Personalization, Customization, Collaboration - New Business Trinity

written by: Gianluigi Cuccureddu

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Published on Tuesday, 30 November 1999 01:00

These are the three concepts/components how -in essence- future (online) business will be shaped and how new opportunities, models and markets can and shall be created. Seen from an abstract point of view, personalization is the front-end of the process, customization is the back-end of the process and collaboration is how these two interact and ultimately benefit from co-creation or at least create a win-win situation.

Personalization

Basically it’s a market need and demand, a consumerist trend to want it the way the customers want it, when they want it and where they want it. Users get personalized content/products/services served based upon preferences specified in the process like interest, location or any other measurable characteristic which can be used to describe the personalization.

Besides the benefits of personalization, which are relevancy and time-efficiency amongst the most important ones, personalization still has many challenges to overcome. The most important one is privacy and the acquisition of data, on which personalization is effectuated.

There are three methods to achieve personalization, through the implicit, explicit and the hybrid way.

Implicit personalization makes use of tracking the users' purchases, or click paths or any kind of habit that characterize the user. Explicit personalization makes use of explicit information which can be found in forms, itineraries and other means of extracting information. Hybrid personalization is a combination of the two abovementioned methods and is -for instance- deployed by Amazon.com.

Examples of personalizations are:
* eBay's Selling form which adapts it functionalities based upon the learning curve the user is going through;
* Amazon's product recommendation engine;
* Google Reader and
* Google Search and its increasing personalized SERP's.

Customization

Customization is the back-end of the production-process. It are IT abilities that make it possible to serve and produce content/products/services on the personalized needs and demand of the customer, it’s not yet always profitable, due to scaling and the market, but the first steps are being made.

(Mass) Customization can refer to two areas of application: first of all, customization refers to the context within the same range as personalization, that users can modify the website to their needs and only display what is wanted. Secondly, Mass customization can be defined as a complex business strategy, which goal is to produce goods and provide services on a large scale, customized to the individual needs of every customer with the efficiency of mass production.

(Mass) Customization can be aimed at maximizing customer satisfaction because they purchase their content/product/service customized by their individual preferences. The Internet is the perfect medium to support mass customization in keeping the costs at a minimum level.

Areas of application for mass customization are:
* Travel;
* Content delivery;
* Transport means: cars, bikes;
* Shoes;
* Software and many more.

Both personalization and (mass) customization are powerful means to attract users and customers, increase loyalty and retention, which paradoxically is achieved by the input of the customers themselves.

Collaboration

Collaboration is the –already- initiated way of conducting business amongst each other and towards end-users.Think dialogue instead of appointing, think prosumerism instead of production.Having in mind personalization and customization, collaboration is the effect of the two. Throughout the process the customer mingles in, to get its personalized needs, and co-creates together with the producer the content/product/service which is enabled by the customized infrastructure and processes, fully customized to individual preferences.

Whilst the utopian hypersegmentation or 1-on-1 marketing might be far from reality, but more and more markets are becoming niches based upon refined corresponding characteristics which create smaller and smaller segments and inherently become more hypersegmented.

Blue Ocean Strategy approach - value creation and cost control

The new trinity also corresponds with Blue Ocean strategies in terms of creating new value at a low cost.

In the new business trinity, value is more and more facilitated by the company and (co-)created by their customers. Lower costs, CAPEX and OPEX, are being achieved simultaneously with the value creation/innovation, because it's more relevant and engaging with the customer than in conventional scenarios and it leaves out the costly parts that often triggers competition.

At the TelecomTV Resolutions, experts from around the globe debated on how to get the most from the cloud through collaboration, for instance:

Service Providers need to take a serious look at how the manage – and indeed retain – their customers. There are still some major internal doubts about the effect of cloud on jobs and company structure – change always scares people – but cloud represents an opportunity, it’s not a threat.

This well indicates that  concepts as cloud and collaboration intrinsically are changing the way we conduct business. The rigid TV industry is about to experience this, one way or another. Change might be difficult, but inevitable. The three pillars of new business are creating new opportunities, and that's a fact.