Personalisation and mass customisation

Personalisation

Web-based personalisation involves delivering customised content for the individual, through web pages, e-mail or push technology.

Mass customisation

Mass customisation is the creation of tailored marketing messages or products for individual customers or groups of customers typically using technology to retain the economies of scale and the capacity of mass marketing or production.

The potential power of personalisation is suggested by these quotes from Evans et al. (2000) that show the negative effects of lack of targeting of traditional direct mail:

'Don't like unsolicited mail... haven't asked for it and I'm not interested.'

'Most isn't wanted, it's not relevant and just clutters up the table ... you have to sort through it to get to the "real mail".'

'It's annoying to be sent things that you are not interested in. Even more annoying when they phone you up If you wanted something you would go and find out about it.'

Personalisation and mass customisation can be used to tailor information content on a web site and opt-in e-mail can be used to deliver it to add value and at the same time remind the customer about a product. 'Personalisation' and 'mass customisation' are terms that are often used interchangeably. In the strict sense, personalisation refers to v v v v

Collaborative filtering

Profiling of customer interest coupled with delivery of specific information and offers, often based on the interests of similar customers.

customisation of information requested by a site customer at an individual level. Mass customisation involves providing tailored content to a group or individual with similar interests. It uses technology to achieve this on an economical basis. An example of mass customisation is when Amazon recommends similar books according to what others in a segment have offered, or if it sent a similar e-mail to customers who had an interest in a particular topic such as e-commerce.

Other methods of profiling customers include collaborative filtering and monitoring the content they view. With collaborative filtering, customers are openly asked what their interests are, typically by checking boxes that correspond to their interests. A database then compares the customer's preferences with those of other customers in its database, and then makes recommendations or delivers information accordingly. The more information a database contains about an individual customer, the more useful its recommendations can be. The best-known example of this technology in action can be found on the Amazon web site (www.amazon.com), where the database reveals that customers who bought book 'x' also bought books 'y' and 'z'.

Figure 6.4 summarises the options available to organisations wishing to use the Internet for mass customisation or personalisation. If there is little information available about the customer and it is not integrated with the web site then no mass customisation is possible (A). To achieve mass customisation or personalisation, the organisation must have sufficient information about the customer. For limited tailoring to groups of customers (B), it is necessary to have basic profiling information such as age, sex, social group, product category interest or, for B2B, role in the buying unit. This information must be contained in a database system that is directly linked to the system used to display web site content. For personalisation on a one-to-one level (C) more detailed information about specific interests, perhaps available from a purchase history, should be available.

An organisation can use Figure 6.4 to plan their relationship marketing strategy. The symbols Xj to X3 show a typical path for an organisation. At Xj information collected about customers is limited. At X2 detailed information is available about customers, but it is in discrete databases that are not integrated with the web site. At X3 the strategy is to provide mass customisation of information and offers to major segments, since it is felt that the expense of full personalisation is not warranted.

Mass customisation

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