Mass Customization: 5 Benefits That Can Make Your Company More Competitive

Exploring opportunities to add a personal touch during a transaction is something businesses have been looking into for decades. This practice is usually aligned with customer relationship management (CRM), often capitalizing on building relationships after an initial sale or inquiry.

Mass customization flips that equation around and incorporates personalization into the product rather than the service provided. Here's what you need to know about mass customization and how your company can benefit from it.

What is mass customization?

Mass customization is the middle ground between personalized products and mass production. In essence, the product a customer receives won't be an original, but it won't be a copy either.

For example, take a company like Ponoko that creates laser-engraved signage for companies. If the company made a series of identical "open" signs with the same font and format for purchase as is, that would be an example of mass production. If the company created bespoke signage, in which the customer picks the color, font, style etc., that would be customization.

Mass customization falls somewhere in the middle, with the direction toward either side depending on the manufacturer. Using this example, the sign maker could offer a set format for signs, allowing customers to choose the text that's added to the pre-set template.

Mass consumption provides the opportunity for personalization without building each item from scratch.

What are the types of mass customization?

While the concept behind mass customization is simple, the term itself is broad. Mass customization for one company might look dramatically different from another company's utilization. Under the umbrella of mass customization are four subtypes:

Adaptive customization

Adaptive customization indicates that the customer can adapt the product to suit the mood or occasion. An example would be the popular USB light-up shoes of recent years. All of the shoes are the same, but the end-user has the option to choose and change the display color or pattern.

Collaborative customization

Collaborative customization is a collaborative process between the manufacturer and the end-user, with different variables to choose from. Pizza is the common example for this category: the core ingredients remain the same, and you choose what you want on the finished product.

Transparent customization

Transparent customization is when the custom metrics are chosen for the consumer based on the information they've provided. For example, ordering "custom" shampoo based on one's hair type.

Cosmetic customization

Finally, cosmetic customization is more superfluous but no less valuable to customers. This type of personalization typically pertains to packaging, like adding a personal note to each order.

The benefits of mass customization

Understanding the types of mass customization helps clarify the benefits for many companies. Here are the five overarching benefits of mass customization.

1.   Better profits

The primary benefit of mass customization is a better profit margin. Companies can charge a premium for customization with only a slight increase in production costs. Personalization also creates a greater sense of value, making customers willing to pay more for the privilege.

2.   Better customer satisfaction

The more tailored a product is, the better it will fit a customer's needs or wants. As a result, using mass customization will help increase customer satisfaction by creating a product they perceive as made for them.

3.   Better customer retention

Better customer satisfaction segues into better customer retention. In addition to cutting costs in acquiring new customers by improving repeat sales, this also helps improve word-of-mouth lead generation.

4.   Simplified production and inventory management

One of the barriers that stop many companies from exploring mass customization is the misconception that it’ll dramatically increase production costs. However, mass customization can improve both manufacturing protocols and inventory management.

Adding a customization option can be the starting shift toward just-in-time production. It also makes it easier to expedite delivery to the end-user, as many products can be manufactured to near completion before the customization options are added.

5.   More sustainable

Finally, the inventory management considerations and customer satisfaction lead to a more sustainable business approach, both environmentally and in terms of growth. Better control over inventory management equals less waste, and long-term customer satisfaction contributes to less consumption.

Final thoughts

Nearly every type of business can benefit from some aspect of mass customization. From giving your customers options to choose from to adding personal elements to packaging and delivery, mass customization is an incredible opportunity to connect and profit.