The aims of mass production are simple; achieve economies of scale, thereby increasing efficiency and reducing costs. However, modern consumer needs aren’t always satisfied by mass production. Today’s consumer increasingly wants to play a part in creating the products that they consume and they’re happy to pay a premium— and wait— for the privilege. Advances in e-commerce, data analytics and manufacturing technology are making this new customer need a realistic possibility. Move over mass production, we are now entering the age of mass personalisation.
Fifty two percent of customers are willing to part with their personal data in return for personalised products and experiences1. When customers can personalise products, their loyalty to a brand significantly improves. Higher profit margins, richer customer insight and reduced inventory costs are also benefits associated with personalisation. However, mass personalisation is often costly and tricky to implement. It also requires a complete shift in the way Consumer Goods organisations think about customer data, organisational structures, marketing and manufacturing. Consumer Goods organisations must believe that the increased cost and challenging implementation can be offset by the benefits of personalisation. With that in mind, we have identified three focus areas for anyone looking to drive profitable personalisation at scale.
Only personalise where consumers value personalisation
There is a broad spectrum of available approaches between mass produced products and fully bespoke solutions. Organisations like Amazon deliver mass produced, personalised recommendations based on a consumer’s previous purchases. The consumer doesn’t input into this process beyond allowing the use of his or her data. Mini customises its products en masse by allowing customers to choose colours and accessories and then producing cars in relatively small batch sizes. Saville Row tailors offer consumers the opportunity to personalise every feature of their suit and the suit is made bespoke for each consumer.
The right degree of personalisation is not always fully bespoke, as this can lead to a paradox of choice for the consumer and high operating costs for the manufacturer. The right level depends on the needs of the consumer. If Consumer Goods organisations can understand the varied daily desires of their consumer, they can identify the right degree of personalisation to offer, in the right markets and at the right time. Organisations will need to develop deep data and analytics capability in order to best understand where customers value personalisation.
Enable a new collaborative way of working
The marketing functions of Consumer Business organisations used to lead personalisation effort with personalised marketing based on customer segmentation and client purchase data. However, personalisation can no longer be owned by any one team. It requires close collaboration between marketing, product development, manufacturing and commercial teams. These teams need to work together at rapid speed. As Consumer Goods organisations are often relatively siloed, this requires a significant change in ways of working. The leaders will be those that find opportunities to collapse siloes and replace them with empowered, cross-functional teams that can adapt processes to deliver on consumer’s personalisation needs.
This type of cross functional collaboration requires teams with the right mix of skills and clearly defined roles and responsibilities. However, this alone will not be enough as many will find the pace and new style of collaborative working uncomfortable. It’s important to simultaneously coach individuals on the new ways of working whilst also understanding what works for them. Launching cross-functional working across the whole organisation in one go is likely to fail. Therefore, organisations should start small by identifying the areas that will make the transition easiest before building on this. Success with this new way of working should be celebrated. Celebrating success can be infectious and soon everyone will want to be involved in this new way of working. Best practice will continually evolve and so it’s important to ensure that each team member is empowered to continually provide feedback and influence changes to ways of working.
Embed operational agility
Whilst mass production delivers economies of scale and reduced per unit costs, personalisation requires economies of speed; i.e. small-scale production that allows organisations to test and learn the degree of personalisation that customers value. Technologies such as 3D printing are making it increasingly possible to produce in batch sizes of one and improvements in customer relationship management (CRM) tools are making it easier to manage a consumer as an individual. However, Consumer Business organisations must go beyond technology improvements and focus on people change if they are to enable the operational agility that personalisation requires.
Manufacturers that have typically been incentivised to focus on economies of scale will find it uncomfortable to shift to a new economies of speed mindset. In order to enable this shift, Consumer Business organisations must find new measures for success, engage staff on the benefits of new manufacturing process and empower staff to take decisions that go against old ways of working. Our recent Barometer on Change report offers perspectives on economies of speed vs scale.
For too long, personalisation has started and stopped with marketing, offering targeted recommendations based on recent transactions. When the whole organisation works collaboratively to identify granular consumer needs and delivers the operational capability to execute on those needs, enterprise scale mass personalisation can shift from being an ambitious dream to a realistic possibility.
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