Will Gen Zers push personalization toward individualization?

Apr 26, 2018
Tom Ryan

According to a study from the IBM Institute for Business Value, Gen Zers find value provided at an individualized level — such as when it is delivered through promotions and offers that match individual Gen Zers’ specific needs and desires — as more important than personalized experiences shaped by the brand.

The study, done in collaboration with the National Retail Federation (NRF) and based on survey of 15,600 Gen Zers from 16 countries, said that while individualization and personalization are similar concepts, they are initiated differently:

  • Personalization: Driven by the brand to tailor consumer shopping experiences based on known customer segment preferences, behaviors and history.
  • Individualization: Driven by consumers, enabling them to initialize and customize their own singular shopping experiences.

The study found digitally-driven Gen Zers wants to actively share their opinions, collaborate and co-create with brands.

Recommendations included empowering Gen Zers to create their own experiences, including designing their own products.

A second suggestion was to deploy tools and services to enable Gen Zers to get involved and experiment with new programs and existing initiatives. IBM writes, “Reward them for their feedback with direct benefits at an individual level. Apply data, deep analytics and cognitive insights to engage with them authentically and contextually.”

Finally, brands are urged to mine social media to identify shopping preferences, purchasing trends and other consumer insights at an individual level.

“Engage in an ongoing, sustained dialogue with them,” IBM researchers recommend. “Connect with them in real time: provide enhanced mobile functionality, incorporating AI agents — such as chatbots or virtual assistants — that can dynamically learn from data captured in each interaction and deliver customized services, resolutions to issues and informed purchasing options.”

Individualization appears to be a newer buzzword invented to encourage brands to move personalization beyond segmentation and broad demographics to granularly understanding individual needs and their context across the shopper journey.

Wrote Roland Gossage, CEO of GroupBy, a search and navigation solutions provider, in an article for Multichannel Merchant, “With specific, on-brand contextualized messaging unique to each shopper, each message becomes more personal, captivating and relevant based upon a shopper’s click, search and purchase history.”

DISCUSSION QUESTIONS: Do you see Gen Z demanding more individualized shopping experiences? If so, what will that entail that doesn’t exist today? How do you see the distinction between “personalization” and “individualization” in consumer marketing?

Please practice The RetailWire Golden Rule when submitting your comments.
"I do think Gen Z is going to change what loyalty programs provide as benefits because of this 'individualization' thing. "
"“Individualization” and “connect with them in real time.” Definition: Gen Zers build their own style shoe, hoodie, game controller etc. and post them."
"It’s a mistake to think that poorly executed personalization programs invalidate the entire model"

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20 Comments on "Will Gen Zers push personalization toward individualization?"

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Max Goldberg

Gen Zers seem a lot like Millennials in their desire to have it their way, which seems a lot like Boomers as well. Consumers want a better, more individualized shopping and communication experience with brands. Those retailers and brands that can offer this may be rewarded with increased sales and loyalty. They just can’t overpromise and underdeliver.

Nikki Baird

Ugh. Normally I love the work done by IBM’s IBV, but I think you can summarize this insight into “listen to what your customers want and then give it to them” — which I hope is not exclusive advice for one particular generation.

That said, I do think Gen Z is going to change what loyalty programs provide as benefits because of this “individualization” thing. I get a sense from my interactions with them that they aren’t going to respond as well to general points-based incentives. They’re going to want either to choose and direct the benefits they receive, or they are specifically going to want experiences — behind the scenes access, meet and greets, exclusive products, those kinds of things. These kinds of programs are much harder to pull off and that, to me, is ultimately the difference between individualization and personalization — individualization is pull from the consumer and personalization is push. But individualization means a lot more flexibility, on the part of the retailer, to accommodate.

Lyle Bunn (Ph.D. Hon)

The march toward individualism is unrelenting for the value that it brings all parties. Privacy is the issue and unfortunately data theft for gain and data sharing with partners is too high profile for consumers to fully gain confidence that their data will be applied for their benefit. Brand communications that make their data use policies and practices more transparent can win this confidence. Brands and retailers will be well served in demonstrating their convictions to provide better individualization.

Kim Garretson

I see a huge miss in the sources quoted here. They talk about mining social media, using AI and chatbots, etc. to reward individuals for their feedback. What I don’t see is the simple act of asking each individual to set their own criteria for when they would give the brands and retailers permission to alert them on content they’ve specifically asked to receive.

Art Suriano

With technology, the possibilities of individualization will become endless. However, where retailers need to be careful is not giving up too much to the customer. The more we allow for individualization, the more we are segmenting our business, and that can become costly. Personalization, for the time being, is more cost effective provided it gets positive results but because of technology and Gen Z knowing it’s available, they will continue to demand more.

Going forward, I see more opportunities for customers to, as discussed in the article, create their own products. Inevitably this will happen in apparel when we perfect custom-made clothing. And for any product where there is a design element, customers will be able to create their own version. Customization driven by individualization will change many aspects of how we do business, no doubt allow for new players and, unfortunately, many more of the traditional retailers will go out of business unless they can adapt. The world is changing rapidly, and technology is leading the way.

