Especially for you

Editor's note: Kunal Gupta is an analytical consultant at Burke Inc., a Cincinnati research firm.

When I go to a fast-food restaurant, I like to order chicken nuggets...but I order them on a bun. You've never seen such confusion! I throw the entire operation into a tailspin. This is because fast-food service, by definition, does not easily allow for made-to-order requests.

After much study, however, I would argue that mass customization - providing customers with anything they want, anywhere they want it, any way they want it, and doing it profitably - can happen in the service sector and can happen successfully. I am going to outline how you can get fries with your shake and eat them too...even if you ask for them on a bun.

The concept of customization is not new. Many years ago, the family tailor or the cobbler down the street produced clothing and shoes to fit the preferences of each customer. Over the years, the economy expanded and the distance between the manufacturer and the customer increased. Today, while the concept of customization is identical to what it was years ago, the challenge is mass producing such customized products. Eyeglasses, computers, bicycles, electronics, and other manufactured products are customized to buyers' preferences, and manufacturers are rewarded with satisfied and loyal customers. The smartest of these manufacturers have mass-produced such customized products and offered them to customers at near regular prices. Such companies have built measuring and manufacturing systems as well as operational competencies that allow quick production of individualized products. The challenge is to translate this idea to the service sector in a profitable manner.

We're starting to see key examples of mass customization in the hospitality industry, with hotels and car rental companies. Frequent traveler preferences are managed and customized service provided instantly and seamlessly through sophisticated operations. Wyndham Hotels, for instance, now offer to customize rooms for individual guests.

The benefits of mass-customized services are legion. Many see the service sector as the key to reviving the flagging American Customer Satisfaction Index (as measured by the University of Michigan, American Society for Quality, and the CFI group). Recent arguments say the inability to customize service offerings has eroded service perceptions. For companies wanting to benefit from one-on-one customer relationships and avoid constant switching costs, this could be the answer.

Pursuing mass customization in the service industry requires an honest and detailed internal assessment. Crucial questions must be addressed before making the very real commitment to go down that road. The following steps outline a process to determine if mass customization is the answer to your service quality needs.

Step 1: Market research, of course

Do your customers want customized services and are they willing to pay more for them, if necessary? This is a critical point to consider. Well-planned market research is the best bet for determining consumer preferences. Such market research can be conducted both overtly and covertly. Overt research should attempt to gauge the difference between the choices available in the market and those required by the customers in the marketplace. If current offerings in an industry are unable to cater to customer requirements, conditions are ideal to offer customization.

In covert research, the efficacy of customization could be measured by test-marketing customized services to select customers. Such customization could include individualized greetings and/or customized offerings during the overall service experience. More favorable perceptions of quality and satisfaction among the test market customers vis-à-vis the control group could indicate the need for customized offerings. Covert research might be especially applicable in the service sector, where the intangible and experiential nature of the offering makes it hard for customers to articulate their preferences.

Once you determine your customers want customized service, you must continue research to focus on attracting the right clientele - people who want customization and might be willing to pay for it.

Step 2: Making it work is work

Are your customers willing to work a little to reap the benefits of a customized service? You must determine whether they will complete the lengthy survey, divulge personal information and preferences and perhaps spend more money for the convenience of customization. For example, a businesswoman traveling alone may want to fill out a detailed survey to ensure that she is always given a room near the lobby, or away from end corridors. Other businesswomen, for those same security reasons, may not want to share that information. In addition, a growing number of customers don't like to share personal information. It's a sensitivity issue you must recognize.

Even if preferences can easily be obtained, it is important to understand they are not static. Customers who always want orange juice for breakfast may get a craving for coffee or cocoa. Allow flexibility in your survey and in your delivery of mass customized services.

Step 3: First is best

As with many endeavors, there is a huge advantage to being first in the category. If your company considers mass customization an option, be the first to offer it. Being first should not be interpreted as acting in haste. Rather, pursue being first with prudence; it can be a potent and distinguishing business strategy. The advantages of being the first to offer customized services can be both market-driven and operational. From a marketing perspective, such a strategy makes the customer feel like an individual instead of a number, and such perceptions earn customer loyalty. From an operational perspective, building in-firm competencies to offer customization requires seamless integration among departments of the organization. Being the first to develop and improve upon such expertise leaves competitors playing catch-up.

Step 4: It's all in the delivery

Think through the organization's capabilities and resources. One of the biggest challenges specific to service providers is reconciling customization with reliability. Service reliability requires well-planned systems, processes, and scripts to avoid service failures. Service customization requires latitude in systems, processes, and scripts. For example, if a hotel customizes the room according to guest preferences, slow room turnaround could increase customer waiting times, and the operational requirements of customization could add to costs. Likewise, customizing each fast-food item could cause the core quality of the standard product to vary, and also make the operations less efficient by introducing variability in processes otherwise standardized. Customers don't want customized service offerings that impact service reliability and costs. Reliability and customization must be reconciled to minimize deleterious marketing and operational effects.

Reliability always has been important to service customers because of the intangibility and variability that characterize most service transactions. These characteristics introduce uncertainty and perceived risk about forthcoming service transactions, and reliability helps quell customer fears. The customization journey, therefore, should begin only after the service provider can offer reliability. The best approach is to offer increasing levels of divergence and choice, each reliably. Start by offering divergence in areas that can be most easily managed, and gradually move toward divergence in other service areas. This stepwise approach ensures that divergence does not become chaotic and unmanageable. A good strategy is to start offering more variants of tangible components to customers. For example, a hotel company could offer greater variety of in-room supplies, choice of rooms, and food and beverage items. While this seemingly is simply offering variety, it is the first step in the pursuit of customization.

It's also important to remember that employees are key at this stage. Delivering customized services ultimately rests with them. Make sure you have strong employee relationships, union relationships, if applicable, and the teams to deliver the customized services. Make sure employees are willing and able to customize social interaction with customers. For example, have employees address customers by name; this takes the firm closer to customization by offering personalization over and above variety in tangible offerings.

If these actions result in a positive customer response, invest in building and managing a customer-level database. Such a database takes market segmentation down to individual customers, and allows instantaneous access to detailed customer preferences. This investment signals management's commitment to customization and you are on your way.

Remember that in most cases, a service provider may be able to offer only customization, not MASS customization. Unlike manufacturing, services by their nature are less customizable on a mass scale. For service providers that pursue customization, short-term profitability and financial recovery of investments would come from the customer's willingness to pay premiums for individualized offerings. In the long-term, however, the big payoff would come from customer relationships and loyalty. After all, customers benefit from the arrangement as well; they get what they are looking for every time, without having to re-express preferences and re-establish relationships.

Persevere

You've made it through Step 4! Once you decide to pursue customization, persevere. Mass customization of services is not the pursuit of a solitary team or department; it requires a long-term commitment from the entire organization.

Your customers may not understand what you've gone through to deliver their preferences, but if you ever get your nuggets on a bun, at least you will appreciate what happened behind the scenes.