Note: This article was originally published in Website Magazine. To view the article, click here.
Customer lifetime value (CLV) is an important metric as it captures the revenue potential of each customer relationship over their lifespan with a company.
Higher CLVs lead to greater profits for the enterprise, and now, with the rise of potentially billions of cloud-connected sensors and smart devices collectively known as the Internet of Things (IoT), there are more opportunities than ever before to grow both.
The IoT relies on sensors and machine-to-machine (M2M) communications to produce data on a variety of subjects. Translating that data into more rewarding customer experiences is one of the most significant opportunities that comes with the IoT. Here are three ways any enterprise can mine IoT data to cultivate deeper customer connections and generate higher per-customer revenues.
1. Monetize IoT Data by Expanding Offerings
One way to improve CLV is to use data created by IoT devices to give existing customers new ways to consume products and services – and more reasons to remain loyal. Adding IoT-driven services to an existing product catalog can help marketers meet fast-changing customer demands and keep competitors at bay.
For example, in the offline world, auto insurers like Progressive are accommodating their cost-conscious customers by offering them new pay-as-you-drive policies where rates are based on the miles actually driven. Mileage is tracked and sent to the insurance carrier through a small IoT-connected dashboard plug-in. Consumption-based policies such as these can lower premiums by as much as 50 percent – a powerful incentive for insurance customers to stay put.
Cable TV providers are especially adept at the repackaging game. It’s how they fend off subscriber churn. Years ago, they expanded beyond TV with triple play packages that added Internet and phone services to the mix. With the advent of IoT, they’ve now added another: smart-home monitoring. These systems combine motion sensors, cameras, smart locks and brainy thermostats that allow cable customers to remotely manage hearth and home from anywhere. Subscribers who sign up for these services view them as a convenience they can just add to their existing bill. That’s exactly the mindset companies want their customers to have if the objective is to increase CLV.
In the online realm, MyFitnessPal, the world’s top online health and nutrition membership community, is embracing IoT to make it even easier for its more than 80 million members to reach their goals. They can now add personal data from their favorite wearable IoT fitness gadgets like Fitbit and Jawbone to the other health information they track on MyFitnessPal. Providing an in-demand service like this pays off for the website, even though its CLV is difficult to pin down because the site is free to join and ad-supported (even though it is still a big financial hit).
Earlier this year, sportswear maker Under Armour purchased MyFitnessPal for $475 million. Clearly, its goal is not only to monetize the site, but also to tie it into its own sales of IoT trackers, including computerized performance wear.
2. Improve Your Website Experience to Deepen Engagement
For any company that sells online, one of the most obvious means for growing CLV is to improve how visitors engage with the website. Data gleaned through the IoT can provide a clue. Several vendors offer sophisticated analytics that can help brands identify site issues that may be causing lost sales and missed connections.
Of these firms, Reactful, is particularly innovative. The company uses IoT advancements in M2M learning and powerful algorithms to assess the way visitors interact with websites. The solution tracks subtle variations in customer clicks, scrolls and mouse movements in real-time so designers/marketers can better understand both behavior and intention.
What are they drawn to? Are they hesitating for an instant before taking a particular action? Exactly where on a page do they go dark?
With such insights, it is possible to hone in on precisely which aspects of a website need work in order to improve conversions.
3. Get Personal to Boost Customer Satisfaction and Loyalty
Relying on the IoT to make a website more personal is only the beginning. The truth is, the technology serves up personalization opportunities in spades.
An expanding universe of smart sensors and devices generate continuous streams of personalized, real-time data on just about anything people want to monitor and manage – from heartbeats, footsteps and sleep cycles to inventory levels, shipments in transit and medical diagnostic equipment.
Consider online streaming TV pioneer Netflix. It’s made a science of personalization, due in part to its reliance on intricate M2M processing. For example, each day, it tracks millions of viewing streams from its customers. From this data, it not only offers customer-specific viewing recommendations based on predictive analytics, but also shows individual subscribers exactly what they’ve already watched and even where they paused a particular show, no matter what device they use when they return. Personalized experiences like these are a key reason behind Netflix’s outlandish success.
Indeed, endless digital rivers of IoT data hold a veritable treasure trove of information brands can harness to transform customer satisfaction and increase CLV. That’s because most IoT products and services leave a digital trail that reveals details about the way customers use and interact with them.
Consumption data provides an unprecedented view into customer behaviors, preferences and usage patterns. With these insights, it is possible to produce perfectly timed, spot-on offers and incentives that customers increasingly expect.
Keep in mind that using customer data in this manner requires two things: permission and respect. Intrusive, unsolicited promotions or sharing data with third parties without authorization can undermine even the best-intended CLV efforts.
The Internet of Things is poised to usher in disruptive change on a scale unmatched in the digital experience, but some things will never change. In order to expand CLV and increase profits in the age of IoT, companies still need to win their customer’ hearts and minds at every turn. Savvy use of IoT technology can help make that happen in a heartbeat.