Personalised products and services can increase companies’ revenue and improve customer loyalty, study finds

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2007-04-03 09:10

Hong Kong--(뉴스와이어)--The days when a customer could have a car that was any colour as long as it was black are long gone. Today, it is crucial to connect with customers by satisfying their individual needs and preferences, and to design products and services that do so, according to Personalisation: Transforming the way business connects, a new report from the Economist Intelligence Unit, sponsored by Cisco.

Respondents to the worldwide survey of 328 senior executives, conducted by the EIU, say that more than half of companies’ products and services will be mostly or totally personalised in five years, up from 37% today. Furthermore, personalisation has a positive impact on revenue growth: 66% of respondents say it has a major impact today, but 80% predict such an impact in five years.

Although companies have long been offering customised merchandise, customisation is based on templates and does not take individual customer preferences into account. Personalisation, by contrast, allows the customer to stamp a product with his or her own applications, preferences and configurations. By doing so, personalisation has the power to increase sales and margins enough to transform business models. Over half of our respondents expect the personalisation of customer interactions to affect 2%-25% of their company’s revenue base, while 23% say it would affect 25%-50%.

Furthermore, personalisation increases margins, “stickiness” and loyalty, and customers are willing to pay extra for the interaction experience. Sixty-four percent of respondents assert that personalisation of their products or services has resulted in somewhat higher or much higher revenues.

“Personalisation is an important trend that can potentially influence corporate valuations, business strategies, and mergers and acquisitions,” said Rama Ramaswami of the Economist Intelligence Unit, the editor of the report. “By providing more appropriate tools than were available during the era of mass customisation, it has broader social implications for improved productivity and innovation.”

Other key findings of the report include the following:

· Leveraging IT is vital to the success of personalisation strategies. Survey respondents rank personal digital assistants (PDAs) as the most important technological application to improve personalisation over the next five years. Eighty-two percent of our survey respondents say PDAs will play a role in their personalisation strategy. Other important technologies are collaborative workplace applications, business intelligence programmes and unified voice, video and data networking.

· Collecting information on customers’ buying preferences bolsters the ability to personalise products and increase customer loyalty. Having information on customers’ future needs or buying plans increases the chances of a subsequent interaction, say 46% of survey respondents. Fifty-nine percent obtain this information through their front-line salespeople; 46% use customer surveys.

· Customer interactions present unique opportunities to establish competitive advantage. Thirty-seven percent of our respondents say that customer enquiries and the initial sale present the strongest opportunities to establish competitive advantage. Forty percent find that their best chance to gain a competitive edge lies in service delivery and follow-up support interactions.

The report is one of three studies conducted by the EIU for Cisco that describe the development of the interactions economy, in which customers, suppliers, owners, workers and others go beyond mere transactions to exchange information for mutual benefit. The other two research projects investigate the role of collaboration and innovation in the interactions economy.

“To differentiate themselves and create competitive advantage, companies will have to break new ground by building a customer experience based on high-value interactions and customisation of products,” said Robert Lloyd, Cisco senior vice president of U.S. and Canada Operations. “As routine transactions become increasingly more commoditised and automated, value will lie in hard-to-replicate personal relationships and customisation.”

Personalisation: Transforming the way business connects is available free of charge at www.eiu.com/Personalisation

Notes for editors:

Personalisation: Transforming the way business connects is an Economist Intelligence Unit white paper, sponsored by Cisco Systems. The research is based on an online survey of 328 executives, conducted by the Economist Intelligence Unit in October and November 2006, as well as in-depth interviews with senior executives from a wide range of industries worldwide. Fifty-eight percent of the companies surveyed for this report had annual revenue of less than US$500m; 28%, between US$500m and US$10bn; and 15%, US$10bn or more.

About the Economist Intelligence Unit

The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of more than 700 analysts and contributors, we continuously assess and forecast political, economic and business conditions in 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.

About Cisco

Cisco is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Since the company’s inception in 1984, Cisco engineers have been leaders in the development of IP-based networking technologies. Today, with more than 47,000 employees worldwide, this tradition of innovation continues with industry-leading products and solutions in the company's core development areas of routing and switching, as well as in advanced technologies such as wireless LAN, unified communications and home networking.

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