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The Coming IoT Tsunami Will Redefine Customer Engagement

Ginger Conlon | September 22, 2016

iot-customer-engagementBy Ginger Conlon, Chief Editor, Customer Alchemy

“The future is already here, it’s just not evenly distributed yet.” 

This quote by William Gibson is especially apropos when it comes to the Internet of Things (IoT) and its influence on business. Despite the fact that there are already billions of connected devices globally, that broad connectivity and its potential revenue impact have yet to reach anywhere close to its possible limits. In fact, McKinsey Global Institute estimates that IoT has a potential economic impact of $3.9 trillion to $11.1 trillion per year by 2025.

According to Gartner, there will be 6.4 billion connected items in use worldwide in 2016, an increase of 30% from 2015. Gartner further predicts a reach of 20.8 billion connected devices by 2020. BI Intelligences puts that number at 24 billion in that same timeframe, citing an expected 41% CAGR from 2015 to 2020.

This year alone, Gartner predicts 5.5 million new devices will get connected every single day. And with that connectivity there is data. Glorious, insight-filled, expansive data.

But this data isn’t your garden variety collection of demographics or SKUs. This is smart data. Data you can use to revolutionize your approach to customer experience and engagement because IoT expands far outside the walls of marketing.

For customers, the lines that organizations use to delineate departments such as customer service, order management, and logistics are already irrelevant. IoT is graying those lines for the companies using it, enabling them to optimize customer engagement in ways never before possible. This applies to B2B and B2C companies. Some B2B companies are already using self-diagnosing machines that proactively request service; B2C companies such as Disney and Nest are using IoT to gather individual-level data to improve the customer experience not only for those unique customers, but also for other customers based on aggregate data.

Imagine a future where your IoT toothbrush sends data on your brushing habits to the manufacturer, which can then email you links to relevant content on how to brush more effectively based on your specific brushing style, and to your dentist, who can provide any necessary advice or service based on that data. And forget using one-click ordering for your K-Cups. In the not-too-distant future your Internet-connected coffee brewer will reorder them for you based on your consumption habits and flavor preferences.

Don’t stand by watching as this unevenly distributed future unfolds. Start preparing now for ways your organization can optimize customer engagement through IoT. Here are several considerations that will help set you along the right path.

It’s not just about marketing.

IoT’s ever-present connectivity allows companies to get smarter about their customers. It also allows businesses to deliver better customer experiences at touchpoints that have everything to do with engagement and loyalty, but little to do with marketing in terms of campaigns and communications; for example, logistics, self-diagnostics, and store payment systems.

Companies using IoT need to think more across functions than ever before. Consider the futuristic example of an Internet-connected refrigerator. It could offer consumers a subscription to their preferred supermarket that provides consumer-selected autoreplenishment for everyday items such as milk and paper towels; it could include machine learning to track items in the fridge and make recommendations for related or new items (excellent marketing opportunity for an ecosystem of partners); and could even link to consumers’ fitness trackers to recommend workout levels based on calories consumed. If the fridge includes a water dispenser, it could also autoreplenish the filters. There needs to be organizational alignment of data and processes for this to happen—and to happen seamlessly.

But marketing can be the ring leader.

In many organizations marketing is already focused on delvering relevant, yet consistent experiences across channels. In those circumstances marketing is already working with departments across the organization such as customer service, IT, and shipping. As IoT drives more of this cross-functional need—and broad opportunity for customer engagement—marketing is well-suited to devise the company’s overarching IoT strategy. And then operations may be best-positioned to orchestrate the related tactical plans.

Channel and data sources could multiply exponentially.

If every IoT device is a “channel” and a source of data, then expect channels and data sources to mushroom as IoT expands. That may feel overwhelming considering the seemingly innumerable channels and data sources currently available. This difference is intelligence. IoT channels and data are “smarter” because they’re more closely connected and relevant to individual customers. This intelligence will allow organizations to provide helpful experiences that drive positive results and advocacy at every one of these customer interaction points—even if it is the customer’s device doing the actual interacting.

Instead of thinking in terms of channels, think about moments of engagement. Instead of data, think about insights such as triggers and context. Sending a contextual message to a smart car that it needs service—and providing local service station recommendations—is not too far off in the future.

“Good” data is no longer good enough.

Don’t be in data denial. You say, “We have a pretty good view of the customer.” But then you find reams of duplicate or incomplete records that get in the way of optimizing the customer experience.

If you’re going to build an IoT strategy, you need to get your data in order. It needs to be clean, connected, and well-organized. Think of it as organization-wide master data management, where you’re trying to have a single version of the truth amid an agglomeration of data sources from across the organization (e.g. call center, CRM, marketing database, POS, social, etc.) and outside of it (e.g. partner and third-party data).

You also need to determine what data you’ll want to capture and use as part of your IoT strategy. It can’t be, “I want it all.” It should be focused on what elements of the customer experience you’re trying to optimize.

Enabling technologies are in various states of maturity:

IoT can help you think differently about customer engagement and expand your channels. But you have to have the right technology to support your IoT strategy. This starts with today’s advanced data management tools that can handle the connectivity and cross-organizational views you’ll need. Additionally, evaluate enabling technologies such as iBeacons, RFID, Bluetooth low energy, and Z-Wave. When doing so, consider the maturity of those tools and how well they’ll actually be able to support what you’re trying to accomplish through your IoT srategy.

IoT may not be right for your organization—yet:

Not every company needs a mobile app to engage today’s mobile-crazed customers. Similarly, not every organization needs IoT to address today’s digital-savvy customer. Before rushing into IoT, you must understand your customers and what you can provide through IoT that’s helpful, useful, and not creepy.

You also need to consider your organization and its current capabilities. Do you have the vision and strategy and support in place to launch an IoT initiative? What about the data and cross-organizational collaboration? If not, what steps to do need to take to get there?

“It’s crucial for organizations to future-proof themselves for the ever-expanding concept of new channels,” says RedPoint Global VP of Product Strategy Patrick Tripp, who recently examined the next generation of customer engagement in a webinar conversation with Forrester Principal Analyst Rusty Warner. “This might be vehicles, appliances, gaming systems, ad tech, or many other areas. The key is to be able to provide data and ingest data at the right moments of customer engagement. This will evolve beyond marketing to include sales, services, commerce, and various other aspects of the business.”

Yes, IoT will continue to challenge marketers to think differently about how they define channels. But it also will provide access to insight about B2B and B2C customers and their usage habits and preferences, as well as the condition of their Internet-connected devices. As its use expands expotentially over the next few years, it will forever alter the competitive landscape.

As Tripp asserts, you need to start thinking now about how to future-proof your operations. And, about how IoT can enable customer engagement optimization for your organization.

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Ginger Conlon