Research notes: The pillars of customization

Here are a few key points from our recent study on consumer preferences:

Visualization is critical

Many customizers don’t show a ‘WYSIWYG” representation of the final product, which is a mistake.   Visualization boosts consumer confidence and increases sales conversions.   Users expect accurate visualizations of their creations.  That said, they don’t necessarily expect tricky visual animations, just accurate ones.   Visualization help builds trust.

Pillars of customization

The fit problem

“The fit problem” is the primary barrier to adoption to buying custom apparel.     This is not just a customization problem; it’s an online retailing problem.   Asking customers to self-measure is very risky.  “…online retailing is being hit by crippling returns, up to 30% of goods are sent back: very often simply because they don’t fit.” – WSJ

User experience

Don’t expect your customers to be tolerant of awkward software design just because you offer customization.  What is good user experience?  Is it just a polished website design?  The answer isn’t that clear.  Designing a great customization experience is something we all agree is critical, but there is no universal answer to how UX design is done well.

Price premium

The majority of customers are price sensitive.  Walmart.com, Amazon and eBay are all about price savings, for example.   Groupon is the fastest growing company in history, and their core value is offering 50% off valuable products and services.   Per a recent Deloitte study: “discounted prices become an anticipated part of the consumer products shopping experience.”

Customization is not just for luxury products, it will be part of almost every shopping experience in the form of select, adjust design, add accessories, personalize, etc.   Brands that compete on price can also differentiate by offering customization.

BUT, luxury brands continue to thrive and can command premium prices for customization.   Burburry just launched a customizer that sells $7,000 fur trench coats.   BMW reports that customers that use their configurator spend 20% more than those that go to the car dealer.

The key here is to realize that for many brands, visual customization is expected. It is a requirement.  Price is still king.   But certainly, customization continues to be a differentiator that helps command a premium price.   At MCPC 2011, someone commented that personalization is the process of changing an object into something with a high emotional value attached.

(More on guidance in an upcoming post…)

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Who are mass customization customers?

At TechCrunch Disrupt Beijing, finalist United Styles launched a new “user generated fashion” crowd-sourcing website.  The business model focuses on letting users design their own clothing, open their own stores, and sell their own designs online.  The goal is to democratize the design industry, effectively taking the power away from Madison Avenue and letting users “pull” their own fashion instead of it being “pushed” to them via conventional, predictive mass production business models that depend on the voodoo science of demand forecasting.

After the presentation, United Styles was asked by the panel of judges “who is your target user?”  Their answer was the “the fashion blogosphere.”   Huh?

A cardinal rule of social media

This is an important question for all companies offering custom products.  Who ARE mass customization customers?  Power shoppers?  Fashionistas? Tweens?  The oddly shaped?  Designers?  Hipsters individualists?  Luxury buyers?   Novelty gift buyers?

In his blog, VC Fred Wilson identifies one of the cardinal rules of social media:   “Out of 100 people, 1% will create the content, 10% will curate the content, and the other 90% will simply consume it.”   This customer segmentation framework applies to co-creation marketplaces as well.

Designers

United Styles

Bespokable, for example, provides a platform for a network of tailors to design shirts based on users specifications.  Users themselves don’t touch the visual product configurator.  Instead, customers describe their requirements via a web form.  The tailors review the requirements and self-reported body measurements, and then design a custom shirt via the online design tool.

Lookk and Fabricly also target “real designers.”  Up and coming designers are attracted to these new web platforms because they offer the chance to showcase their collection as an independent designer.   Instead of designing garments within a web browser, these designers use more conventional offline design tools like hand sketching on paper and Adobe Illustrator.  They then upload their designs and even photographs.

These are the 1% – the power users that create the content.   Experts only.

Quasi-designer

Threadless and United Styles target the amateur quasi-designer.    The micro-entrepreneur.  The casual designer engages with browser based design tools and uploads their design to a virtual store.   No special design skills or tools are required.  This is true fashion co-creation:  come to a website site and start designing and selling garments.     The real opportunity here is to encourage an untapped market of untrained designers to start designing, creating a large pool of virtual inventory.

A built-in fashion police feature

The key to success in the co-creation market is balancing user creativity with content curation.  The quasi-designer is a curator of controlled content.  Like a Polyvore user who creates sets, the core fashion is defined and controlled within the constraints of the design tool.

These are the 10% that are curating the content.   Anyone may apply.

What’s important to realize is that these new services open up a larger market of creators / curators by making it increasingly easier to access creation and curation tools.

Consumers

According the cardinal rule, the real opportunity is in serving the 90% of the market, ie the consumers of the (created and curated) content.   It is the mass-market appeal that fuels the business model.   The designers and the quasi-designers create content for a large audience of casual shoppers to purchase.

Who does mass customization serve?  Like social networks, the co-creation network serves a mix of audiences; the creator, the curator, and the consumer.