Shep Hyken

My thoughts on this are close to what’s in the above article. Personalization and individualization is the difference between big data and little/micro data. Big data spots trends and gives you bigger pictures to your consumer behavior. Little data is based on the individual customer’s buying history.

Personalization is about marketing to segments of your customer base. The customer feels like the promotions is personal because it’s tied to what they’ve bought in the past. Thousands of customers who’ve bought similar merchandise receive the same “personalized” messages. In other words, if I buy a tennis racquet from a sporting good store, I’ll receive promotions about tennis, not golf. Yet, when you move to individualized messaging, then you are doing exactly what the word infers; targeted messaging to the unique individual. That requires a deeper understanding of your customer; what they like, dislike, etc.

As marketers, when we get to a point where we can truly individualize our efforts, we will more effectively meet our customer’s unique needs and expectations. This is true one-to-one marketing.

Sky Rota
1 year 2 months ago

A few of the lines in the article stuck out to me but with a completely different definition than you are using. “Individualization” and “connect with them in real time.” Definition: Gen Zers build their own style shoe, hoodie, game controller etc. and post them on Instagram, Snapchat for all to see!

Offer us options to “build/individualize” our products we are purchasing. We take the time and interest to build. A perfect example is the Xbox Design Lab, which lets us build our own controller and we can’t wait to post/display/share our OWN creations! We actually save the brands marketing dollars as we are the marketers for your product. We are a part of the process and we can’t wait to share our masterpiece across all social platforms! Today you can mix brands and collaborate together, we accept all of it. Nike shoe with a Gucci Check, YES! Post/share and let the likes pour in!

Lee Peterson

First of all, it’s pretty tough discerning the difference between the two and pretty easy to see how they overlap. But aside from that, the idea of customers identifying what they want and co-creating with brands will always remind me of the Henry Ford quote: “If I’d have asked my customers what they wanted, they’d have said; a faster horse.”

There’s data, then there’s creativity, and asking a “generation” to help you provide them with something creative is about data (see also: IBM). Giving them something they’d never have thought of is creativity. Retail needs more creativity, not more data.

Cynthia Holcomb

Gen Z’s expectations of “individualization” as outlined in this research are what ALL shoppers want in a digital shopping experience. In 20 years of digital shopping, segmentation under different guises has grouped people into buckets based on a variety of inferred behaviors twisted into so-called “personalized” recommendations/targeted ads and “synthetic” shopping experiences.

Funny, “individualization” meaning how/what inspires a shopper to make the decision to purchase is completely counterintuitive to personalized segmentation. Whether a car, a dress or a home, the bottom line is that emotion-based purchases are completely unique and subjective to each individual’s sensory preferences of fit, look and feel. So while it’s nice for Gen Z to send the wake-up call for “individualization” in the digital shopping experience, all ages have been clamoring for individual shopping for years. Just ask retailers about their digital return rates. Bottom line, true “individualization” requires matching people to products they Love through the filter of “individual” preference.

Doug Garnett

What strikes me is the social/psychological realities that might lead to this. We could read this survey response to be “Gen Zers dont have much money so they suggest using their comments to get premium things.” And once they have money they’ll simply vote with their pocketbook.

That said, I’ve always been skeptical about both personalization and individualization (as described here). Retailers get some decent PR from programs in each. But personalization has generally failed to produce dramatic increases and is not a stable strategic pillar. Individualized product is also usually premium priced so it’s more appealing to consumers with more money than Gen Zers.

It’s no surprise they’d ask for all these things in a survey — essentially the news cycles and online hype have them predisposed to ask for it. The real question is: Is pursuing individualized shopping a viable business strategy? I think the answer is that it’s not. They simply don’t have the money to follow their survey answers with spending.

Sterling Hawkins

It’s a mistake to think that poorly executed personalization programs invalidate the entire model. If that was the case Facebook wouldn’t have a business. Done right, content, offers, promotions, etc. that are catered to a shopper’s interest can drive engagement and behavior for products at any price point. The challenge is having the culture, systems and tools to do it effectively.

Gabriela Baiter

I’m with Sterling here. By the definitions above, brands can invest in “individualization” without changing their product line. Sephora pioneered this concept when they moved away from traditional CRM lifecycle comms to digital experiences that personalized their customer journey during product discovery. (i.e. Virtual Artist). They are creating individualized experiences to serve up product recommendations, not creating products that are unique to every person.

Another good example of this is Ollie, a modern dog food brand that lets dog owners “design their own meals.” Even though this tactic makes a customer feel like the brand is hand crafting their dog’s meal in real time, all they’re doing is using AI to recommend products based on the data they give them.

Doug Garnett

Part of my point is that individualization is successful with people with more money. So it’s not that there’s not money to be made there — rather it’s not Gen Z or Millennials who are going to make it profitable.

That said, my sense is that individualization is a minority strategy — interesting, smart but limited in sales volume to under 20% (usually) for the near future (until science fiction becomes reality).

As to personalization, Amazon’s personalization isn’t effective in my experience with it, even though it’s the most sophisticated one out there. Amazon remains unable to sort out what to present to me/offer to me other than standard re-targeting that everyone does (inaccurately).

