B2B companies are also finding that their customers view personalization as a value-added service. For example, PSS World Medical, a $1.8 billion distributor of medical products and diagnostic imaging equipment, is expanding its business by personalizing its online catalog according to its physician-customers’ type of practice and what their colleagues are buying. Although only 6 percent of PSS’s customers currently use the Web on a monthly basis to place orders, the company has increased its incremental sales by $200,000 a month since the launch of its online system.

All three companies have based their personalization efforts on one fundamental principle. They put strategy first and technology second. They had to figure out if personalization was right for their business and how they could make it work before installing a single piece of code. Company executives also realized they had to fully integrate their information systems so that they could access and share customer information in disparate databases.

Tellingly, none of these companies rely exclusively on off-the-shelf software. Instead, they use entirely homegrown applications or some combination of packaged and custom-built software. (Off-the-shelf packages often don’t include the functionality that many companies need to access and integrate legacy customer information.)

Finally, at least two of these companies are using their personalization systems to reach the Holy Grail: getting customers to spend more money with them through cross-marketing. If a Reflect.com customer orders another bottle of customized shampoo online, she is immediately greeted with a pop-up ad that offers her a special deal on the conditioner that goes with that shampoo. And when a dermatologist shops on PSS’s personalized website, the site automatically shows him other products that are most popular among his own colleagues.

If the pundits are correct, every company will have to individualize its products, services and interactions with customers in order to stay competitive. Only then will the promise of CRM?increased customer revenues?be fulfilled.

Weighing In, Online

EDiets is one of a handful of subscription-based Internet pure-plays to have survived the shakeout and achieved a profit. The dotcom personalizes diet plans to overcome its biggest handicap?not having the face-to-face weigh-ins that programs like Weight Watchers and Jenny Craig offer. With eDiets, members weigh themselves in their homes and track their progress on the site. To compensate for not having regional weight loss centers, eDiets has to customize its weight loss plans to such an extent that they appeal to people who have grown tired of Weight Watchers and Jenny Craig’s cookie-cutter approach.