Should Your Business Customize Its Products?

What are customized products?

A customized product has been changed to meet a customer’s specific needs and preferences. Instead of offering standard off-the-shelf items, you give customers the ability to make the purchase unique to them.

For example, you can buy a regular Ralph Lauren polo, or you can customize your order by adding a monogram, custom embroidery or text on the sleeve. Nike By You, for instance, allows customers to choose the colors and images for their favorite Nike shoes.

What’s the difference between personalization and customization?

While personalization and customization may seem like the same thing, there are a few fine distinctions between the two. 

Personalization involves using customer data to create an experience that feels unique to each customer. Receiving a promotional email using your name in the subject line is an example of personalization. When Amazon suggests items for you based on your purchase history, that’s also personalization. 

In comparison, customization allows customers to make changes to the item based on their preferences. Buying a phone case that you designed yourself would be an example of customization.

Examples of product personalization and customization

• Coca-Cola’s Share a Coke campaign: Coca-Cola made a splash in 2014 with its Share a Coke campaign. It featured bottles with popular names to inspire customers to seek out bottles with their own name or the names of loved ones.
• Gainful: Gainful offers customized greens, protein powder, hydration packs and preworkout. You’ll start by taking a five-minute quiz to help the company understand your goals and dietary needs. Once you’re finished, you’ll receive your supplement recommendations.  
• Spotify Wrapped: With Spotify Wrapped, Spotify analyzes each user’s data and presents it in a well-designed, engaging slideshow that ranks each user’s listening habits. Users can learn what artists and podcasts they listened to the most, where they rank among their top artists’ listeners and what subgenres they’ve been enjoying. When Spotify Wrapped comes out at each year’s end, customers flock to social media to share their listening trends. 
• Enfagrow’s personalized advice for babies: Enfagrow, a baby formula company, provides advice and product recommendations based on a baby’s age and development stage. Plus, parents can receive emails that include coupons and special offers. 
• Function of Beauty’s tailored hair products: Function of Beauty creates tailored shampoos, conditioners and body washes based on each person’s preferences and hair type. After completing a short quiz, customers can get exactly what their hair needs. Customers can also choose the scent of their products and list a name on their bottles, making Function of Beauty’s products truly unique. 

What are the benefits of offering customized products?

Giving customers the option of purchasing customized products offers many positives for businesses, including:

• It increases customer satisfaction and attracts new customers. When customers can tailor products to their specific needs, they’ll have a better experience overall. They’ll also be more likely to continue doing business with your company. Deloitte research showed that brands incorporating personalization are 71 percent more likely to experience improved customer loyalty.
• You can charge more for customized products. Since these items have a higher perceived value, customers are willing to pay more for them. This can lead to increased profit margins and higher revenue. According to McKinsey, such personalization can increase revenues by 5 to 15 percent.
• It elevates your company’s brand, helping it be seen as more customer-focused and upscale. McKinsey reported that 76 percent of customers actually get frustrated if a business does not provide a personalized experience.
• You will create more customer data and actionable insights. This information can help with your future marketing and product development.

Why are customized products increasingly popular?

Part of the reason for this new trend, dubbed the “market of one” by Michigan State University, is increased competition. Most of the marketplace has become optimized to the point where companies are seeking out new ways to stand out from the crowd. Offering custom products differentiates your business.

“If you don’t customize your product, at the end of the day, there isn’t much that separates you from your competitors,” said Cameron Zoub, co-founder of Whop.

Allowing your customers a hand in creating exactly the product they are looking for adds significant value to the product and the customer’s time. It also creates a personal connection between the customer and the product and, by extension, between the customer and your business.

Personalization also brings you closer to your customers by making your business seem more human and authentic. “Personalization adds a human element to any brand by making it all about the consumer, as opposed to the product,” said Jason Brown, CEO of Persona Nutrition.

Adding a personal touch to your products ensures they hold more meaning for your customer.

What to consider when deciding whether to offer customized products

Customization doesn’t make sense for all businesses. “If it takes substantial resources and distracts from the core business or if it’s not feasible financially, then it may not be beneficial,” said Antonella Pisani, founder and CEO of Eyeful Media. 

Given the benefits, you might be tempted to jump in and offer customization right away. But before you make the leap, there are a few things you should consider.

What costs vs. return do you anticipate?

Implementing customization can be costly, from a few thousand dollars for simple software to more than a million for complex technology. Besides setup, you’ll have annual maintenance and staffing costs. You’ll want to ensure profits will outweigh your expenses.

What technology is required for customization?

Think about the type of customization you want to provide and what technology requirements that might entail. How will you integrate these new demands with your current e-commerce and inventory systems? What kind of customization platform will you need? Does this already exist or is this something you’ll have to develop?

What is the timeline to implement customization?

Be realistic about how quickly you can provide customization. Even if the technology is readily available, you will need to train your customer service and fulfillment teams and create marketing materials before offering customization. You might also want to take time to beta test the new products with select customers or launch a pilot program where you can collect customer feedback and monitor performance metrics before your big launch.

What can you learn from your competitors’ custom offerings?

Before creating your customization plan, research what market gaps are in your industry. Get a competitive advantage by designing options that offer a unique selling proposition for your target audience. For example, if your competitor just allows customers to select colors, what other embellishments can you provide? You should also see what mistakes your competitors have made. For instance, what do their customers complain about? 

Should your business offer customized products?

Not all businesses or products lend themselves to personalization or customization as an option. Think about what your business offers and whether that product or service can be tailored to individual customers as well as whether your business has the capacity — both financially and in terms of staff — to support it.

Your business should offer customized products if…

• Your target market values customized products and is asking for them.
• You have the staff, technology and processes to support offering customized products.
• You’re operating in a niche market and looking for ways to differentiate your business.

Your business shouldn’t offer customized products if…

• Your target market values convenience and low costs over customization.
• Your profit margins are thin, and you don’t have the resources to support the endeavor. 
• You can’t guarantee quality control with your customized products. 

Strategies for customizing products

The customization trend is heavily rooted in human psychology. People love to feel special, talk about and identify aspects of themselves and receive products made specifically for them. “Once a customer [has personalized a product], they’re more likely to see it as a representation of themselves and thus are often more content with the product,” said Michael Anderson, manager of organic search at collystring.

Here are some best practices for implementing customization at your company:

Have a plan of action

It is vital to have an idea for how you’ll execute this business strategy or else you run the risk of annoying your customers. If they spend too much time filling in information into a quiz or survey without getting the product or service they’re looking for, they might walk away frustrated.

Ensure that the customization process is short and easy

Most customers have limited attention spans and don’t want to spend too much time on a quiz or inputting information. So, make sure your setup takes less than five minutes to complete and that you have access to technology that can accurately and effectively analyze the data.

Keep customers happy

A combination of human touch and artificial intelligence (AI) is an effective way to make sure you are fulfilling your customers’ expectations. The AI can quickly analyze the data, and you can ensure that the details are correct.

Customization or personalization can bring significant value to your business and add a new level of connection with your customers, but it shouldn’t be forced. Take the time to consider if and how you should implement this strategy in your business.

Kiely Kuligowski and Sean Peek contributed to the reporting and writing in this article. Source interviews were conducted for a previous version of this article.