Ralph Jacobson

This study is more confirmation of trends than presenting new information. And there is value in that. I will say that perhaps a larger percentage of Gen Zers are more vocal socially regarding personalization than, say, Boomers. However, I tend to even question that statement. The more I investigate marketing today, the more I see all age groups wanting and responding to marketing promotions that are relevant to them. It just makes sense and should be no surprise. “Personalization” vs. “individualization” pertains to the level of data you capture and derive insights from. Using the tools available today will allow you to pinpoint an individual shopper’s persona and respond proactively to it. There may be thousands with a very similar persona, but the shopper will think they’re getting special treatment most likely.

Shelley E. Kohan

Gen Z is pushing the idea of customization and individualized shopping experiences. The generation understands the amount of data being collected (and most are OK with the data collection), but they expect brands to deliver more relevant shopping experiences catering to their individualism because they know how much information brands collect. In other words, this bright generation is saying, “I know you have tons of data about me so you should be giving me individualized shopping experiences.”

One small step retailers can make TODAY is to understand feedback given through social media and apply this back into the business (products or services). There is currently a plethora of feedback from customers which is not acted upon by retailers. Take the feedback and put it back into the business.

Ken Morris
I don’t think individualized shopping experiences only appeals to Gen Z – it is probably appreciated by all demographics. Individualization is the next evolution of personalization that combines “customer context” with personalized web experiences. Personalizing the experience based on analytics and “customer context” to create a unique, personalized experience for each customer is a differentiator. BRP defines customer context as “the interrelated factors of customer insights and environmental conditions that make the shopping experience relevant.” Retailers have the ability to know what a customer has in her closet, what she previously purchased, what she browsed on the web site and abandoned in her online cart, when she is near your store and even exactly what she is browsing and where within the store. In addition to customer insights, customer context considers environmental conditions such as current and forecasted weather, time of day, time of year, media (news), social media, traffic, holidays, events, and other conditions that impact a consumer’s purchase decision. Combining this data with dynamic web pages that are customized to individual profiles, searches… Read more »
Phil Rubin
1 year 2 months ago

It’s not just a generation (Z, M, X or otherwise) that is demanding individualized experiences, but rather almost every human with discretionary spending power. Customers expect more relevance from brands in a world overflowing with data. Individualization and personalization might be distinguishable semantically among marketers but customers simply want and expect brands they like to “pay attention to them and act accordingly.”

It’s not rocket science nor is it pure science or art, but rather a combination.

The expectations are clear in the proprietary research we conduct and reflect what Amazon has done with its 100 million Prime customers who have even higher expectations than non-Prime members (however few are left!).

Ricardo Belmar
The insights from the IBM survey/analysis will play out in how we see future loyalty programs defined by retailers. Gone are the days when simply earning tiered discounts was enough to create brand loyalty with shoppers. Personalization and individualized shopping experiences represent a new form of tiered loyalty approach retailers must adopt to appeal to each successive generation. It’s not just something for Gen Zers, although as a group they will certainly have greater appreciation and expectations for the experiences, this is something all retailers need to evolve their brands to. Giving the shopper the ability to customize and co-create in the shopping experience makes the entire process feel more emotionally meaningful. The difference is how each approach is initiated — personalization starts with the brand, while individualization starts with the shopper. It’s all about who controls the experience. Retailers will need to facilitate both in the future to be successful and build greater brand loyalty. Technologies like AI and big data analytics will play a large role here, but so will the human element… Read more »
Mike Osorio
The discussion is excellent and points to two key ideas: One, that this is about understanding what the customer wants and delivering on that (no different than for any previous generation). Two, that Gen Z is leveraging social media and other technologies to more aggressively push for individualization whenever possible. A retailer delivering individualization well is Stitch Fix, who marries big data analytics with a real, human stylist who engages directly with each customer to co-create each “fix.” Another who is doing this on a fully human level is Dirty Lemon, whose healthy beverages are marketed and sold exclusively via text message, leveraging Gen Z’s favorite way to communicate. And the conversation is all human — no chatbots or other AI tech. The point here is that each brand and retailer needs to understand how they can provide engagement for their customers that leverages today’s technologies in a brand-right way. Personalization remains a core effective strategy, blended with appropriate Individualization. Yes this is more costly, but is now a growing requirement for ongoing engagement with… Read more »
Kai Clarke

Gen Z is really no different than any other group (Gen Y) who wants things personalized, to fit their needs. Who doesn’t want a loyalty program that gives their customer enough flexibility to feel like it was “customized” for them? From baker’s dozen (your 13th is your own choice and free) to frequent buyer discounts, we have been dealing with loyalty programs in customized versions for years. Gen Z will push the shopping experience to be more technology driven, but the demand for individualized satisfaction tied to the customer loyalty program will not change … only how it can be customized through technology.

"I do think Gen Z is going to change what loyalty programs provide as benefits because of this 'individualization' thing. "
"“Individualization” and “connect with them in real time.” Definition: Gen Zers build their own style shoe, hoodie, game controller etc. and post them."
"It’s a mistake to think that poorly executed personalization programs invalidate the entire model"

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