Customer Futures Perspective: Personalisation - it's only a matter of time... and of moments
Customer Futures Perspective: Personalisation - it's only a matter of time... and of moments
We’re on the cusp of an economic shift, tilting towards the ‘empowered customer’. And it's going to change personalisation forever.
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Thanks for coming back to Customer Futures. Each week I unpack the disruptive shifts around digital wallets, Personal AI and digital customer relationships.
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REMINDER: Customer Futures Meetup - Copenhagen on 8th Feb
The next Customer Futures Meetup will be in central Copenhagen on the evening of 8th of February.
As ever it’s a relaxed get-together to talk about all things personal data, customer engagement, digital wallets and of course Personal AI 😎
When: 5-7pm, Thursday 8th February 2024
Where: Skt. Petri, Krystalgade 22, 1172 København, Denmark
Who: Regular readers of Customer Futures, friends and colleagues... anyone interested in the future of being a digital customer
RSVP: If you'd like to come along, please either
1) DM me here or
2) reply by email to this Customer Futures newsletter
Looking forward to seeing some of you then!
PERSPECTIVE: Personalisation - it’s only a matter of time… and of moments
Most businesses want to personalise products and services for their digital customers.
It’s seen as a way to make more money with ‘relevance’ and ‘engagement’ (whatever those words mean). And it’s a way to make customers feel valued, and (in theory) to stop them from leaving for a competitor.
It shows that they understand the customer.
But do they really understand? Does it really work?
There’s plenty of evidence that it doesn’t. It often feels spammy. Or simply misses the mark.
And I’ve written about the difference between the privacy line (“How do they know that about me?”) and the clumsy line (“Why on earth am I being offered that?”).
I’ll share more on the debate about personalisation another time. I also recommend reading Graham Hill’s posts on that, and about why personalisation often goes wrong.
Instead, this post is to dig into the idea of personalisation from a different perspective: The idea of ‘mass customisation’.
An idea first proposed by Joe Pine nearly 30 years ago. It’s about hyper-personalisation at a mass scale. Here’s the original book and 2004 TED talk.
If we’re honest, mass customisation hasn’t really been possible. Not digitally anyway.
But that’s all about to change.
Because we’re on the cusp of an economic shift. Tilting towards the ‘empowered customer’. And driven by new tools like Personal AI, digital wallets and verifiable credentials.
Businesses will soon move beyond the one-size-fits-most personalisation strategies we get today. And begin to personalise their products and services at scale. For each and every customer.
Personally.
Why? And how? We first need to look back at the idea of Mass Customisation, where Joe argues that all products and services pass through different economic phases:
We first Extract Commodities e.g. raw coffee beans.
Then a business uses the commodity (e.g. beans) to Make Goods (e.g. packs of ground coffee).
Then another business uses the goods (e.g. packs of ground coffee) to Deliver Services (e.g. freshly poured cups of coffee).
With each market shift, we commoditise the step before.
Once raw beans arrived in neat packets of ground coffee, we stopped caring about where the raw beans came from. And once we got fresh, hot cups of coffee, we stopped caring about where the packets of ground coffee came from.
Joe’s point is that this is a repeating pattern. Where each step commoditises what went before.
The 1990s gave birth to the Services Economy. And in 2004 Joe asked the next logical question: what comes after services - when you customise it for a specific market?
You get an Experience.
Our customer experiences are really just services that have been tailored - customised - in some way.
In my coffee bean example, the new experience is your local organic coffee shop. They not only serve hot drinks (the service), but they stage an experience.
You can relax in a big comfy chair. You can read the papers. Listen to jazz music. Maybe even enjoy the local artwork.
It’s a specific customer experience. In a specific environment. A specific take on how to create value. And a new target market beyond standard cups of coffee.
And you can smell the profit.
Because a coffee bean costs less than a penny. A scoop of ground coffee costs maybe 20p. And the cup of coffee from that same scoop costs £2.50.
But a visit to your local organic coffee shop is much more expensive. That skinny-latte-extra-shot-no-foam-Ella Fitzgerald-serenade costs nearer £4.
Living in the moment
What’s this got to do with personalisation?
Each time we move up the value chain - like you see in the picture above - we are customising the market. Where those custom markets are still large.
But what happens when we customise an experience? What’s the next stage up the chain?
The experience becomes personalised. Just for you.
A market of one.
In 2004 Joe Pine argued that a customised experience is really about transformation. Helping you transform yourself, physically, intellectually or emotionally.
But I believe that it’s much more specific than that. Personalising, or customising an experience means understanding when customers have the experience. And where. And with whom.
It means understanding customer context.
The digital economy is now just ‘the economy’. We are digital by default.
And with the arrival of Personal AI and new digital customer tools, we are seeing the early signs of the next shift. The inevitable step beyond experiences.
So what’s a personalised experience?
It’s a Personal Moment.
At specific times of day, like when you get up. At specific locations, like your place of work. And specific social contexts, like going out for a family meal.
We will soon move from Joe’s 2004 Experience Economy to the Personal Economy.
