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Insight: Will the Internet of Things be cool or creepy?

By now you’ve heard the statistics: According to Gartner, there are already 6.4 billion devices connected to the internet – and Gartner predicts that this number of connected “things” will reach 20.8 billion by 2020. With so many more options soon available to collect data and deliver reward and recognition to best customers in-store, online, and in their homes, our task will be to understand what data from the Internet of Things (IoT) can be most predictive of customer engagement – and how we can leverage that data to deliver a personalized, relevant customer experience without crossing into the creep zone. Our roundup on the intersection of IoT and loyalty reviews what the experts say.
By Rick Ferguson

A recent Snipp blog post highlights the three broad categories of Internet-connected devices that will soon provide a wealth of data and insight on customer behavior, as well as new channels through which to reward and recognize customers: Wearables, such as smart watches and fitness bands, that can provide personal data as well as a link to payment apps and reward programs; beacons and other geo-locational technologies that can track customer movements in-store as well as provide in-store reward and recognition; and wireless sensors in automobiles and appliances that can provide data and reward opportunities on the road or in the home.

These devices will result in a flood of user data flowing back to marketers and manufacturers. According to Snipp, it’s the observational power of this data that will prove most immediately beneficial to marketers.

“As the number and type of devices connected to the internet grows, so will the amount of data collected by them. These devices will provide a real-time, fly-on-the wall view of what customers actually do, where they are, what they like, and what they don’t – all without them having to actually say a thing. Marketers will no longer have to predict what customers will do; rather, they will simply have to observe a customer’s behavior and understand the context around a particular action. All this data can be leveraged to design better customer experiences, right from their journey through a store all the way through to how the loyalty program perfectly targets them at the right time to encourage repeat purchases.”

The possibilities for leveraging the IoT in building customer relationships are mind-boggling. Here’s one example of leveraging IoT to build loyalty from all the way back in the horse-and-buggy days of 2015, courtesy of Harvard Business Review:

“Another offering that taps the power of the Internet of Things and Big Data is Disney’s MyMagic+. Disney customers (aka “guests”) wear a MagicBand bracelet that allows Disney to know where they are at all times. Guests use an application called My Disney Experience to plan all of their bookable and non-bookable activities: dining, rides, attending parades, and so on. Then, Disney can use the tracking information and send them personalized messages via their smartphones about things like where they might find a cold drink if they are ahead of schedule, what they might skip if they are running behind, and, if they are heading toward a congested area, a better route to take.”

And here are few scenarios currently either in market or on the horizon, courtesy of IBM:

Sneakers that sell to you: “Knowing you’re a busy executive, every week, the [connected sneaker] takes into account your schedule and the weather and recommends the best time and place to get exercise. Now imagine you just got back from your daily run and the chip proactively sends an alert to your fitness tracker letting you know how many miles you’ve logged in your current pair and, knowing precisely when you traded in your last pair and why, it reminds you that it’s time to buy new sneakers and places the order for you from your favorite retailer. It also knows where you are traveling for the next month and recommends some new running gear that is more appropriate for that climate.”

Washing machines that sell to you: “A connected washing machine understands how many loads of laundry you do every week and the cycles you tend to use, and with this insight it could anticipate when you need to order more detergent to get the best possible price and place it for you. That’s a great convenience for on-the-go people who often find empty detergent bottles at the worst possible time. But there’s more. Traditionally a retailer sells you a washing machine or a refrigerator as a single transaction. It’s a onetime payment that ends once it’s hooked up in your home. But it doesn’t have to be that way. Working with Visa [IBM] transforming that entire business model, allowing companies to tap into continued revenue streams that last for the lifetime of the unit. In fact, it seeds a greater level of loyalty that will likely help ensure you buy from them again in the future.”

So here’s the question: Do those two scenarios outlined above sound cool? Or do they sound creepy? Will any of this personalization, needs anticipation, and product recommendations centered around IoT be done on behalf of consumers, or on behalf of marketers?
Ideally, the activity would benefit both sides in the form of mutually beneficial customer relationships. A future in which your washing machines becomes the equivalent of a modern home printer – a loss-leader piece of hardware designed to drive repeated detergent-pod purchases just as your home printer consumes a mountain of $50 print cartridges – could be a boon to time-starved consumers, or an unwelcome intrusion into your lives. A pair of sneakers that helps you track your fitness goals is cool; a pair of sneakers blasting an endless stream of product “suggestions” to you isn’t cool at all. There’s a fine line between personalized and intrusive; despite consumers’ enthusiasm for connected devices, there’s a significant danger that too many push notifications hammering consumers from their Alexas, their appliances, their cars, and their clothes could register a strong push-back.

So let’s set some ground rules. To leverage the Internet of Things to build strong customer relationships that stay on the cool side of the equation, consider these simple best practices.

  • Ask permission. Consumers should be fully informed about what data your device collects, how that data will be used, who will have access to it, and how to opt-out of any data collection. Send only those notifications or offers through your device that your customers have specifically asked for. If you do business in the European Union, coming data privacy regulations will make this suggestion a requirement. If you’re not in the EU, then don’t wait for the legislatures to come knocking; become good stewards of your customers’ data today.
  • Reward and recognize. Leverage classic loyalty marketing techniques to reward your best customers for interacting with your devices in a way that reinforces desired behaviors. Recognize long-tenured or high-value customers with benefits that reinforce their sense of status for opting into your IoT marketing stream.
  • Don’t just speak; listen. Rather than use your connected device as just another marketing broadcast channel, use it also as a listening post: embed feedback mechanisms into your device, and demonstrate your listening skills by responding quickly to customer feedback.

For a look at how a brand can build loyalty via the IoT, consider this anecdote about electric car manufacturer Tesla Motors, courtesy of Forbes:

“Tesla not only provides software updates to the car’s operating system (OS), but also crowdsources ways to innovate by allowing customers to submit requests for features they would like. Recently a customer submitted a request for a crawl feature: in effect, extremely slow cruise control to ease the driving experience during heavy stop-and-go traffic. Not only did Tesla implement the crawl feature for that customer, but they rolled it out across the entire fleet via a software update.”

Properly channeled, the power of the IoT has the potential to transform customer relationships as profoundly as the mobile device changed them ten years ago, and as profoundly as the internet did 20 years ago. So long as IoT marketing provides the foundation for mutually beneficial relationships between companies and their customers, the future will be far cooler than it will be creepy.

Rick Ferguson is Editor in Chief of the Wise Marketer Group.

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