Importance of Differentiating Between Personalization and Customization

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In the context of guest experience, “personalization” and “customization” are often used interchangeably, but they do have distinct meanings. Let’s first define both:

1. Personalization involves tailoring experiences, services, or products to meet individual guests’ specific needs, preferences, and characteristics. It relies on data-driven insights with AI and algorithms to analyze guest behavior, past interactions, and demographic information to deliver relevant and targeted recommendations or services. Personalization aims to create a seamless and individualized experience for each guest by anticipating their needs and preferences.

2. Customization, however, involves allowing guests to actively choose or modify elements of their experience according to their preferences or requirements. Unlike personalization, which is often driven by data and algorithms, Customization puts the control in the hands of the guest, allowing them to tailor their experience based on their tastes, desires, or circumstances.

A study by Deloitte found that 50% of consumers expressed interest in purchasing customized products or services. This indicates that there is a demand for Customization among consumers.

Personalization is the way to go if you’re looking for a more tailored experience that matches customer expectations. But if you want to let your customers create a truly unique experience and let customers be more empowered, Customization is what you are looking for.
Personalization is done for Customers, while Customers do Customization.

The main goal of Customization is to empower customers over their experience.
The main goal of personalization is to establish a stronger and more captivating relationship with customers, creating this emotional experience.

Here are some interesting statistics:

  • 79% of businesses in the retail sector invest in personalization tools. This is higher than any other sector and may indicate that retailers stand to benefit the most from personalization (SmarterHQ).
  • A recent study from (McKinsey) states that 75% of customers are more likely to buy based on personalized recommendations.
  • 76% of consumers say they are likelier to purchase from brands that personalize their services. Personalization is critical to the entire customer life cycle. In addition to personalization making consumers more likely to buy, 78% say they are more likely to recommend brands that personalize and make repeat purchases.

Let’s see now some examples of both Personalization and Customization:

1. Travel:
Personalization: Websites like TripAdvisor suggest destinations, accommodations, and activities based on past
travel behavior and preferences.

Customization: Carnival cruise line offers customers the option to personalize their cruise experience by
preselecting dining preferences, shore excursions, and onboard activities before embarking.

1. Beauty and Cosmetics:
Personalization involves tailoring the shopping experience based on individual preferences, purchase history, and demographics. Sephora might use personalization techniques such as recommending products based on past purchases, sending targeted marketing emails or notifications, or offering personalized product suggestions through their website or app.

Customization: Sephora’s customization options enable customers to create products uniquely suited to their individual needs and preferences. This refers to allowing customers to create or modify products according to their preferences. Again, Sephora’s Customization could involve services like custom foundation blending to match a customer’s skin tone perfectly.

1. Food and Beverage:
Personalization involves tailoring the dining experience to meet individual customers’ specific preferences, dietary restrictions, and needs.
Examples:
A restaurant that remembers a regular customer’s favorite dish and prepares it as they like it without asking.

Customization allows customers to create their own meals by choosing from various options and ingredients to suit their tastes and dietary requirements.
Examples:
Subway: Customers can build their sandwiches by choosing bread, meats, cheeses, vegetables, and sauces.
Starbucks: Starbucks allows customers to customize their drinks by choosing the type of milk, syrup flavors, and toppings.

1. Fitness:
Personalization involves tailoring experiences, services, or products to meet an individual’s specific needs, preferences, and characteristics. It’s about creating unique experiences for each person based on their unique attributes.
Example: A personalized fitness plan might be created by a personal trainer after conducting a thorough assessment of an individual’s fitness level, health goals, medical history, and lifestyle factors. This plan would
be unique to that individual, considering their strengths, weaknesses, preferences, and limitations.

Customization allows individuals to make choices or adjustments to pre-existing products, services, or experiences to better suit their preferences or needs. It gives users control over certain elements to fit their preferences within a predefined framework.
Example in Fitness: A fitness app may offer customization features that allow users to adjust workout intensity, duration, or specific exercises based on their preferences and fitness level.

Users can choose from various pre-designed workouts or customize their own by selecting exercises they enjoy, targeting specific muscle groups, and adapting the personalized program to their preferences.

Peloton provides personalized workout experiences through its connected fitness equipment and subscription-based streaming service, allowing users to choose from various classes and instructors based on their fitness goals and preferences.

Fitbit allows users to customize their fitness tracking experience by setting personalized goals, tracking specific activities, and receiving tailored insights and recommendations based on their activity levels and progress.

Understanding the distinction between personalization and Customization is essential because:
· It helps businesses or organizations develop appropriate engagement strategies for users or customers.
· It guides the selection of technologies and tools needed to implement personalized or customizable experiences.
· It informs the design of user interfaces and experiences to ensure they effectively deliver personalized recommendations or customization options.
· It influences how data is collected, analyzed, and utilized to support personalization efforts while respecting user privacy and preferences.
· It allows us to avoid mistakes such as the following:

Insensitive Targeting:
A company sends promotional emails for luxury vacations to customers who have recently experienced financial hardship, such as bankruptcy or job loss.
Poor Timing:
A food delivery service sends discount offers via SMS to customers during late-night hours, disturbing their sleep and causing annoyance.
Ignoring Preferences:
A streaming service continues recommending horror movies to users who have repeatedly marked such recommendations as “Not Interested,” disregarding their stated preferences.
Lack of Adaptability:
An e-commerce website keeps recommending winter coats to customers even after they’ve made multiple purchases of summer clothing items, failing to adjust recommendations based on seasonal preferences.
Stereotyping:
A job search platform primarily displays high-paying executive positions to male users and lower-paying administrative roles to female users, based solely on gender demographics.
Inaccurate Recommendations:
A music streaming service suggests heavy metal albums to a user who has only listened to classical music due to a flawed algorithm that fails to account for diverse music tastes.
Creepy Personalization:
A retail website sends an email to customers addressing them by their ex-partner’s name based on outdated information stored in the customer database, causing discomfort and concern.

In summary, while personalization and Customization aim to enhance user experiences, they involve different approaches and considerations, making it essential to differentiate between them in various contexts.

Alain Najar
Alain Najar: EHL Business Hospitality school graduate, MBA-BSL Lausanne, certified trainer HES-SO-Switzerland, Certified Hospitality Educator-USA, EFQM expert, LQA mystery shopper. Worked 13 years: Hilton-11years, Sheraton, Accor, in Kuwait, Dubai, Madagascar, Syria, Egypt. He joined EHL as a senior lecturer for 30 years, teaching F&B management and Service Quality Design related to Customer Experience-CX. Currently, at the head of Najar Hospitality Consulting, he still share his knowledge as a visiting professor, delivers seminars and certifies hotels schools around the world.

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