Swap Meet - customization of products and services - Polling Data - Statistical Data Included

American Demographics, July 1, 2001

The Internet makes it affordable for businesses to offer this level of personalization, explains Richard Gerstein, vice president of marketing and design at Reflect.com. A brick-and-mortar cosmetics company, for instance, may only be able to develop and stock inventory of just a few varieties of makeup to suit different skin types because the overhead costs - warehousing fees, returned goods, salary for the rep behind the counter, etc. - are very expensive. But online, a company doesn't need to manufacture anything until there is an explicit demand. Says Gerstein: "Even if customization doubles the cost to make the product, we don't have to double the pricing to the consumer because we can take the money we saved elsewhere and put it toward the customization process."

In addition, more flexible manufacturing tools and computer-based design techniques are bringing down the cost of customization, says Scott Killian, CEO of FanBuzz, which offers design-your-own CustomFansuperscript ™ sports team apparel. Just a decade ago, creating a custom logo on a sweatshirt, for example, would mean cutting an individual pattern out of steel, at an expense that he says is too large and inconceivable to quantify. Even now, the cost to create a custom product is about 20 percent more than it is to make a mass-produced version, Killian estimates. But he believes there are customers willing to pay for personalization. Our Harris survey found that to be true: of those very interested in buying customized clothing or shoes, 79 percent are willing to pay a premium. Pine predicts that as costs continue to drop, and customer demand continues to rise, more companies across all industries will be forced to adopt customization just to compete. His forecast: By the end of the decade, at least 20 percent of all consumer businesses, online and offline, will offer customized products and services, up from less than 5 percent who do so today.

But offering customization or personalization for the sake of doing so isn't the answer either. The trick is to get personal, but not too personal, and never too quickly. One of the biggest mistakes businesses make is that all too often, in their race to hoard data, they forget to think about what they really want it all for, says Bruce Kasanoff, author of Making It Personal: How to Profit from Personalization Without Invading Privacy, (Perseus Publishing, November 2001). By rushing, marketers risk both turning off potential consumers and costing their business serious bucks, he says. Managing extraneous data is expensive, and with an emotionally charged topic like privacy, companies can't afford to offend. "If you are constantly asking people for more and more information about themselves, you are only training them to ignore you," Kasanoff says. "But if you only ask once in a blue moon, people are more likely to respond and be curious about what benefits they can get in return."

Mark Hollander is a believer in "drip-irrigation marketing" or incremental relationship building: Ask for a little information upfront, show consumers what they can get by trusting you, then, and only then, ask for more. As a frequent business traveler, Hollander, executive vice president of DeepBridge Content Solutions, is constantly strapped for time. He remains loyal to Marriott, in particular, he says, because its online booking system offers a personalized service - a complete listing of his prior stays and preferences - in exchange for bits of personal information, like his name, address, and frequent traveler number when he logs on. He likes having the option to add to or delete from his personal profile at any time, at his own pace, and he especially appreciates that they remember his preferences so he doesn't continually have to repeat himself.