CIO — Remember all those big promises the dotcoms made about being able to market to their customers on a one-to-one basis? All that fancy-schmancy personalization technology they had behind their websites was supposed to make it happen. They would track their customers’ every click, purchase and page view and then make recommendations about what books, CDs and clothes their customers

should buy. As we all know, personalization technology didn’t pay off in time to save dotcoms’ skins.

In fact, personalization has been the Web’s biggest unfulfilled promise, at least so far. It has disappointed companies and consumers alike for several reasons. first of all, efforts that many companies tout as personalization are really just exercises in simplistic customer segmentation. Just because a letter from a bank about a home equity loan is addressed to "Dear Meridith Levinson" instead of "Dear Valued Customer" doesn’t mean it’s tailored to Meridith’s needs, especially when she is single, rents an apartment and doesn’t need a $20,000 credit line. That is an instance of a bank segmenting an individual into some category of customer it deems worthy of a home equity loan. Neither the bank nor the consumer wins in this situation; the bank doesn’t sell a home equity loan, and the customer doesn’t get offered the Roth IRA she really wants.

The second reason personalization hasn’t lived up to expectations is because off-the-shelf personalization technologies focus on giving customers specific recommendations based on what they’ve bought in the past. And those recommendations don’t differentiate between gifts and personal purchases. If Dad, who usually buys classic rock CDs for himself, purchases a Korn album for his 12-year-old son, he may start getting recommendations for grunge every time he logs in. And that’s just annoying. By contrast, when a customer patronizes a brick-and-mortar store, he can get sensible recommendations on everything from house paint to upholstery swatches by simply asking a clerk. And it takes a lot less time.

Despite such disappointing outcomes, there are a handful of companies that understand the essence of personalization and are doing it right. They realize it’s about determining a customer’s unique needs and offering products and services that satisfy him. For instance, at San Francisco-based Reflect.com, a Procter & Gamble spinoff, women can customize cosmetics, moisturizers, cleansers, shampoos and conditioners that best suit their skin and hair care needs. And if you’re fed up with Weight Watchers and the Atkins’ diets, essentially one-size-fits-all regimes, eDiets.com offers weight loss and fitness plans tailored to your individual activity level, dietary preferences, medical history and emotional needs.

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