What Internet of Things means for marketing & CX

Most Internet of Things (IoT) projects today are about the optimisation and automation of processes and about goals that are only indirectly related with the customer and with customer experience.

This might surprise you as it is often assumed that all digital transformation initiatives, also those who include an IoT component, are first and foremost about customer experience optimisation and about becoming more customer-centric in the so-called age of the empowered consumer.

However, as is often the case, we need to differ and distinguish between perception and reality, in digital transformation and in the Internet of Things.

Customer experience is not the key focus in the Internet of Things

If we look at the major goals of organisations which are moving beyond pilot projects towards scalable Internet of Things deployments, we see that by far the focus is on internal and operational goals, rather than customer-facing goals.

Quoting from the announcement of "IDC's 2016 Global IoT Decision Maker Survey": "Improving productivity, reducing costs, and automating internal processes are seen as top benefits of an IoT solution. This highlights an internal and operational focus by organisations over the short term as opposed to external, customer-facing benefits".

As mentioned in our analysis of the research, improving internal processes obviously often has an impact on the front end of the business and the customer experience but it's clearly not the key priority.

Again we need to differ. The Internet of Things has become a huge umbrella term that is covered by mainstream media and even tech media as a "thing" but IoT knows many use cases and comes in really many flavours.

The IoT customer rationale in some sectors and industries: the example of retail

You can hardly compare a connected fitness device with a smart parking or waste management application, to give an example.

That's why definitions of the Internet of Things matter and why we typically distinguish between the Consumer Internet of Things (where you'll find that fitness device and the next generation of smart wearables) and the Industrial Internet of Things (from smart city projects such as the ones mentioned to manufacturing and beyond).

While the first (Consumer Internet of Things) is most often mentioned in a customer data, customer experience and marketing context (with connected devices providing the data which are needed to enhance experiences), it is certainly not yet the segment where the action is happening for several reasons we’ll look at in a next entry. The action is in the Industrial internet of Things.

Here we need to differ once more and look beyond the use cases and rationale for Internet of Things projects across various industries. IDC’s earlier mentioned findings are valid for all industries combined and it’s clear that in some sectors the focus on the customer and customer experience is far higher than in others.

The most obvious example is retail, where on top of reasons of logistics, inventory management and cost reductions, to name a few, quite some Internet of Things use cases aim to improve customer engagement. From smart fitting rooms to interactive signage, self-checkout and smart mirrors: they are all oriented on customer engagement, customer experience and of course often also often on personalised marketing, a topic for a next blog post.

Research shows that among the main benefits of the Internet of Things, as reported by retailers, are inventory accuracy (important for the retailer AND the customer), the possibility to interact with a digitally enabled shopper in the physical store (the Internet of Things after all is about bridging physical and digital experiences, one of the key goal of many retailers) and increasing the effectiveness for consumers.

Yet, as the report by Retail Systems Research also says, retailers still have many hurdles to take before tapping into the key possibilities of the Internet of Things in retail.

Setting the priorities right: the Internet of Things at customer and business optimisation service

Moreover, amidst all challenges they face and the technological investments they make, it's key that retailers go for deployments of the Internet of Things - or any other technology for that matter - which make most sense; read: offer most tangible benefits as we'll tackle in a next post.

In the meantime, look at use cases that work and at your individual challenges, context and customers. As the Consumer Internet of Things (the adoption of IoT-enabled smart devices) is just in the early days for a myriad of reasons and despite wide media coverage, it's crucial to look at projects that pay off now and can be easily scaled in the future.

Do retailers have to launch Internet of Things projects? That depends on many factors of course but it's clear that where customer experience benefits meet direct business benefits, retailers aren't exactly sitting still. Increasingly shoppers will expect the same experiences as they know them from more innovative players in any retail segment from retailers in and beyond these segments. It will be the next expectations spill-over effect.

And to conclude with a quote from Retail Systems Research managing partner Brian Kilcourse; retailers have struggled to integrate the store to an otherwise 24×7 anytime/anywhere selling environment. It's why many want IoT projects to begin with - despite their struggles to get bandwidth and support, to name a few.