Forbes.com

Having it their way: The big opportunity in personalized products

Sellers of everything from dress shirts to handbags and even consumer packaged goods are discovering the value of letting customers create their own unique products.

By Elizabeth Spaulding and Christopher Perry

First published on Νοεμβρίου 05, 2013
min read


This article originally appeared on Forbes.com Sellers of everything from dress shirts to handbags and even consumer packaged goods are discovering the value of letting customers create their own unique products. Retailers use Big Data to present a personalized set of products to their customers—it’s been a driving force behind Amazon’s success. Now brands are taking personalization a big step forward into mass customization. They are discovering that they can elevate customer loyalty and engagement—and use their customer base as an engine of advocacy to potential buyers. Product customization helps brands boost sales on their own websites or gain share on a retailer’s site. For example, Pepperidge Farm customers now design Goldfish crackers, and Jawbone customers configure their own Jambox speakers. Trek enables cyclists to build a bike from the ground up. And Brooks Brothers allows men to create their own suits. A Bain survey of more than 1,000 online shoppers found that while less than 10% have tried customization options, 25% to 30% are interested in doing so. While it is hard to gauge the overall potential of customization, if 25% of online sales of footwear were customized, that would equate to a market of $2 billion per year. Beyond the pure size of the opportunity, our survey showed that those customers who had customized a product online engaged more with the company. They visited its website more frequently, stayed on the page longer and were more loyal to the brand. Equally, customization helps companies differentiate their products from those of their competitors at a time when the Internet is rapidly making it easier for customers to compare the prices of products with standard features. With the proliferation of social media and online publishing, styles and trends now change faster than ever. Customization helps companies gain insights from customized designs and fine-tune products to stay one step ahead of the competition. With each design choice, customers share real-time shopper preferences that go well beyond what they would say in a focus group. For example, what Brooks Brothers learns from its customers in one season is used to help it deliver the next season’s product line. “All of this activity points to rapid growth in mass-customization offerings across categories. Early pioneers like Oakley have demonstrated strong consumer demand for customized products, and successfully orchestrated programs are delivering positive ROI and consumer engagement,” according to Kent Deverell, CEO of Fluid, a digital agency and software as a service provider that helps companies launch customization offerings. In our experience, all successful companies follow five rules. Before testing the waters, companies should be clear about the strategic value they hope to achieve. Some companies use it primarily to engage with customers and build brand advocacy. Others pursue customization of a chosen product line largely for its direct profit potential. Consider Longchamp’s self-design versions of its iconic Le Pliage tote bag. On the extreme end of the spectrum: building a core business around a customized offering, such as Wild Things has done with its design-your-own Insulight jackets. Companies also must determine how much customization they really need to offer. Some brands allow consumers to design a unique product that will be built to order, with a range of features that can be added. Others offer minor customization options—engraving a name on a briefcase, for example. Some companies only allow customization in fit or design. And others, like Serena & Lily, provide “consumer-choice bundling.” Shoppers at Serena & Lily’s online store design their own bedding combinations, buying existing products that are then collected from a warehouse and shipped to them. For most retailers, it’s the option that makes the most sense—they can sell from a standard product line. Successful companies offer customers a simple and easy design template as a starting point, as opposed to a blank canvas. If the online design process is too complicated, difficult or unattractive, many potential shoppers will be turned off. They may also reject too many options. In addition to making the design process enjoyable, companies need to make the return process seamless. All customers seem to want the option of returning goods within a reasonable period, typically 30 days. Our survey determined that demand for customization falls off precipitously if consumers think they could be stuck with something they don’t like—even though early adopters of product customization have found that return rates are lower than for standard products. Another important consideration: helping consumers share their creations with friends and relatives. For example, the North Face has launched a gallery of designs created by customers for its Denali jacket, which serve as inspiration points for others. Jeld-Wen enables real-time, online collaboration for customers to co-create and share customized door designs. As more retailers and brands give their customers the design-it-yourself option, they should see a boost in profitable revenues, stay connected to their best customers and lower costs. Winners will be those that know their objectives, understand how much customization they really need, keep things simple and create a repeatable model for delighting customers again and again. Written by Elizabeth Spaulding and Christopher Perry, Bain & Company partners based in San Francisco and members of the firm’s Global Retail practice.

