How to prepare your CRM strategy for the Internet of Things

20th May 2016

In the last few years, sensors have expanded out from smartphones to bring connectivity to anything from cars and TVs to watches and glasses. The age of the Internet of Things is upon us, and is set to herald a new wave of disruption, opening up fresh areas of competition and new opportunities for customer engagement.

This of course means that organisations must begin to consider how the Internet of Things, and the new data that accompanies it, will be factored into future CRM strategies.

Speaking to MyCustomer ahead of this year’s Customer Strategies & Technologies Summit in London, Brian Manusama, research director for CRM at Gartner, explains: “In the era of digital business, where physical and digital lines are blurred, CIOs and IT application leaders supporting CRM must consider what the new relationships between people, businesses and things mean for CRM.

“The digital business model redefines the customer relationship. As things become more intelligent, they will gain the capacity to buy and sell in the world of digital business and the Internet of Things. This means new opportunities for revenue and efficiencies for all types of enterprises, but also new ways of managing customer relationships.”

As an example of this, Manusama asks that we consider the following:

  • What if a customer's electric vehicle could find the nearest charging station, reserve a spot and then pay your company for it?
  • What if a customer's industrial machine could cancel your company's service visit because it deemed that it was unnecessary?
  • What if a customer's dishwasher could tell you, the manufacturer, when it was ready for service and scheduled the service call on the customer's behalf?

These examples demonstrate the potential of IoT. Intelligent things will generate a lot of information for organisations, and data that seems big today will be even larger when 30 billion internet-connect things generate even more information. But this also demands that businesses implement new ways to spot opportunities in the span of a moment, as well as new ways to store and process data.

Manusama emphasises: “CIOs and IT leaders will need to help the organisation with the technology agility and analytics skills needed to identify business moments and take advantage of them.”

He suggests that CIOs and IT leaders will need to support the following key CRM functions:

  • Marketing: Help marketing identify intelligent things as a legitimate segment of customers. Since things likely won't respond to emotions, IT will need to help marketers leverage the data from things to come up with new promotion and pricing strategies. Manusama suggests this could even lead to a new sub discipline of marketing called "thing marketing." Thing marketing will be heavily data-driven and will require the assistance of the IT organisation, its data scientists and its business analysts.
  • Sales: Help sales deal with its own things as well as its customers' things. Sales teams may use their own intelligent things to sell to other intelligent things. There are a number of questions that need considering, according to Manusama: “Will sales be able to sell stuff to things that they would not have been able to sell to human customers? How do you protect customers if things are also making purchases? Also, traditional sales incentives may not work. What do you do if you can't take the house to dinner or to a football game? How will sales build relationships with things? Salespeople will need more training on how to interact with things if things can order or negotiate on behalf of their human owners. Will an "ethics of CRM for things" need to be created?”
  • Customer service: Help customer service teams manage and prioritise support cases deriving from things as compared to those coming from humans. Questions that should be considered here include: What is the average time to first response expected by a thing versus a human? The bigger issue is where do customer service reps and the actual customers fit into the service process? Will new service systems and processes be needed? Can it, will it and should it be fully automated? Who keeps track? Who authorises? Who makes sure things are satisfactory?

Manusama adds: “The practice of workforce optimisation is likely to change as we know it, as smart machines assist things and humans assist other human customers. Will IT need to prepare customer service to deal with the human-to-thing interaction as well?”

Next best steps

So what should organisations be doing next to ensure that they’re prepared for IoT?

Gartner recommends four key actions to get your enterprise thinking and experimenting with the idea of things as customers while it is still early in the process. CIOs and IT leaders can help their organisation:

  • Envision things as legitimate customers: Force yourself to envision intelligent devices as customers, as hard as it may seem today. Understand how your human customers make decisions, and then imagine if an intelligent device (or devices) becomes part of the decision-making process. Build your own scenarios and business moments to start the conversation. Ask how you would manage relationships with things. Where will you find these things as customers? Will ecommerce give way to "thing commerce?" Get broad participation in this conversation, and pay attention to how you feel about this personally, as it will be a factor in how your enterprise feels about this.
  • Anticipate potential governance issues: As you envision things as customers, also think about limits or mandatory human intervention periods to ensure intelligent devices don't exceed their expected behavioral parameters. For vendors/manufacturers, this would mean they provide the systems that monitor consumption and usage across all devices in their ecosystem. In this way, they are providing a level of security/advocacy/reassurance on behalf of their customers, the owners of their products. Will new ethics guidelines need to be put in place to address these important questions?
  • Build intelligent devices into your technology innovation pipeline: Begin to explore partnerships with companies that are building intelligence into things. Learn how the technology works, the systems that are needed for coordination and orchestration, and think about how your enterprise will fit in that ecosystem. For example, firms like GE, Siemens, LG, Samsung and Under Armour are building intelligence in their products. Understanding best practices or even working partnerships could accelerate your learning.
  • Prepare your organisation for potential risks with data from a customer's Internet of Things: Gartner sees three levels of risk when it comes to data and the Internet of Things:
    • Security: When things are connected to the Internet, they become hackable. New strategies will be needed to safeguard privacy as the number of touch points increases exponentially. Strengthening the security of your infrastructure to support critical business processes will become a necessity. Your enterprise needs to be in those discussions around standards and regulation, so you will know how to participate in this future effectively with less risk exposure.
    • Access: Gartner believes even getting access to data ecosystems of the Internet of Things will be a real battleground. We anticipate trade wars and new intermediaries caused by the rise of the Internet of Things, governing who has access to what data.
    • Talent: Lastly, consider what analytics technology, people and processes you will need in place to operate successfully when things become your customers.

Manusama concludes: “The Internet of Things around us will do more for us today and in the future than we have yet to imagine. Things will become your customers or will act on behalf of customers, as their agents. It is a future both intriguing and scary. However, if you know the needs and behaviors of your human customers, and if you know what dog food "Mom" likes to feed to Fido, then you know how the house (or the dog bowl) might behave when it has to order more dog food. As long as humans set the rules, and as long as they have the off switch, it will be an intriguing future indeed.”

CRM strategies and the Internet of Things will be examined in detail at Gartner’s Customer Strategies & Technologies Summit on May 25/26 in London.

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