Mass customization: Fit vs Style

Why does someone buy a custom product?  It could be because they have a very unique product design in mind.  Or, it could be because they want a highly personalized version of a product.  Or, it could be because they have a specific functional requirement that standard products do not meet.

Some products categories are ideal for functional customization, others for style customization.  And, some are ideal for both functional AND style customization.

Fit

Shopping for clothes can be difficult.   You need to find a style and color you like, then try it on in a fitting room to ensure a good fit.   Online customization can help you determine if a product is a good “match” for your functional requirements – you are literally specifying your technical requirements.

Do you like these?

Take Dell.com for example.  As you choose features and add functionality you are using a product configurator to build a computer that best suits your computing needs.

Another example is sporting equipment.  Custom bikes and golf clubs all need to match your skill level and physical preferences.   Bikes need to have the right components for your cycling needs and golf clubs need to be the right length for your height.   These are functional attributes.

Determining fit over the Internet has been a challenge since the inception of ecommerce.   Many companies are innovating by adding “virtual fitting room” functionality that can give you peace of mind that yes, that dress shirt you are about to order will fit your body type.

The Financial Times recently published an article about “augmented reality” with the example of trying on wrist watches in a retail setting via an interactive video kiosk.   Rob Diver, managing director of Tag Heuer UK, says: “Gone are the days where you can just have a straightforward transactional website and expect to just make a lot of money.”

Another example of augmented reality is the Warby Parker eyeglasses online “virtual try on” application.  Shoppers can take a picture of themselves with a web cam and then overlay, tilt, and adjust various frames over the image of their face.

Or these?

Tastes

Many product customization experiences focus on personal tastes rather than functional fit.   Custom food and personalized t-shirts are examples of product categories that do not necessarily need to solve a fit issue.    All the food co-creation examples I cited in my recent Mashable article “3 ways to customize your food” speak to tastes, literally.

Both Fit and Tastes

The real opportunity in mass customization may be to appeal to customer’s unique needs both in terms of functional fit AND in personal tastes.   Great examples are furniture, eyeglasses, and dress shirts.   Indeed, the “killer app” in online mass customization may be to create a shopping environment where the customer can design and specify both the sizing and styling of product.

 

Savvy Retailers Increase Brand Loyalty with Co-Creation

Michael Dart of Kurt Salmon Associates

Brands succeed when they evoke an emotional connection with the customer. When a company moves from simply satisfying a functional ‘need’ to creating an emotional ‘desire’ they begin to build brand loyalty.

Customer experience is a major component of the emotional connection that increases desire for a brand.   Apple stores, for example, have moved beyond a commonplace tech shop to an engaging amusement park.  Visitors not only visit and purchase, they participate and interact.

Joe Pine, author of the book, The Experience Economy: Work Is Theatre & Every Business a Stage, refers to interactive retail experiences as “Retail Theater.”  Retail experience is discussed in more detail in a previous post “What’s after customization?  Experience.”

I was lucky enough to speak with retail strategist Michael Dart about some new trends in customer experience.  Dart is the head of Private Equity at Kurt Salmon Associates and co-author of the book, The New Rules of Retail. Darts says that successful brands, such as Apple, are “creating a phenomenally addicting experience” with their customers.

Apple genius bar

“The anticipation of finding something fun releases a surge of dopamine in the brain which is a chemical associated with happiness and satisfaction…you feel good shopping,” says Dart.

After all, as Walt Disney once said, “People spend money when and where they feel good.”

With technological advancements in e-commerce, retailers can offer their customers new ways to enrich their experience outside of their brick and mortal walls.  Online customization options engage them beyond just shopping for an item; they are now part of its creation.

Dart explains, “People get more satisfaction in feeling that they have been part of the creation instead of having a retailer sell something to them.”

In addition to being part of the story, customization allows customers to express their individuality and distinguish themselves from their peers.

However, Dart argues against offering consumers too many choices in customization.   Too much choice weakens the experience, turning it from fun to frustration.  “With too much choice the consumer will feel overwhelmed.  There is less of a feeling that that the retailer understands them….and then they buy less.”

This “paradox of choice,” is explored in more detail in a previous post.

Netflix suggestions

As an example, Dart mentions that walking into a well-stocked Blockbuster store can be so overwhelming that customers may actually leave empty handed, too confused to choose a film.  However, when users are guided through titles on Netflix with personalized recommendations, the experience becomes frictionless – and fun.   The guided experience gives the user confidence that Netflix understands them.  “A retailer should guide the customer and limit their choices.”

I ask Dart if he thinks that (guided) customization is the future of online experiences.

“Yes,” he says. “Ubiquity is antiquity. People do not want the same thing.  As technology enables customization we will see a mass proliferation of this.  We have gone from commoditization to customization, “ Dart says.  “Look at American Idol’s success—they co-created with the audience.”

Voting on American Idol

By voting for their favorite singer, American Idol viewers become more emotionally invested in the show.  Savvy retailers can simulate this experience with co-creation technologies.  By using a visual customizer, companies allow customers to be part of the design process, increasing the fun quotient of the experience, and in turn increasing their emotional connection to the brand.

