What the IoT Can Learn from Nordstrom

What the IoT Can Learn from Nordstrom

I had the opportunity of a lifetime a few years ago. I was the president of my local school board, and we were one of five school districts nominated for a national award. The award ceremony was in the Senate Dining Room at the U.S. Capitol. Hillary Clinton was one of the featured speakers. At times, I had trouble seeing the podium because Ted Kennedy’s head was in the way. Yes, I’m name dropping – it was that kind of event. There was even the possibility of a visit to the White House.

As with most opportunities, this one came with a challenge. At the time, I owned one reasonably nice suit – a ratty old blazer and no ties. You don’t show up to the White House wearing blue jeans and a golf shirt, so I was in a bit of a bind. What to do…

I put on my one reasonably nice suit and went to Nordstrom. When the sales associate asked, “Can I help you?” I responded, “Yes, I need a shirt and tie that I can wear to the White House.” I explained my situation, and for the next fifteen minutes we tried various combinations of shirts and ties against my suit to find just the right look. I came away with a pair of shirts and ties, and a few days later I was the best-dressed school board member in D.C. (Those who know me well know just how unbelievable that statement is).

When you walk in the door at Nordstrom, you know you are going to find two things: quality and service. Personalized service. The kind of service that looks at you and your reasonably nice but out-of-fashion suit and thinks, “Hey, I can even make that look good,” and then proceeds to do just that. I’ve been to Nordstrom many times since, looking for that personalized shopping experience with someone who can tell me, “That looks good,” or, more importantly, “Maybe you should try this instead.” It’s that personalized service, consistently delivered, that sets Nordstrom apart from so many of its competitors.

What the IoT Can Learn from Nordstrom

So, what does this have to do with monetizing the Internet of Things, aka the Monetization of Things? At first glance you might say, “Not very much.” But think about it. What are we looking for today as consumers? I don’t know about you, but I’m looking for two things: value and personalization. In today’s world those two are usually pretty tightly coupled.

We tend to think of value strictly in terms of price, but we should probably think more in terms of return on investment. I’m pretty sure I paid more for those ties at Nordstrom than if I had bought them from a budget retailer. But today I own four ties, two from one of those budget retailers and the two from Nordstrom. Guess which two I wear the most? Where did I get the better ROI?

In the recurring revenue world, we talk a lot about the customer experience as a key driver to success. Customer retention and up-selling are critical for profitability, and happy customers are much more likely to stick around and upgrade than unhappy customers. Since recurring revenue will be the dominant monetization model for IoT, you should expect the customer experience to be critical for IoT success as well. I think this will play out in two key areas: ease of use and personalization.

Back to my Nordstrom experience: I walked in the door, found the nearest sales associate, and asked them to help me solve a problem. Basically, I flipped a switch and then got out of the way. That’s how we want our “things” to work too. Whether it’s a home management system or a wearable medical device, we want it to be easy to use. Complex configuration routines will fail; easy configuration routines will win.

I also want my device to work the way I want, when I want. I want it to be MY device – not something with cookie-cutter factory settings, but something that is flexible and personalized to me. The more options the better, so long as it’s easy to use. Again, back to my Nordstrom example: that sales associate asked me about my personal tastes (e.g., nothing pink) before we started our search. Her recommendations were personalized to me. Someone else wearing the same suit might have walked out with different shirts and ties.

So what might this look like in an IoT setting?

Picture a medical sensor (perhaps a wristband, patch or even a small implant) that tracks vital information. That information is transferred real-time to an app on your phone. The app settings are personalized based on your medical history and preferences, which were gathered through a simple online questionnaire when you signed up for the service.

The app generates an alert when something doesn’t look right. That alert goes to a call center at the Mayo Clinic, where nurse practitioners and on-call doctors can read the data, review it against your history and get you on the phone if there’s a potential problem. Imagine getting a call from a cardiologist saying that your heart is showing irregular patterns and you need to call 911. Or maybe they call 911 for you. Now that’s customer service. If that sounds a little far-fetched, check out the new health app in the next version of ioS and OS X. We’re already halfway there.

The vendors who will thrive in the IoT will be those who add value to their products through a personalized customer experience, the way Nordstrom does. And speaking of Nordstrom, I still only own one suit, and yes, it’s the same suit. I see another trip to Nordstrom in my future.

Bob Harden