Businesses are always looking for ways to grab the customer’s attention, especially in an era of digital information overload. This need, coupled with advancements in technology, has given rise to the concepts of ‘personalization’ and ‘customization’ – terms you’ve probably heard used in marketing, product management, and more. In fact, you may even have heard them being used interchangeably. 

But do they actually mean the same thing? Or is that just conflating two entirely different concepts that need to be treated separately? 

Let’s take a closer look to see if we can clear the air in the personalization vs. customization battle. 

Personalization and customization: united on customer experience

Personalization and customization have both become big business in recent years. The goal is largely the same for both: companies are looking to improve the customer experience and make it more relevant to their audiences. 

And that’s completely understandable – 71 percent of consumers feel frustrated when a shopping experience is impersonal, after all. 

But, without a proper understanding of what personalization or customization really mean, it’s very difficult to apply them effectively. And there’s no doubt, many businesses are still getting them wrong. At least part of that is down to the misconceptions that have developed around the two terms.  

Same goal, different path

Personalization and customization do have some things in common. They’re both there to help tailor marketing content, services, and products. But, there are also a number of very important distinctions to be made. 

When it comes to defining them, we can say that:

• Personalization is the “action of designing or producing something to meet someone's individual requirements.”
• Customization is the “action of modifying something to suit a particular individual or task.”

Although seemingly similar at surface level, one particularly important difference to note here is that of implicit vs explicit focus. 

Personalization is implicit. That’s because it takes place without actively asking users for their preferences. In other words, the company (or more likely their data and algorithm) controls and modifies the experience on the user’s behalf. 

Customization, on the other hand, is something controlled by the user themselves and therefore explicit. Users are actively asked to make choices to tailor the experience to their own preferences.

Check out their more detailed differences summarized in the table below.  

Mass personalization vs. Mass customization

Despite what the name might suggest, personalization isn’t always… well, personal. What we mean is that the experience needn’t be completely unique to every single individual.

Mass personalization creates specific digital experiences for particular audiences based on certain criteria. So, every user wouldn’t be sent an email completely unique to them, but rather something tailored towards the group they belong in. This usually happens courtesy of analysis models that allow businesses to segment their customer base for more effective targeting.  

An important distinction to make within personalization here is that of segment vs. persona. Customer segments can be thought of as high-level classifications of customers, for example their geographical location. Personas, on the other hand, have more to do with a particular type of person, based on their experiences, goals, or motivations (consider that personas are often given pretend names and surnames to illustrate these human qualities).

Mass customization, on the other hand, may occur across marketing or manufacturing, among other areas. It takes the idea of something being made-to-order, or bespoke, to a whole new level by applying it in a cost effective manner so that it can be done on an enormous scale. 

Broadly speaking then, mass personalization is more relevant to customer-oriented companies (in terms of its application to data and communication), whereas mass customization applies to product-driven companies (in terms of its application to production).

Where can you see personalization and customization in action?

Digital technology, and in particular the ‘big data’ explosion, has helped to stretch the limits of what personalization can do. Despite issues around the transparency of data used, 83 percent of consumers are willing to share their data to create a more personalized experience. 

And, with more agile tech and sophisticated manufacturing techniques, customization has become far more accessible too.

Here’s how businesses often use personalization:

• Marketing correspondence. The holy grail for marketers is speaking to users on a personal level – or at least as relevantly as they can (think mass personalization). Even something as simple as a first name in a marketing email can be a massive improvement on being addressed as ‘Dear user’. 
• Recommendation engines. Perhaps the most advanced type of personalization, as popularized by the likes of Amazon and YouTube. It’s essentially used to upsell and cross-sell based on suggestions determined by behavioral data as relevant to the user. 
• Advertising. Ever noticed you get served an ad for trips abroad just when you happen to be looking at potential holidays? It’s no coincidence. Personalized advertising has become the norm, where algorithms use a host of data points to serve the most relevant ads possible to users.   
• Customer service interactions. Personalization in customer service is actually extremely important. The ability to know contextually relevant information about the customer you’re dealing with is a massive boon for customer experience. This relies on access to centralized data and a single customer view. 

And here are some areas where businesses use customization:

• Software. It’s become fairly commonplace to give users the option to tailor software to their own requirements. Whether that’s to do with aesthetics (such as customizing colors and fonts), or even how the data collected is analyzed and presented. The end result is that users feel an increased sense of ownership. 
• Products. There’s a whole range of products available for customization these days (you may also see it as made-to-order), part of a wave of technological advancements in the retail industry. The process involves using computer-aided manufacturing techniques to produce flexible, custom outputs at low cost. It has proved popular as consumers like to feel products are unique to them.
• Advertising. In contrast to the personalized advertising mentioned earlier, users may also be explicitly asked what sort of advertising they want to be exposed to. Facebook and Google, for example, both offer the user options to determine the type of advertising content they’re served.

Personalized and Customized: are they worth the effort?

The short answer is yes. That’s because personalization is about knowing your customers and treating them as individuals. Or in the case of customization, customers are given the freedom to determine their own choices. 

Without those mechanisms in place, you simply don’t have the insight (or the process) to give customers what they truly want. And delivering what customers want is something all brands should aspire to: it helps build loyalty, satisfaction, and ultimately makes for a more successful business.

In fact, there are a whole host of benefits to personalization (for marketing in particular). In email, personalized calls to action convert 202 percent better than default or standard calls to action. And personalization also has a big impact on the bottom line, too.  Econsultancy reported that 80 percent of companies have experienced an uplift since implementing it.  

You can see how conversion rates benefit from personalization specifically in the graph below.

Examples of companies to get inspired from 

You don’t have to search far to find companies trying their hand at customization or personalization. But to find them doing it well, you need to dig a little deeper. Here are a few examples of businesses that have boosted customer experience by nailing their personalization and customization tactics.

Spotify: on song

Spotify has a formidable reputation for their personalization game. And it’s easy to see why. Their personalized curated song lists have been a big hit with their users. At the end of 2019, they added a nice touch – a ‘Your Top Songs 2019’ song list on the app so their users could start the New Year with their perfect personal playlist.

Image source: Spotify listeners were treated to their own personalized playlist at the end of 2019.

NikeiD: make your own

Nike are a long-established heavy hitter in the world of retailers, and have also made big waves with their flagship experience store. They took mass customization to the next level with NikeID, offering consumers the chance to create their very own unique pair of sneakers. Priced at $170, they were by no means cheap, but such was their appeal that Nike not only boosted their sales, they also gained some serious kudos for their innovation.

Image source: The possible combinations are almost endless with NikeID.

Netflix: customized and personalized in one

Netflix are well-known players in the personalization game, but their model actually makes use of both customization and personalization. When a customer signs up for Netflix they’re asked to provide some of their favorite shows (there’s the customization) and are then given a list of options drawing from those choices. 

Customers will also be presented with personalized curated content along the lines of ‘if you liked that then you’ll love this’ as they continue to watch content on the platform, feeding data into the algorithm. Users will even see different thumbnail images for each movie depending on their previous activity.

Image source: Same movie, different image. And it’s all down to personalization.

Customer experience: the personal touch

The last thing that modern customers want is to feel like a dollar sign. So whatever type of business you’re in, personalize your customer experience. Not only will your customers see that you really do care, but you’ll reap the benefits in revenue and loyalty as well.