This article is based on an interview by Internet of Business
It takes more than just a good Thing
Devices may be the IoT’s ‘shiny objects’, but that the real money will flow to those companies that enable enterprises to actually make dollars and sense from all the data that devices generate. It’s all about being able to use software-based intelligence to consume IoT data and then measuring and monetizing that data. But what does it take to make the so-called ‘monetization of things’ (MoT) actually happen?
To make money in the IoT, you can’t look to the margin earned from selling a device alone. Companies must turn instead to the potential for paid and perpetual recurring services that are unlocked by th device as the surer bet for long-term monetization success. In other words, succeeding in IoT takes more than a good ‘Thing’.
The case in point, take action camera maker GoPro. Once a darling of Wall Street, its total dependence on new device sales as its sole revenue stream has served to disappoint in recent quarters. FitBit has a created a similar cautionary tale. The devices ended up on every fitness geek’s wrist and the suburban masses were staring at their wrists on the way to 10,000 steps every day. But that’s where the fun, and the profits, ended. With no value-added services to keep customers engaged and create recurring revenue, FitBit began to founder after its IPO. The cost of continually creating new Things to attract new customers accrues quickly—today FitBit’s stock dumped 75% of its value in 2016 and has yet to take any meaningful steps toward recovery.
Personalization of monetization
To see why is monetization personalization so important, see how streaming TV pioneer Netflix nailed it.
Netflix has 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 millions of customers. From this data, it not only offers customer-specific viewing recommendations based on predictive analytics, but it can also show individual subscribers exactly what they’ve already watched and even where they paused a show, no matter what device they use when they return to viewing. Personalized experiences like these are a key reason behind the company’s huge success.
The IoT is a natural fit for this model because most IoT products and services leave a digital trail that reveals details about the way customers use them. Modern monetization platforms like Aria work to process this consumption data and give firms a view into customer behavior, preferences and usage patterns to offer timed offers and incentives.
Connected cars shift loyalty
How is this new-age personalized monetization billing play out in the realm of connected cars, for example?
For the industry to fully capitalize on connected car services, they are going to have to do more than monetize in-car connected services. What is thought of as ‘loyalty’ now—building and selling a car and hope that it’s good enough that the customer will probably buy another one from you in say five to seven years, has to evolve into building strong and lasting brand affinity.
Calling for a new approach to building the point-of-sale brand relationship, this has to be constantly nurtured to develop a permanence. Achieving this all-important brand affinity is going to be relatively easy for makers of luxury vehicles and work vehicles, where such affinity tends to already exist, but is going to be much harder for low-to-mid-market makers of passenger vehicles where they risk being commoditized.
In these cases, the consumer’s affinity and relationship are far more likely to reside with the provider of the service that puts them behind the wheel (think Zipcar, Enterprise CarShare, even Uber and Lyft) rather than the manufacturer of the vehicle itself. This is why car companies have developed or acquired their own services. Ford purchased vanpooling service Chariot, which uses Ford’s new Transit vans. GM rolled out its Maven car sharing service to an impressive reception—it was immediately fully subscribed in some pilot areas. And there are luxury lifestyle on-demand car services available from Audi, BMW, Cadillac, and others. All of these OEM-owned services bring brand affinity back in-house by offering personalized services—not just products.
Solidifying personalized monetization
To fully solidify this model of personalized monetization, the back office systems that companies rely upon to control the lifeblood of data inside the IoT will have to be updated. It is once again the responsibility of the developers and machine data engineers who will bring this all to bear.