This article originally appeared on Forbes.com

Sellers of everything from dress shirts to handbags and even consumer packaged goods are discovering the value of letting customers create their own unique products. Retailers use Big Data to present a personalized set of products to their customers—it’s been a driving force behind Amazon’s success. Now brands are taking personalization a big step forward into mass customization. They are discovering that they can elevate customer loyalty and engagement—and use their customer base as an engine of advocacy to potential buyers.

Product customization helps brands boost sales on their own websites or gain share on a retailer’s site. For example, Pepperidge Farm customers now design Goldfish crackers, and Jawbone customers configure their own Jambox speakers. Trek enables cyclists to build a bike from the ground up. And Brooks Brothers allows men to create their own suits.

A Bain survey of more than 1,000 online shoppers found that while less than 10% have tried customization options, 25% to 30% are interested in doing so. While it is hard to gauge the overall potential of customization, if 25% of online sales of footwear were customized, that would equate to a market of $2 billion per year.

Beyond the pure size of the opportunity, our survey showed that those customers who had customized a product online engaged more with the company. They visited its website more frequently, stayed on the page longer and were more loyal to the brand.

Equally, customization helps companies differentiate their products from those of their competitors at a time when the Internet is rapidly making it easier for customers to compare the prices of products with standard features.

With the proliferation of social media and online publishing, styles and trends now change faster than ever. Customization helps companies gain insights from customized designs and fine-tune products to stay one step ahead of the competition. With each design choice, customers share real-time shopper preferences that go well beyond what they would say in a focus group. For example, what Brooks Brothers learns from its customers in one season is used to help it deliver the next season’s product line.

“All of this activity points to rapid growth in mass-customization offerings across categories. Early pioneers like Oakley have demonstrated strong consumer demand for customized products, and successfully orchestrated programs are delivering positive ROI and consumer engagement,” according to Kent Deverell, CEO of Fluid, a digital agency and software as a service provider that helps companies launch customization offerings.

In our experience, all successful companies follow five rules.

Before testing the waters, companies should be clear about the strategic value they hope to achieve. Some companies use it primarily to engage with customers and build brand advocacy. Others pursue customization of a chosen product line largely for its direct profit potential. Consider Longchamp’s self-design versions of its iconic Le Pliage tote bag. On the extreme end of the spectrum: building a core business around a customized offering, such as Wild Things has done with its design-your-own Insulight jackets.
Companies also must determine how much customization they really need to offer. Some brands allow consumers to design a unique product that will be built to order, with a range of features that can be added. Others offer minor customization options—engraving a name on a briefcase, for example. Some companies only allow customization in fit or design. And others, like Serena & Lily, provide “consumer-choice bundling.” Shoppers at Serena & Lily’s online store design their own bedding combinations, buying existing products that are then collected from a warehouse and shipped to them. For most retailers, it’s the option that makes the most sense—they can sell from a standard product line.
Successful companies offer customers a simple and easy design template as a starting point, as opposed to a blank canvas. If the online design process is too complicated, difficult or unattractive, many potential shoppers will be turned off. They may also reject too many options.
In addition to making the design process enjoyable, companies need to make the return process seamless. All customers seem to want the option of returning goods within a reasonable period, typically 30 days. Our survey determined that demand for customization falls off precipitously if consumers think they could be stuck with something they don’t like—even though early adopters of product customization have found that return rates are lower than for standard products.
Another important consideration: helping consumers share their creations with friends and relatives. For example, the North Face has launched a gallery of designs created by customers for its Denali jacket, which serve as inspiration points for others. Jeld-Wen enables real-time, online collaboration for customers to co-create and share customized door designs.

As more retailers and brands give their customers the design-it-yourself option, they should see a boost in profitable revenues, stay connected to their best customers and lower costs. Winners will be those that know their objectives, understand how much customization they really need, keep things simple and create a repeatable model for delighting customers again and again.

Written by Elizabeth Spaulding and Christopher Perry, Bain & Company partners based in San Francisco and members of the firm’s Global Retail practice.