Imagine living in a world where cars, homes, and household items are connected to each other via the Internet to better meet your needs. This digital-first world is quickly becoming reality. Cisco estimates that 50 billion devices and objects will be connected to the Internet by 2020. The growth and convergence of processes, data, and things on the Internet creates unprecedented opportunities for businesses to provide people with better services and deepen the customer relationship.
The challenge is to deliver relevant, personalized experiences. Here's what industry experts perceive as the obstacles and opportunities for delivering individualized experiences as more things enter the digital fold.
Despite the buzz surrounding the potential uses and impact of connected devices, which has been dubbed the Internet of Things (IoT), these capabilities are in a nascent stage. The companies that are developing digitally connected products and services are in a developmental stage similar to where the Internet was in 1998, notes Scott Bauer, a principal partner of retail and consumer products at PricewaterhouseCoopers.
"There's a lot of promise, hype, lack of standards, and uncertainty regarding who the players are going to be," Bauer says. "Essentially, retailers are in 'test mode.' There are no best practices just yet, but there are learnings and quantification of how users are willing to interact with brands, and right now it's another feed of data into store activity."
On March 31, Amazon revealed that it is testing a new service-Amazon Dash-that left the media wondering if this was an early April Fool's joke. The company confirmed that it was serious about its service that lets people instantly order household items like laundry detergent and baby food at the touch of a button.
The Amazon Dash Button can be attached to a washing machine or anywhere you're likely to notice a certain product is running low. When you want to reorder a bottle of Tide detergent, for example, just press the button which uses home Wi-Fi networks to alert Amazon to deliver the item, saving you a trip to the store. Amazon says it will send an order alert to your phone in case you want to cancel it and will only respond to the first tap until your order is delivered to avoid multiple orders. The Dash button is still in beta testing mode and is only available to Prime members by invitation. Tide, Clorox, and Huggies are some of the consumer brands that are already available via Dash.
Amazon's Dash button is a "fascinating idea," remarks Kevin Garton, head of marketing at Zonoff, a software provider that enables brands to deliver home automation services. "The Dash concept is a great example of how technology can be used to provide more convenience, but I'm not sure how practical it is yet. Would I need 20 different buttons?"
And while buttons dedicated to one brand are a win for the retailer, price-conscious consumers may not want to be limited to reordering just one brand. Garton says he sees more uses for enterprise customers who are already accustomed to signing multi-year contracts with vendors. For instance, office workers who are running low on supplies might tap on a button to order more Post-Its or coffee.
Zonoff's software is designed to help consumers streamline the control of their devices and the company recently added integrations into the Nest Learning Thermostat and Bose's SoundTouch wireless multiroom-audio system to its platform. With the integration, the Nest and Bose products can be controlled from Zonoff's mobile app, which also controls lights switches and dimmers, motorized shades, door locks, and other home automation products.
The company is also working with its partners on developing new services, such as an ambient alert system powered by Bose. "So, in addition to turning on your favorite station when you get home, you might want to use your home audio for peace of mind," Garton says. "Say you're upstairs and the front door opens, Bose could send you an audio alert."
The prevailing issue for any IoT product or service is leveraging the data generated by these connected devices. "Devices connected through the Internet of things are creating tremendous amounts of data," Garton notes. "And the question is how can we use that data to help consumers live better and receive useful information for making smarter decisions or save money?"
For example, Zonoff is working with its partners on providing homeowners with analytics that tie together the data generated from various items in their homes to help homeowners optimize their usage rates. But building the infrastructure and processes for connecting and analyzing all of this data will take time, Garton adds. "Providing insights into how the items in your home and offices can work on your behalf and be improved is extremely useful but a lot of work still needs to be done."
Marketing in an IoT World
As more devices and objects become interconnected, brands will potentially have richer data and insights for delivering the right message or experience to individuals at the right time. "The IoT creates this web of influence containing each person's personal interests and behavior and the device is the toll booth," notes Anthony Risicato, chief strategy officer at marketing firm Eyeview. "But the wrong approach for brands is to ask, 'how can we get advertising into these devices?'"
Marketers that focus on learning what people want or need will be successful in an age where people increasingly expect brands to understand their personal preferences, Risicato maintains. Indeed, companies in the marketing and ad tech space are racing to snap up customer and audience data. We see this in the wave of data management platform acquisitions including Neustar's acquisition of Aggregate Knowledge two years ago, Oracle's acquisition of BlueKai last year, and Nielsen's acquisition of Exelate a few months ago.
Even Verizon squeezed in an IoT reference in the press release about its $4.4 billion deal to acquire AOL. The acquisition "will also support and connect to Verizon's IoT (Internet of Things) platforms, creating a growth platform from wireless to IoT for consumers and businesses," the company said in a statement.
While it's not clear yet how this will play out, Fortune's Stacey Higginbotham speculates location data from mobile devices and beacons will play a key role. "So that a customer in the shoe section of a local retailer might get information from that retailer, but she might also get a video from the same children's band her kid was listening to in the car, so she could complete her shoe purchase in peace and maybe pick up a few other items to go along with it," Higginbotham writes. "Such a model benefits the retailer, the distributor of the children's music, and possibly the harried mother."
Olof Schybergson, chief executive officer and founder of Fjord, a global design services firm owned by Accenture, agrees that understanding individual needs and preferences is critical.
Brands must "spend the time to understand people's habits and the pain points," Schybergson says. This is particularly critical in an IoT world where technology is making it increasingly easier to form multiple connections and experiences. "Today you can find someone to build nearly any thing that you want," he adds. "So don't start with the question, 'what can I do with this technology?' Instead, ask, 'what do people need?'"