Profits and Problems of Personalisation

May 09, 2016

Rob Currie | Group Business Director | WPP AUNZ

Henry Ford, the founder of mass production, famously once said “Any customer can have a car painted any colour that he wants as long as it’s black.” It wasn’t a joke; Ford had his finger firmly on the pulse of middle-income 1920’s America. He knew that to get behind the wheel of one those magical machines, people would be more than happy to trade individuality for affordability.

A century later the auto industry isn’t the only one that’s being pressured to move in precisely the opposite direction. As markets become more and more crowded and competitive, businesses increasingly find themselves searching for ways to satisfy the modern consumer’s growing desire for personalisation. It was enough for our parents’ generation to have their initials sewn into their hankies. Their grandchildren will expect to be able to personalise almost every moment of their waking lives. In a couple of decades we have gone from happily keeping up with the Jones’s to “Whatever you do don’t confuse me with those @%#*&*$ Jones’s”. Many businesses - especially manufacturers - have been slow to respond to this trend because of the costs it incurs. But those who ignore it completely do so at their peril. 

Contrary to popular opinion, personalisation is not a by-product of the digital revolution; it started long before that. Just think about home entertainment. When I was a kid my options were four TV channels and my record collection. I could only play my records in my bedroom, and if I was out when my favourite TV shows were on they were gone forever. Then came the VHS recorder, then came Pay TV and then came the internet and finally the smartphone. Now I can watch exactly what I want to watch, whenever I choose to, wherever I happen to be. And thanks to Spotify my entire existence has a uniquely personal soundtrack.

The companies which have made the transition to personalization most profitably are the ones which saw it coming a long time ago, and identified the internet and mobile technology, when they arrived, as its facilitators, not its drivers. If the transformation is happening so much faster now than ever before it is only because in the last few years the wealth of digital options have burst the dam of resistance; have presented consumers with so many new ways to personalize that all resistance has been well and truly overwhelmed.

Different businesses are finding different ways to monetize this transformation, and many are finding that consumers are willing to pay an extraordinary premium for personalization. Recently, purely in the interest of research, I tried McDonald’s new ‘Create Your Taste’ ordering system, and ended up paying nearly 50% more for a Macca’s than I ever have before. But I also enjoyed it more than any Macca’s I’ve had before – and I’m sure the enjoyment was as much about my sense of ownership – the idea that this was uniquely my Macca and nobody else’s – as it was about my taste buds. The technology which enabled this must have been enormously expensive, but McDonalds will have have done the research and the maths, and I’m sure I won’t be the only very satisfied customer. With the CYT campaign strapline “How very unMcDonalds” the company seem to be well aware that their embracing of personalization is, at one level, completely antithetical to the fast food concept. But they know that this thing is bigger than them.

Any company that is struggling to grow in Australia today will benefit from finding innovative ways to tap into personalization. And the ones which have grown fastest are the one which have embraced the new technology most enthusiastically. A couple of years ago etsy was a word you couldn’t use in Scrabble. Today it is the name of a global online personalized gift-sourcing company worth billions.

But amongst the evangelists a few people are expressing caution. Personalisation, is fine, they say, as long as it’s consumer-driven, but the problem is that increasingly it is happening without consumers’ knowledge or permission.

And they have a point. The MO of giants like Google, Facebook and Yahoo! Is to tailor what you see on your screen according to your previous online behavior. This fine tuning is what makes them so attractive to advertisers, of course. At one very obvious level it helps consumers, too, saving us from trawling through stuff that’s of no interest or relevance. But the flipside of it is what Upworthy CEO Eli Pariser described in a TED Talk as a ‘filter bubble’ – basically a buffer zone which insulates and isolates the user. To illustrate his point he and a friend simply punched the word Egypt into Google into their laptops and got completely different results because of their very different histories. Eli’s concern can be summarised very simply: Imagine living in a world where people only experienced what they have experienced before. To some extent most of us do live in that world. We all know people who are ‘set in their ways’; who’ve done the same job all their lives, wear the same clothes, eat the same food, sit on the same stool in the same pub and drink the same beer. And watch the same TV. And when you ask them what they’ve been up to they always say: “Same old same old.” People who have personalised their lives to the point where they will never try anything new aren’t usually very good company. But if you’re a business trying to grow its customer base they’re your worst enemy.

There is no doubt that the technology which allows businesses to tailor their product to match consumer DNA is a powerful tool, and like all powerful tools it can be counter-productive if it’s used incorrectly. But one thing’s for sure. Now that consumers have tasted the benefits they won’t go back. If Henry Ford had lived another hundred years and you asked him if he’d do it any differently today, he might well borrow a line from the guy who does the voiceovers for movie sequel trailers.

 “This time … it’s personal.”   

Rob Currie is the Group Business Director of WPPAUNZ, the largest communications group in the region. Follow him on twitter @RobECurrie

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