Why Care About IoT
Imagine a world where your products are seamlessly integrated into your customers’ lives. Their shared data gives you deeper insights – and gives them an interconnected experience.
The Internet of Things (IoT) refers to the interconnection of computing devices embedded in everyday objects via the Internet, enabling them to send and receive data. It is flattening barriers that separate you today from your customers, your business partners, and other groups in your organization. Gartner estimates that IoT product and service suppliers will generate incremental revenue exceeding $300 billion in 2020. IoT’s risks (security) and rewards (new revenue, margin and customer satisfaction) must not distract you from what makes IoT different.
With IoT, your customers need to trust you (and your business partners) enough to share their private information. Your brand is at stake.
Good News: You Know More Than You Think
Take comfort that IoT is following the same path products and services have for thousands of years. Companies must recognize the patterns and plan their responses to capitalize on opportunities at the most optimal time – and not over-invest.
Wave 1: Novel products encourage experiments and create new patterns. For example, health trackers that monitor sleep patterns and steps have taken consumers by storm. Many water cooler conversations have centered on fitness wearables and new products and features continue to emerge. The companies have added functions based on customer feedback, and more and more consumers adopted the devices.
The Customer’s Underlying Desire: “I want to be advised!” Reinforce a pattern before your customers lose interest
Smart, connected products will force the fundamental question, “What business am I in?”2
It should come as no surprise that the first releases of FitBit or Jawbone were basically data repositories. The companies added functions based on customer feedback, and customers grew to trust the product.
But many products never reach the tipping point into the second wave: when customers want to be advised. The connected vehicle has evolved quickly because both customers and partners want advance notice when it’s time to have the brakes changed. Will your washing machine make a successful leap to the second wave?
And Here's Where It Gets Harder
Wave 2: Product becomes a concierge-like service in response to customer desires to be advised on their own terms
The Customer’s Underlying Desire: “I’ll share more ... if it’s worth it to me!” Find out what customers value, then find out how to deliver it – inside or outside your company
This wave features a heavy use of reminders, permissions, and social sharing to dynamically create value. This second wave of IoT shifts the use of a device from static data and insights to a more service-based platform. Customers use your product to create their own experience – and define their own value.
Take for example the connected security system. Second wave versions can alert you when someone arrives at your home, remind you to turn on your alarm, and auto lock doors at various times of day based on detected patterns.
Your company needs to work with customers as they become more comfortable sharing insights and data. If you hear and actively address their needs, they will begin to see you as a partner – and become fiercely loyal to you.
This second wave will quickly uncover how well your company can be nimble, communicate seamlessly, and focuses on how the product fits with the brand.
Disney’s MyMagic+ is a second wave success story that featured an incredible amount of tough coordination across many business functions to realize their vision. The vacationer’s experience now begins well before the trip starts to reduce the hassle, the lines, and make the experience more “magical.”
As customers get used to the second wave, companies will be challenged with the next set of customer demands: the ability to integrate data across a community of businesses. How far will you be pushed on this topic relies heavily on where you start and how much this might influence your brand. Many MagicBand wearable device features were left on the cutting room floor because Imagineers could not permit a wearable technology to drastically change their Guests’ park experience.
Keep Your Eyes On The Prize
Wave 3: Product as a portal to an enriched experience
Products that reach the third wave are the fabric of a larger community of products to offer a better experience to customers. Your customers trust your product enough to reveal insights about themselves to share with your partners.
Your business will win the IoT race by figuring out each service that fits your brand, understanding how it meets your customers – with a focus on always building trust first.
With these needs met, your customer revenue shifts to a service-based annuity with a significantly higher customer lifetime value.
A leading example of a third-wave success is IFTTT.com, whose customers are “chefs.” They create their own recipes that seamlessly work across software or other IoT devices. They choose what, where, and how often they connect.
There were a lot of times when people were like 'this is going to be so painful.'— Nick Franklin, ex-Executive Vice President, Walt Disney Parks and Resorts, Next Generation Experience, in reference to the Mymagic Project3
Will such sticky customers give permission to receive offers from either your company or business partners? How much is that worth? And is it too far-fetched to think that customers might be willing to pay for this service in the future?
Keep in mind that both trust and brand are key. Customers want to be able to change their mind anytime, and they expect your solutions – and those of your business partners – to adapt on the fly. This means that you must also keep a watchful eye on protecting your brand so that customers trust you regardless of what your business partners do.
Considerations On The IoT Journey
Vision and Value: Are you building enough trust with customers for them to want to share more? Does your vision for IoT fit your company’s brand?
Organizational Alignment: Who inside and outside your company will champion this change? Are your organizations truly working together to focus on the customers’ needs?
Business Case: Is the case for change clear and financially compelling?
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Technology is successful only when it allows people to be more human and to express their humanity in new, more meaningful and powerful ways. This is true for all major technological advancements and IoT will be no exception.— Sandjar Kozubaev, Futurist
- Gartner, Inc. "Gartner Says the Internet of Things Will Transform the Data Center." March 2014.
- Michael E. Porter and James E. Heppelmann, "How Smart, Connected Products are Transforming Competition.” Harvard Business Review, November 2014
- Austin Carr, "The Messy Business of Reinventing Happiness." Fast Company, May 2015