Marketing
The difference between personalization and customization in retail CX
Angelo Coletta, founder of Zakeke, defines personalization and customization within the retail customer experience and the vastly different benefits provided both in-store and online.
August 25, 2021 by Angelo Coletta — Vice President, Diffusion PR
Retailers often use the terms 'personalization' and 'customization' interchangeably. In reality, these two terms provide vastly different benefits to the customer experience, both in-store and online.
In short, customization is all about the products while personalization is all about the people.
• Customization allows the consumer to assume the role of creator by adding a monogram or choosing sneaker colors.
• Personalization is about the retailer tailoring the product offerings for a consumer and leveraging data to provide a more personalized and unique shopping experience.
While both offer benefits to the retailer (repeat business, more sales) and customer (control over what they are buying, exclusive offers), it's important to differentiate the two to understand what needs to be prioritized to increase a brand's bottom line. So, what is the difference between customization and personalization, and what does each offer a retailer?
Customization
Customers are increasingly demanding a more interactive shopping experience. Customization allows the customer to assume the role of creator, enabling them to control what they are hoping to purchase, from changing the color of a pair of shoes to monogramming a bag or tailoring the shape of a couch to fit their living room. What will that couch look like in your living room? Does the bag you're purchasing look better with gold zippers or silver? How many custom colors for your new sneakers is too much?
Visual customization features provide customers with an immersive and unique shopping experience so they can more accurately predict what their product will look like – which reduces the chances they'll return it once they buy it from the retailer. Customization is more than just populating your e-commerce store with static product images; it's implementing technology to make the consumer the creator to customize a product to their exact specifications.
Think about shopping in a brick-and-mortar retailer. We pick up the products, move them around and observe them from a variety of angles. 3D product configurators are solving this problem and enabling customers to make more informed purchases by interacting with the products — visual content is essential for selling online.
Simply allowing the customer to customize a product isn't enough. Augmented reality and 3D preview are an important tool for retailers to replicate the in-store experience, and set expectations for customers before their purchase arrives.
One of the most important features of AR in the context of online shopping is the ability for customers to see what an item looks like — from placing a piece of furniture in their own living room to a virtual try-on to confirm sizing is correct before checkout. Visualizing the product by using technology allows customers to interact physically with it (and reduces the nearly 30% product return rate in the UK and the $550 billion loss in the US).
Personalization
When it comes to personalization, it's all about making the customer feel special by offering a unique experience through getting to know them a bit better. Consumers want to feel valued by retailers, whether it's online or in-person, so in order to truly offer a more personal shopping experience, retailers need to examine what matters most to their customers. Is it offering a discount on the pair of jeans you know X customer always buys? Is it recommending particular products to compliment the recent purchase Y made during their last visit?
Personalization provides a unique shopping experience to drive repeat visits and increase sales. A study by Deloitte shows that an average of 36% of consumers expressed a deep interest in purchasing personalized products or services.
According to Accenture, 91% of consumers are more likely to shop with brands who recognize, remember, and provide relevant offers and recommendations. In fact, 70% of millennials are willing to let retailers track their browsing and shopping behaviors in exchange for a better shopping experience. Retailers can offer more personalized and unique shopping experiences to consumers by leveraging data from past purchases and buying habits.
In an extremely competitive market, retailers need to get to know their customers, and quickly. By leveraging certain technology, like AI, retailers can create personalized offers based on previous searches, purchases and profiles. AI has drastically changed how we shop. Think about the last time you logged into your Amazon account — from the product recommendations to the offers you see on the homepage are all part of Amazon's AI technology to personalize the app for each customer.
Customers want more
Studies show that 23% of product returns are due to a disconnect between the customer's expectations and the item's actual appearance on the website.
By implementing both customization and personalization technology, retailers can increase customer confidence in purchasing online, which drastically reduces returns due to unmet expectations and drives repeat visits.
To provide customers with a truly unique shopping experience, brands need to decide whether customization or personalization will improve their bottom line. In some cases, it might be both — but it's important that customization and personalization work as two separate activations, not as one.
Angelo Coletta is the founder of Zakeke
About Angelo Coletta
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