Today businesses differentiate themselves by improving customer service (through quality) and the customer experience (through authenticity).
But once the customer is empowered with their own digital tools - part of the Empowerment Tech market - companies will soon be able to take things to the next level.
They’ll be able to personalise customer moments.
When you walk into a store. When the weather changes and you need to change your route to work. When you’re moving house. When you need to make an insurance claim.
More data please
Let’s look at the closest cousin of the Personal Moment: digital advertising.
Businesses are today desperately keen to place the right ad in front of the right customer at the right time.
And so where do advertisers turn? To the Data Majors and the social networks. The GAFA. To those who have been the most successful at predicting what people might like to buy and do next.
And - in theory - the platforms that best understand customer context.
Except they don’t.
Today’s so-called personalisation is often miles away from reality.
But it doesn’t matter. Over the average day, and over the average population, the Googles and Facebooks of the world only need to be slightly better at personalisation to win. To become the single most valuable way to engage digital customers.
And so the money flows. At last count, over 40% of the $600Bn global advertising market went to Google. Nearly 20% to Facebook. And almost 10% to Amazon.
But as we move into the Personal Economy - which is going to rely on having BOATLOADS OF PERSONAL DATA - can the GAFA maintain their dominance?
I see two problems:
Yes, they have customer data. Stacks of it. But is it accurate enough? When the GAFA offer one-size-fits-most personalisation solutions they can get away with errors. Because there is more noise than signal. Customers are already used to the mistakes and can laugh them off. But when an advertiser uses highly personal data, including real-time context - and then gets it wrong - it’s the stuff of PR nightmares.
Have the GAFA earned enough trust - from both advertisers and consumers - to be given the right to enable personal moments? And to collect the vast amounts of new data needed to get it right?
You may remember the 2012 story of the US retailer who targeted pregnancy ads at a teen girl before her father knew about the baby. Not pretty.
Here’s where I’m going with this.
The Personal Economy is going to require LOTS OF DATA (much of it in real-time). And LOTS OF DIGITAL TRUST.
The GAFA will find that hard to scale. Not with today’s data business models, and without risking public missteps. Including handling the backlash from the market, and dancing with regulators on what’s acceptable with personalisation.
The risk of getting it wrong - of guessing customer moments using highly personal data - is high.
Who then is positioned to do it? Who can access the customer data needed? And who can be trusted enough to offer Personal Moments credibly, authentically and valuably?
I can only think of one place that can be done with the required levels of privacy, security and digital trust.
It’s the customer themselves.
Remember: the only true 360-degree view of the customer… is the customer.
My prediction: disruptive Personal AI platforms are going to blow Google and Facebook’s personalisation performance out of the water.
Why?
Because a Personal AI trained by the customer, with their own personal data, together with other approved and trusted information sources, will outperform any 3rd party platform.
Personal AI tools - part of the wider Empowerment Tech market - will understand the customer better than they know themselves. And they will be more private and secure than anything else available today.
And more accurate.
Zoom out and you’ll see that soon it will be the customers themselves who will define the customer experience.
Shaped around each personal and different customer moment. And all enabled by trustworthy businesses that understand the customer, her context, needs, and wants...
…precisely because she will have made that information available to those businesses she trusts.
Here’s one final point. Remember that with mass customisation, each new phase commoditises the last. With experiences (reading the paper in the organic coffee shop) we commoditised the service (making cups of coffee).
So as we move into the Personal Economy, shaped around personal moments, we will inevitably commoditise today’s experiences.
Here’s a recent example. In late 2023 British Airways operated a breakthrough flight, from London to Rome, where passengers used a digital identity wallet for the trip.
The digital wallet contained a portable digital copy of their passport - with face biometric - plus a boarding pass. Before flying, the customer was able to share their personal data, including a picture of their face, ahead of time, so that the airport knew ‘which face to expect’. (Later deleted of course, according to data protection).
When they passenger arrived for the flight, their face became their boarding pass.
The boarding pass experience became invisible. Commoditised.
Seamless and personal travel, from kerb to plane without having to stop or present a document.
This is Empowerment Tech in action. A customer sharing their personal data with a business, directly and privately, using a digital wallet. And enabling number of seamess personal moments. Like passing through an eGate to go straight to the plane.
It was the customer themselves stitching together a new, personal customer experience.
Transparently. Securely. Privately. And all under the control of the passenger.
Yes, this is a border-crossing example. And yes it involves pretty sensitive face biometrics. But you can see the potential for the same tools and Empowerment Tech to personalise the customer experience.
To customise it. To understand context. And to empower the customer to shape the experience around them.
Alain de Botton once said:
“…Most of what makes a book ‘good’ is that we are reading it at the right moment for us…”
It’s why moments matter.
And why understanding customer context is fundamental to getting personalisation right. And why so many businesses get it wrong.
Joe Pine’s idea of mass customisation is an idea whose time has come. Finally enabled by digital Empowerment Tech.
Personal AI. Digital wallets. Verifiable credentials.
It’s coming soon.
Because with personalisation it’s only a matter of time… and of moments.
Thanks for reading this week’s edition.
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