With so much data coming in from all sides, almost every serious company is probably utilising this valuable trove to improve their products and services. Having user-, transaction- or even behaviour data is so much more powerful than any of the qualitative or quantitative surveys which large corporates have heavily relied upon for decades. In addition, using a lot of data during the innovation process can create a better fit between the customers’ needs and the end product/service. With the endless possibilities of machine learning and AI, it’s actually possible to create a unique product or service for almost each and every customer. But are customers really interested in unique and customised offerings or are they more interested in the best match, with some limited options for possible customisation? With all the opportunities it feels like a dilemma, but there is also a lot of evidence to suggest people are fine with a one size fits all approach, as long as it’s satisfying their needs.
Huge number of products and services, compared to decades ago
Back in the day, centuries ago, there were hardly any traditional end-products or services as we know them now, especially not the customised products that we’re able to buy now. While retail markets have been here with us for more than 10.000 years, the inventory of many of these outlets have been very limited for decades. Very common products were traded back in the days: vegetables, eggs, meat. Jumping forward to the 19th century, the number of available products and services has definitely spiked. However, it was only after the introduction of the modern supermarket as we know it now to see another spike in the number of available products. Some modern supermarkets have more than 60.000 products on display. Another thing that really helped was the industrialisation which made it easy to create a wider variety of products, produced in bulk. And think about this: Amazon has a catalogue of more than 12 million items! Compare this with the first general shops during the medieval era!
Growing number of products; paradox of choice
The increasing competition and customer demand have brought us into a situation where we’re right now: endless numbers of brands with an even more endless line-up of products and services. If you’re looking for a ‘t-shirt’ in the American Amazon store, you will get more than 100.000 results. This sounds really cool, but lots of choice also creates a lot of confusion. Barry Schwartz lays it out very well in his ground-breaking book ‘The paradox of choice’. While some marketers and sales people still believe companies should offer a wide variety of products and brands, he actually points out to the opposite: adding more products or variety creates so much confusion that people tend to become paralysed. Not only will it be hard for customers to pick the best product, but there’s an even bigger risk: some customers won’t buy any product at all. This is obviously true in the brig and mortar retail, but a different story in the online world. With so many options to sort and/or categorise things, it’s easier to find the appropriate t-shirt. This obviously wouldn’t work if you haven’t got a clue on what you’re looking for.
It’s costly to create unique and customised products
Based on the available customer data and requirements, it’s easy to create a line-up with personalised products and services. Hotels could start offering customised stays: having a bed and a washroom most probably would be a required asset, but a lot of the current inventory and services may not: want a tv or not? Big sofa or an office desk? What kind of design would you like? Contemporary? Minimalistic? All of this could be offered based upon usage date collected during previous stays, combined with Google browsing. And what about buying a new car? Why not provide your previous driving behaviour data to the preferred dealer ask them to come up with a totally customised and unique car? You can even share your latest browsing data with them. And what about creating a unique perfume, based upon some of one’s personal preferences and online identity? It would be so cool to have a unique perfume, based upon all your Facebook, Instagram and other data wouldn’t it? While the costs would be major point of concern for many companies, the opportunities within the service industry are endless. One could think about unique and specific content services. In my case, Spotify could offer me a Jasper Fortuin music service, mainly driven by my previous music preferences.
Most customers don’t want unique products and services, but some do
While it sounds appealing, here’s the thing: with an exception of the odd millionaire and/or style fetishist who probably wants to own a unique car and only wants to go to a party while wearing very exclusive attire, most consumers are not interested in unique and customised products. They not only want a product or service that is being used or has been bought by some of their peers, but they are also looking for something to admire; they want to walk around a specific model of a car and return home to think about it for another week or so. There are exceptions and a good example is the perfume industry. The global market size in this industry for 2018 was an estimated 31 billion Dollars. While still growing because of the increased demand of luxury and exotic fragrances, the growth has surpassed that of mass fragrance products. Yes, there is still a huge demand for traditional perfumes produced and offered by well-known brands like Chanel, Dolce & Gabbana or Calvin Klein. In contrast, some of these companies are now offering a wide variety of premium segments. Even more: Jo Malone stores offer fragrance consultations to develop customised products.
Buying customised products and services is expensive, but also time consuming
While there is a small but significant market for totally customised products and services, I don’t expect this to grow in a fast pace. Here’s the reason why: customers don’t want to
answer a lot of complicated questions during the purchase process. After determining the preferred brand and model of a car (or any product), they only want to spend time on the colour and some of the accessories and/or smaller customisations. And there’s more. After buying a product or service, it’s much easier to explain this to your friends if it’s somehow ‘standard’; while it’s relatively easy to tell your friends you just bought Flowerbomb Dew from Victor & Rolf (a perfume from a Dutch fashion brand), it’s very hard to explain that you went to a Jo Malone store and walked out with a customised perfume based upon oud, burnt leather or fermented citrus; some friends will be pretty impressed but most of them will be left puzzled.
Most successful companies are offering a one size fits all line up
Even after weighing in every single data point for each customer, the most successful companies have managed to keep their product line up simple while still pleasing a huge number of customers. Apple has a steady growing range of products and services, but other than the option of choosing a specific colour the customisation options fall short. What they’re doing really well is creating products with so many functionalities that it satisfies people with very different requirements. Another example is Netflix. They’ve spent so much money on attracting a huge subscriber base that they can add enough titles to please almost every single user. In other words: there is no need to create several Netflix offerings, because the base is large enough to add every single new title into the main catalogue. This sounds really cool, but brings a lot of new challenges: how to make sure to deliver the required content to their subscribers? Companies like Spotify and Netflix have spent big box in creating mechanisms to come up with recommendations. One could even say that the service itself is standard, but the way they’re delivering you the service is customised.
Instead, setup a marketing approach to attract specific customers
I expect that the number of available products will grow faster than the offerings for customised ones over time. While saying this, I also believe the importance of data continue to grow. But this will not be used to create customised products. Instead it will be used to create better products and services. And above all, data helps to create the biggest match. To use the Netflix example again: if they identify a very small group of people who are interested in a special genre of movies, they can target these people by highlighting the offerings of this special genre within the catalogue.
Conclusion: embrace data, but don’t fall into the trap of creating too many customised options
I will be the last person in the world to advise companies to ignore data. The opposite is true: real data will continue to help companies create better products and services. While developing or improving new products or services companies should not fall into the trap of creating too many options. Not only would it become a costly operation and not at all simple, there is a limit to customers’ willingness and ability of picking the right product or service.
