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 every company is embarking on a bold Internet of Things strategy. In fact, nearly three-fourths of enterprises believe IoT solutions will create new business opportunities and bolster their 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 much different picture: Most of the IoT use cases today are focused on cost reduction and efficiency – and only 13 percent 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 early in the IoT, many compelling use-cases are emerging across various industries. Many 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.
Today, with the rise of the cloud and big data, we are now able to collect and aggregate more information about customers than ever before. By also having a real-time, context-aware data feed from multiple product sources over time, companies will rapidly continue to shift how they do business with customers.
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 service instead of product. Here are two primary ways the IoT will help companies drive growth from their customers – with some specific use cases.
1. 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 now 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 based on specific energy consumption targets and temperature SLAs — selling an air conditioning unit and hoping the customer obtains the desired experience are now days gone by. Other examples can include preventative maintenance services by anticipating wear-and-tear of a device, or product education services based upon usage patterns.
The healthcare and medical device industries are also key verticals that stand to benefit tremendously from the IoT. Today, a number of medical device companies are developing connectivity 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, verticalisation, advanced telematics and connected cars, home automation, and so on. 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 monetise solutions.
2. Deepening Customer Relationships
The Internet of Things becomes a new frontier for CRM – bolstering traditional sales acquisition and customer support approaches. The IoT places greater emphases on ensuring customers derive ongoing value from a product or service across the customer lifecycle (onboarding, adoption, renewals and expansion) to minimise churn and create customers for life. The initial sale initiated by CRM now becomes the starting point for the IoT across the customer lifecycle.
By connecting-the-dots and aggregating data from IoT with other valuable customer data in the cloud, companies can better engage customers. Here are some use cases for 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
- Recognise buying behavior to adjust merchandising and align with local preferences
- Deliver customised offers at the perfect moment – i.e. 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 enterprise – it’s effect on how companies manage their customer relationships will be priceless. Ultimately, the IoT will help companies create more sustained value 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 understand and engage existing customers. If your business is based upon customer-centricity, it’s time to incorporate IoT into your long-term strategy — your viability may depend on it.