Commoditization can be defined as the process by which a product or service that was

unique or innovative becomes generic and widely available. As a result, its price drops as
competition increases. When several companies offer similar goods, consumers tend to
choose the lowest price tag.

Customized service is any service that’s tailored to the needs of individual customers. The
math is simple – if the service better fits their needs, you’ll be more successful in service,
sales and retention. Sometimes it’s used interchangeably with personalized service.

Here are three examples of that in the contact centre:

 When a customer calls your contact centre, your routing system recognizes

their location and sends them to a relevant agent.
 A customer calls, and your IVR system notices they have an outstanding
order. The system provides them with order status updates. 
 You notice that customers who buy a particular service often contact you
with a specific question. You proactively send this segment of customers a
message explaining the issue.
In each of these examples, you’re using something you know about the customer to provide
a unique service experience.

There’s also a second definition of customized service – letting customers set up your service to
their liking. 

Allowing customers to set up email or SMS alerts (or both) is one example of how contact centres
offer customized service.

You provide the options, and the customer chooses the ones that suit them.
The key difference between the two definitions is that in the latter, you don’t need to have data on
the customer.

They make all the decisions themselves!

YouTube is a great example. Users watch videos and subscribe to their favourite channels –
thus customizing the experience to their needs. 

But the platform doesn’t only show videos from channels viewers choose. 

It uses these decisions as data points to further personalize its recommendations. 

Amazon, Netflix – recommendation engine and personalized/customized services through

market basked analysis.

Benefits –

 Customers expect customized service! – providing tailored services with

personalization based on different customer segments

 Customers spend more with customized service!

 Customers can become more loyal
 It’s easier to keep up with the competition

Servicing a product – (SAAS example)

Services have become a commodity now-a-days with the advent of

technology and data analytics. E.g if a company is using AI technology
to deliver services like Lenskart, then other companies like Lenskart
might also use the same. If a company like Netflix is using SAAS model
(servicizing a product), then Canva and other companies will leverage
the same cloud based subscription model to leverage the same services
being offered by Netflix and become a mere service commodity e.g
Adobe

For a number of years turning products into services was a

sound business strategy to gain profit and raise a company
position on the market by offering long-term customized
offering to the customers. Adobe is probably still one of the
iconic examples of service transformation. For decades the
company was selling software in a form of out-of-the-shelf
products with a perpetual-license software model. Creative
 professionals would buy a boxed version of Adobe products
and kept on using it forever, skipping the updates as what
they had was working just fine. By 2008, Adobe was hit by
recession along with the appearance of new free solutions
of similar nature such as GIMP. (Free and open source
image editor). By 2011 they decided to take advantage of
new by then cloud technology and turned their product
into subscription-based services (despite the heavy
objection from both investors and customers) with a pretty
spectacular success. Such a transition was a proof that
services were offering a higher economical value to people
and therefore it was worthwhile to take one’s product (a
car) and build a service around it (maintenance service
combined with lease and insurance).

Out-of-the-shelf - available as a stock item: not specially designed or custom-

made off-the-shelf software. used to describe a product that is available
immediately and does not need to be specially made to suit a particular
purpose: You can purchase off-the-shelf software or have it customized to suit your
needs.

Off the shelf software are standardised software applications that are mass-produced,
available to the general public, and fit for immediate use. They are designed for a broad
range of customers, offering a comprehensive set of features to streamline operations. Off-
the-shelf software is software that is ready-made and available to lots of people. You
usually pay a license fee to use it, e.g., Microsoft Office, Windows 10, Norton Antivirus,
Adobe Photoshop.

Off the shelf software product will become a mere commodity after some time because any
other company can use the same technology for its benefits, but if we customize the
software based on our requirements and advantages, then it won’t be a commodity e.g
Adobe example in 2011 mentioned above.

Take this example: Service commoditization

A retail store sells clothes and they buy software to manage the store. They purchase the
software, login and setup their items in it and that’s it. It works well from then on and
they don’t have to do anything to make it work specifically for their store. This is an
example of “off the shelf” software because it works for any retail store without them
having to make major configurations to it to fit their purposes.

Take this example: Service commoditization + Service Customization

Say you owned a bank and you loan money to people based on their income, their age
and their credit score. Say you buy a software system to automate your loan decision,
however it needs to fit all the existing rules of your organization.

Because each Bank is different the software needs to be configured to match your bank’s
specific needs. a team is set up to configure the system and tell it what credit score to
approve, what income level to use and what age group to loan how much money to,
etc... This software is not “off the shelf” because it needs to be specially configured to
match the Bank’s needs.

Service Commoditization:

Today we observe something that could be called: technology commoditization. Technology

commoditization will keep on progressing ever faster as a consequence of digital
transformation processes so many companies around the world are presently undergoing.
The end goal of any such transformation is to harness technology to streamline the current
services. It is about optimization and cost reduction nicely packed in the story of entering
into a new era of technological advancement.

Technology is both the core driver & the enabler for that transformation. innovations in
technology like - Cloud, mobility, analytics, IOT, Machine Learning, IOT, Blockchain
etc. is causing the service commoditization in IT industry.

As a consequence (often not particularly noticeable or widely comprehended) services are on

their way to turn into digital commodities with all the drop-backs associated with the
commoditization process such as constant price pressure and purchasing solely based on
price and availability. It will become a battle field for those who can lower the costs and
therefore the prices the most. It will lead to creating services that are much like any other
service out there. Which is inevitably leading to the decadence of Service Economy as a
winning business proposal.

Give Netflix, amazonPrime, Disney-hotstar, SonyLiv , Zee5 are all SAAS based servicising a
product example . The all Use the same cloud based technology (SAAS based ) subscription
model . Hence all these services have become a mere commodity in themselves.
Customization in their offerings is very important in the form of recommendations,
personalized touch, recommendation engines, tailor services etc.

Customization + commoditization of services is important for their business to function.

There is an opportunity to focus on designing the strategic

vision that will set your business on the path to build solutions
that will differentiate it from the competition by offering
customized services.

Customization of Netflix, AMAZON prime – A/B testing for checking the landing cards
Machine learning to power up the recommendation engine, providing right content at right
ttime.

A service standard helps to define what a customer can expect from a service and how
it should be delivered by the service provider, e.g., in terms of timeliness, accuracy and
suitability. ... Service standards can also give consumers and clients more confidence,
reduce costs and open up markets for businesses.

Retailers standardize customer service specifically to ensure uniform quality of treatment

of all customers, both internal and external. Some examples of customer service
standardization within the retail industry include: ensuring product availability, ... and
enabling overall service efficiency.

This is because customization attempts to meet the needs and preferences of the

individuals while standardization attempts to meet the needs and preferences of the
masses (bus and transportation services).

On one side of the spectrum, some companies opt for the most standardized approach
possible. Coca-Cola is a perfect example of this approach, historically maintaining a universal
product line with little to no localization.

At the opposite end of the spectrum are companies like Proctor & Gamble that highly
customize their products, online content and marketing for different markets.

Somewhere in the middle are businesses like McDonald’s that choose a balance between
the two. McDonald’s is a well-known example of this hybrid approach. It offers a mostly
global menu that can be found anywhere. But McDonald’s also incorporates local products
to cater to local tastes—such as vegetarian options in India, burbur ayam in Malaysia, and
gazpacho in Spain.
Retail personalization is the process of providing every shopper with a unique journey
across every single touchpoint and channel, based on historical data and real-time shopper
intent, powered by customer and product Intelligence.