Mass Customization - The Company

THE COMPANY

Offering custom products has clear advantages for businesses. Since acquiring new customers is more expensive than retaining existing ones, firms would prefer to go on building customer relationships over time rather than continuously marketing to an indistinguishable mass. Mass customization is tailor-made for this kind of retention. Even where customized products are marginally more expensive to produce, the savings generated, in terms of marketing and outreach, by boosting customer satisfaction and developing long-term loyalty, can more than make up the difference.

Mass customization also tends to foster an alternate method of measuring a firm's success. Rather than looking at market share, which measures the percentage of the total market that is captured by one firm without distinguishing individual customers from each other, under mass customization, according to Ward Hanson of Stanford Business School, firms place greater weight on the lifetime value of individual customers. In other words, the company with the greatest number of customers may have a higher cost structure than a competitor which has the greatest customer loyalty, placing the share leader at a long-term disadvantage. Since customization places greater emphasis on customer profiles and outreach, the cost of acquiring and retaining a customer becomes paramount.