Making Mass Customisation Work

Making Mass Customisation Work

Me-to-Me: The Future of Customer Engagement

This series of Leadership Summits will explore the emerging concept of Me-to-Me: Enabling customers to select exactly the services and products they want, when they want them and at a price they are willing to pay. In this way, digital, financial and communication service providers could deliver mass customisation to enterprises, SMEs and, ultimately, consumers, while maximizing the value of each and every transaction for both parties.

Mass customization – moving to a new level

Across the economy, companies have been trying for decades to achieve mass customisation – the cost-effective provision of products and services that customers can tailor to their exact needs. For companies facing commoditisation and brutal price competition, the logic is compelling – if customers can buy a product or service that precisely meets their needs, they are likely to pay more, buy again and recommend the supplier to other potential customers. And by enabling customers to choose the exact configuration they want, the supplier gains valuable insights into how markets and customers’ requirements are changing.

In manufacturing, particularly the automotive and computing sectors, a limited form of mass customisation has been implemented with some success. Dell, for example, became the leading PC maker in the world by enabling customers to specify how much memory they wanted, how big a hard-drive they required, the speed of their PC’s processor and which software they wanted pre-installed.

But this kind of product configuration is just scratching the surface of what is now feasible thanks to recent technological advances. “We believe the time for widespread, profitable mass customisation may finally have come, the result of emerging or improved technologies that can help address economic barriers to responding to consumers’ exact needs in a more precise way,” noted McKinsey in a February 2014 paper(1).

As digital technologies enable companies and customers to exchange insights and information in real-time, mass customisation is set to become far more sophisticated in terms of both the proposition and the associated price. What’s more, mass customisation is moving beyond manufacturing: Advanced information and communications technology (ICT) is now making mass customisation feasible in the services sector. For example, Amazon Web Services enables customers to assemble (and continually refine) a cloud computing solution from a wide array of potential solutions and components.

With the right ICT systems and processes in place, a financial or communications service provider can also tailor its proposition to individual customers. A service provider could, for example, make customised offers in real-time by harnessing advanced analytical software that can rapidly combine data on a specific customer with data on similar customers. To take a straightforward example: A service provider might offer a graphic design agency a broadband service with a very high-speed uplink between 5pm and 8pm – the hours when such agencies typically sends prototype designs to their customers.

(1) How technology can drive the next wave of mass customization
February 2014 | by Anshuk Gandhi, Carmen Magar, and Roger Roberts

Self-service that puts the customer in control

But making tailored offers is unlikely to be enough. Customers will want the flexibility to adjust these propositions to their exact needs. A design agency may decide that, in its busiest quarter, it will need a fast uplink between 5pm and 9pm and is prepared to pay more for the longer timeslot. Advanced and intuitive product configurators (either in the form of apps or web apps), together with flexible back-end systems, can make it straightforward for customers to tailor a service exactly to their needs and their budget.

Moreover, service providers can now give customers all the information they need to optimise the service proposition. For example, a design agency should be able to see how much data it uploads and downloads each day, how much that data costs and how much traffic is generated by each application – all in clear charts and graphs.

Highly informed customers will be better placed to select the services they actually need and are, therefore, less likely to be dissatisfied and disloyal. Here’s another straightforward example: A mobile operator could give a small business a clear view of what it is spending on roaming services in which countries and at which times of the year. At the same time, it could offer the business a tailored roaming package that only applies in specific countries and at specific times of the year. Again, the customer would be able to adjust these parameters and see how these changes would impact the price of the roaming package (determined by data analytics software that gauges the customer’s propensity to buy and the cost to the service provider of delivering that service). The upshot? The customer would only be paying for what they need, rather than for an annual global or regional roaming tariff plan.

More broadly, service providers could also dynamically adjust their pricing according to supply and demand, just as airlines and hotels do. If a service provider’s systems are seeing strong demand for roaming services in a country hosting the World Cup or the Olympics, for example, they could increase their prices to ensure they’ll be able to cover the wholesale costs of connecting that traffic.

Getting down to business

Service providers are likely to implement mass customisation first in the business market. That’s because both enterprises and SMEs now demand precisely-tailored ICT solutions: For businesses operating in fast-digitising and increasingly-global and competitive markets, ICT plays an increasingly pivotal role in deciding whether a company will survive and thrive.

An enterprise’s precise ICT requirements will be dictated by the strategy it uses to differentiate itself. For example, a retailer that decides to dispense with branches will need extremely reliable and secure connectivity it can use to interact with its customers. The days when a service provider could offer all businesses an “off-the-shelf” solution are long gone. To succeed in the business market, a service provider now needs to be nimble and responsive to developments in each of the vertical sectors it is targeting. As markets change, the services and solutions a business customer requires will also change.

Carving out a competitive edge

In summary, advanced mass customisation is now feasible in the services industry and service providers that embrace this concept are likely to gain a competitive edge, particularly in the business market. As more and more SMEs use Amazon Web Services and other pay-as-you-use services, they are demanding more flexibility from other suppliers. In particular, they don’t want rigid contracts. Instead, they want a Me-to-Me experience that gives them the scope to continually adjust a proposition and the associated price to meet their exact needs. In other words, a service provider needs to put the customer in control and build a relationship based on transparency, trust and loyalty.

It isn’t just customers that benefit from a Me-to-Me proposition. As customers optimise the service proposition and the price, they will generate valuable data that a service provider can then use to guide its investment in its networks, IT systems and talent. In future, data and value will continually flow backwards and forwards between suppliers and customers. Implemented well, Me-to-Me will be a win-win, enabling both service providers and their customers to prosper.