparel, eyewear, cosmetics, and home decor.
An example of this is Phlur. Perfume-seller Phlur recognizes that fragrance changes depending on the body chemistry of the wearer. So instead of printing pre-scented fragrance strips in magazine ads, they sell $18 sample sets of three fragrances customers choose themselves. Each sample contains enough fragrance for 30 days, and customers can apply the $18 to a full bottle of their choosing.
Empower Your Customers with Customerization and Win Lifetime Loyalty
Ultimately, customerization puts your customer in charge of their buying experience so they can get the most out of your products. When you show your customers that you care about their goals and make it easier for them to reach them, you’re creating a relationship with them that can last a lifetime.
Learn how Endear can help you give your retail customers unforgettable, tailored experiences no matter where they are.