Over the past few years, there’s been a lot of hype about the Internet of Things (IoT) and its massive potential to change how we live, work and conduct business. From wearable devices to smart appliances that share information via sensors, it seems like/that every company is embarking on a bold Internet of Things strategy. In fact, nearly three-fourths of enterprises believe that IoT solutions will create new business opportunities and bolster existing offerings. By 2020 the IoT will produce an estimated 50 billion connected devices, and IoT solutions will generate $7.1 trillion. Yet the current reality paints a very different picture: Most of the IoT use cases today are focused on cost reduction and efficiency – and only 13% of IoT use cases between 2009 and 2013 targeted revenue growth or innovation.
So, how will companies drive future revenue growth from the Internet of Things?
While we are still in the early stages of the IoT, many compelling use cases are emerging across various industries. Several of these use cases create new ways to drive growth and profitability from existing customers. How? The Internet of Things simply represents another “smart” endpoint to better understand customer behavior, value sentiments and product consumption.
With the rise of the Cloud and big data, we are now able to collect and aggregate more information about customers than ever before. Once companies have reliable real-time, context-aware data feeds from multiple product sources collected over time, they will shift how they do business with customers even more rapidly.
Ultimately, the IoT will change how companies bring new “value” to products and services, engage their customers and drive future growth strategies. To make this shift, companies need to take a different approach – think differently – and focus on services rather than products. Using specific use cases, here are two primary ways the IoT will help drive customer growth:
- Moving from Products to Outcomes
Combined with the Cloud, the Internet of Things is already changing business models and related product offerings. One of the biggest shifts has been the move from selling discrete products with attached services to selling complete “outcomes”, or Outcomes as a Service (OaaS). Think of OaaS as simply a product wrapped in a service-based SLA or goal.
One great example of OaaS is a leading commercial air conditioning company that’s leveraging usage analytics and the IoT to charge for and deliver outcome-based air conditioning that focuses on specific energy consumption targets and temperature SLAs. The days of selling an air conditioning unit and simply hoping that the customer will have the desired experience are now long gone. Other OaaS examples include preventative maintenance services, such as anticipating the wear-and-tear of a device, or creating product education services based upon usage and adoption patterns.
The healthcare and medical device industries are key verticals that stand to benefit tremendously from the IoT. Even today, a number of medical device companies are developing greater connectivity in order to improve communications between health care providers and patients while also providing real-time monitoring of patient health through bedside diagnostics.
The list of new business models enabled by the IoT is endless – asset sharing, verticalization, advanced telematics and connected cars, home automation and more. Net-net: With new insight into how customers are using a product or service, combined with other data sources in the cloud, businesses have new ways to deliver value to customers and monetize solutions.
- Deepening Customer Relationships
By bolstering traditional sales acquisitions and customer support approached, the Internet of Things has become a new frontier for CRM. In order to minimize churn and create life-long customers, the IoT places a greater emphases on ensuring that customers derive ongoing value from a product or service across the customer lifecycle (onboarding, adoption, renewals and expansion). The first sale initiated by CRM is now the starting point for the IoT across the customer lifecycle.
By connecting the dots and aggregating data from the IoT with other valuable customer data in the cloud, companies are better equipped to engage customers. Here are some use-cases that demonstrate how the IoT can be leveraged to drive deeper customer relationships and loyalty:
- Combine usage behavior with other customer history to predict and prevent churn
- Recognize buying behavior to adjust merchandising and align with local preferences
- Deliver customized offers at the perfect moment (e.g., when a customer enters a store)
- Manage inventory volume based upon demand and purchases (Amazon does this today!)
- Understand product usage and trends to improve future product development efforts
What’s next for the IoT in today’s enterprise?
While the IoT holds broad appeal across every branch of enterprise, its effect on how companies manage their customer relationships will be priceless. Ultimately, the IoT will help companies create more sustained value by moving from a one-time “initial sale” focus to an ongoing relationship with customers. The specific effects will be felt in how companies go to market, and leverage their CRM systems and other data to better understand and engage with existing customers.
How will your company leverage the IoT to better engage your existing customers?
How will you integrate IoT processes and information into your front office systems to deliver a more compelling experience?
If your business is customer-centric, it’s time to incorporate the IoT into your long-term strategy. Your viability may depend on it.