Customization Vs. Personalization: Understanding the Difference

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Collectively, businesses are now more informed regarding the customers they serve. Prior to the existence of the internet and access to data, businesses knew very little about their customers’ behaviors.

Brands had little insight into which mediums were performing best between print media, radio, and television. On the service side too, businesses would rely primarily on surveys in an attempt to build a very general customer persona, knowing full well that each individual likely differed from the aggregate findings.

The internet, of course, changed all of that. No longer do companies blindly invest in advertising mediums that may or may not yield a return on investment. They now know which among them do yield the highest return and pour all their advertising dollars into those channels. First-party data has been a game-changer in that department. Similarly, businesses understand their customers and are able to provide a better experience with their company. According to consulting firm Accenture, 91 percent of consumers prefer to shop with brands that provide offers and recommendations that are relevant to them.

Even as privacy regulations like Apple’s App Tracking Transparency (ATT), California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR) all give more power to consumers to own their data, customers still demand tailored experiences for their needs and preferences.

Customer data has allowed businesses to both customize and personalize their products and services. And understanding the differences between the two is critical to success.

Though they are reciprocal by nature, personalization and customization have differences, namely the lift asked of the customer.

Personalization is the tailoring of an experience or product by a business based on data collected on that customer. Customization, however, involves the customer in the tailoring of a product or service. Some might categorize customization as a type of personalization.

Regardless, customization offers a higher level of individualized experience than personalization.

One way to help distinguish this difference is to think of a real life scenario: If you were to walk into a department store to buy a suit, you’ll see a range of sizes. Those sizes are general guidelines that cater to the varying customers that walk through the door. But given the individual nature of each person, a tailor might tweak a size to better fit an individual. That process is personalization.

Though personalization and customization sound as if they’re one in the same, there are distinct differences, namely customization allows the customer to modify an experience, product or service themselves.

Both are used in response to the proliferation of data existing for businesses to leverage about their target consumer, demographic, or customer. But the distinction between personalization and customization is important to make. When determining which to offer, it’s critical for a business to ask: will my customers help enhance a product or service with their participation?

When developing overarching business strategies, marketing and partnerships, the fundamental difference might dictate how you message products and services to your customers.

The bottom line is: the data we have today has put businesses in a better place than ever to offer individualization. Use this data to your advantage and watch your efforts pay off in the long run.

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