Before the Internet — and before everyone carried miniature computing devices that constantly collect and transmit data — marketers lumped personalization and customization together. Today, while these concepts still remain complementary, they’ve transformed into two distinct strategies.

Customization and personalization are two sides of the same coin. Both concepts stem from the traditional CRM practice of seeing each customer as an individual with unique needs and preferences. People enjoy being treated like VIPs, and companies that prioritize good service are best at earning prospective customers’ business and loyalty.

Both strategies aim to engage and retain customers, but they do so differently. Personalization is a system-generated process through which a marketer changes the functionality, interface, content, or distinctiveness of a brand’s site to increase its personal relevance to individuals. Customization, on the other hand, is generated by users. This enables customers to adjust their experiences to their liking.

Each play important roles in providing top-level services, but depending on your goals, only one may suit your needs.

Personalization: A Breakdown

Personalized sites use data mining to change responsively according to each visitor’s history. By analyzing an individual’s previous online behavior, the algorithm creates a site view that appeals to his or her specific tastes.

American Express is a prominent champion of this strategy. It delivers experiences that make its users feel they’re interacting with other human beings, not a faceless corporation. The company prides itself on remembering details about all of its customers and caters to them based on past behaviors and characteristics.

Personalization tools like cookies and geo-fencing can help companies create relevant, real-time offers at the right time — knowing just a few key details about customers makes all the difference. A kindergarten teacher and a CEO will visit an office supply store’s website for very different reasons. By pulling up their profiles, the site knows to market crayons and construction paper to one of them and sophisticated office chairs to the other.

Google and Yelp establish personalization by bringing up search results near users’ locations. If you’re looking for the best restaurants in your area or a top hotel on a road trip, these sites will return the most relevant results based on where you’re located. Although some people value full accessibility over personalization, most appreciate the ease and efficiency of location-based results.

Personalization doesn’t just make people feel warm and fuzzy because brands remember their favorite purchases; it makes brands seem indispensable.

A Closer Look at Customization

While personalization systems predict users’ needs and preferences, customization empowers them to design their own experiences.

Facebook strikes this balance particularly well. Although its algorithms determine exactly what users see in their News Feeds, it also allows them to turn off certain notifications, remove uninteresting or offensive content, and choose which alerts they receive. Feedly also allows for maximum customization of its users’ RSS feeds. Thus, individuals in that community read only what matters to them.

Customization tends to be more transparent than personalization because it involves users actively choosing how they interact with sites. Also, it requires them to opt in on sharing certain data. While personalization is a more predictive tactic, it can also make people pause when they consider how much of their data is being pulled from behind the scenes.

Companies must ensure that their personalized features don’t give off a Big Brother vibe. Users will reject these sites outright, perhaps abandoning them altogether.

Customization, Personalization, or Both?

Neither customization nor personalization is inherently better, and most great customer experiences employ elements of both. However, there are some instances in which brands would want to emphasize one over the other.

Research indicates that people tend to feel more positive toward customized, “human-like” experiences in which they have control over what they see. However, personalization still proves attractive to users who aren’t used to customizing their online experiences. In fact, when forced to customize systems without prior knowledge, non-power users become frustrated and feel negatively about the entire experience.

Because people aren’t always the most reliable sources when it comes to their consumption habits, personalization can help fill in the gaps where self-reporting or customization doesn’t align with the actual data.

Buyer personae can help marketers create the right experiences for different customer segments. One set of users may demand customization options while another may feel uncomfortable about having to adjust its notification settings. On top of that, there may be others who don’t like that brands seem too familiar with their online behaviors. All of these people require different strategies.

Many brands use both systems successfully, creating dynamic customer experiences across the board. Mint, a financial planning app, allows users to connect accounts, establish different budgets, and explore suitable investment plans. Each week, the company emails summaries to its users, highlighting their expenses, savings, and net worth. USAA also offers its users similar budgeting tools, as well as extensive financial news and advice.

The leaders of these companies use their expertise to create the best personalized experience possible, but they also invite customers to improve and customize interactions. This is when you really see the maximum impact of customization and personalization.

While personalization and customization require different software and strategies, both share a common goal: to make customers feel valued and important. Whether in a customer service call or through interactive features on a website, tracking technology has made it possible for every business to tailor its customer experience to individuals.

Ania Rodriguez

Ania Rodriguez


Ania Rodiruez is CEO at Key Lime Interactive.