As the shopping dynamic changes to become a more interactive experience, a brand’s loyalty will become increasingly linked to the customer’s brand involvement.  If they can build it, they will come….

What’s after customization? Experience.

Joe Pine, author of the bible on Mass Customization, followed up his strategic guide to mass customization with a book about the Experience Economy.

From the Amazon review “In The Experience Economy, the authors argue that the service economy is about to be superseded with something that critics will find even more ephemeral (and controversial) than services ever were: experiences. In part because of technology and the increasing expectations of consumers, services today are starting to look like commodities. The authors write that “Those businesses that relegate themselves to the diminishing world of goods and services will be rendered irrelevant. To avoid this fate, you must learn to stage a rich, compelling experience.”

Beyond conventional goods and services, rich customer experiences can be seen everywhere you look – entertainment, theme parks, video games, even social networks.

In the context of ecommerce, an experience can be the creative process of choosing, designing, and crafting a product.  In a previous post I wrote about the craft market and “the pride of authorship” as part of the shopping experience.    Individuals not only want products that best match their tastes and preferences – they want to feel that they have crafted their version of a product.  “I made this!”

Ikea mass produces furniture kits that must be assembled by the customer.  A small Dutch design company recently launched ThisisMykea where their slogan is “say NO to naked furniture.”  Customers can have a hand in personalizing furniture by selecting graphic designs or uploading pictures to apply as stickers to the furniture.   The goal is for the customer to experience that they have both designed and (to some degree) assembled the product.  Mykea “enables everybody to customize their Ikea furniture and thereby giving their interior a trendy look and making their homes more personal and unique with the MyKea Design Covers.”

Curiosity Atlas is an example of the new frontier of customer experience.   Curiosity Atlas focuses on hosting gatherings where customers can mingle with local vendors.  The goal is to share creative experiences with both vendors (co-creation) and friends and family (community).   Adding local community to the value of brand experience is very compelling.    The focus of these gatherings is to inspire more creative and personal gift ideas, rather than just picking up a run of the mill fruitcake or Christmas sweater for that special someone.

“We believe in tango classes, mandolin lessons and mastering the art of handmade mozzarella. We believe in the importance of perfecting poker skills, developing one’s signature cocktail, and blowing hot glass…just to see what takes shape. We believe that it’s never too late to go to circus school.  Curiosity Atlas is an initiative to cultivate a community and market focused on experiential living.  We aspire to help people live richer lives by providing inspiration and access to unique, local and hands-on experiences that foster personal growth and deep connection to family, friends and community.”

So how does experience relate to mass customization?  The theme is that both customization and experiential shopping offer more interactive, creative control beyond the conventional search-and-purchase shopping model.   And more satisfaction.

Mass Customization best practices – Fun

One of the key takeaways from the recent Smart Customization seminar at MIT was that the best online customization experiences are both fun and guided.  A summary of the seminar can be found by following the Twitter hashcode #masscustom.

One of the most successful online customizers is 10 year old Build-a-bear.   Build-a-bear has over 15 millions users and has sold over 82 million custom bears.

Build-a-bear has paid close attention to customer satisfaction and loyalty.    Their reporting metrics show that they have over 80% highly satisfied guests.   Build-a-bear has learned that they are selling an experience, not just a product.    Their NPS (Net promoter scores) show that fun drives recommendations, sales, and growth.   Fun is viral.

The build-a-bear experience is semi-guided.  In store associates help and guide but don’t overpower.  This guided approach is transferrable to online configuration.    The key is to find a balanced mix between guidance and empowerment.

So what is fun?  Like a video game, fun interactive digital experiences are colorful, dynamic, and playful.   “Fun,” in the context of video games, can be influenced by bright colors, sound effects, visual effects (swooshes, fading, bouncing, poking, sliding), responsiveness / animations, puzzle solving, progress steps, and a feeling of accomplishment.

And, there are social aspects to fun like sharing, community building, and crowd-sourcing, ie creating a social market place.  Note that one of the first social networks was eBay sellers and buyers connecting on seller forums.

Another example of a fun configurator is the jewelry builder found at www.delusha.com.  From my discussion with Delusha:

“We set out to build a product configurator that met the following objectives;

1) Fun to use!

We believed that the more fun and entertaining the configuration tool was, the more time users would spend designing their own products.

2) Intuitive

By mirroring the “real life” steps one would take to make their own jewelry we felt confident that users would more easily understand the steps in the virtual world.

3) Physically interactive

We chose the “drag and drop” (dragging items from the components list to “work area”) method as we wanted users to feel they were literally “making” there own jewelry; and thus intensifying the bond between the product and creator.”

In summary, product configurators should be consumer-facing and fun to use.  The Internet has become visually rich, fast, and fun to use.  The best mass customizers will deploy an online customization experience that is above all, guided and fun.