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The IoT is here to stay. A look at the good side and the bad side of how it will impact customer experience PHOTO: Jean-Marc Gerbelost

Working in the tech sector can become an invitation to reality distortion. 

We spend our days creating tools and services that call on nebulous technologies to address business requirements that haven’t yet been imagined. And the same processes that require ridiculous leaps of faith and imagination can also be the gateways to fantastic innovation as well.

On the other hand, working in tech also requires a solid understanding of the actual preferences, priorities and constraints facing people and businesses in the real world of the here and now. After all, how can you dream up the solutions for tomorrow if you can’t grasp the problems facing us today?

The IoT Is Here to Stay 

The Internet of Things (IoT) is one nascent arena where these two seemingly contradictory demands converge. And despite recent bad news about botnet attacks and internet outages, the IoT is here to stay. 

It has evolved in accordance with Metcalfe’s Law, which states that the value of a communications network grows proportionally to the square of the number of users connected to the system. In other words, even with the ever-growing list of implementations we find commonplace today, from smart homes and automated assistants, to drones, wearables and self-driving vehicles, much of the IoT’s true impact has yet to be realized.

The IoT has already become integral to industries as disparate as agriculture and oil exploration and it influences countless aspects of modern life.

It has also changed us.

Taking Connection for Granted 

We’ve grown accustomed to a connected world. We now routinely expect our objects to absorb information. And we expect that this information will be used to serve our needs and wants in ever better ways. 

Think about the first time you received a text message stating that an item you ordered would be delivered by the end of the day. That handy notification was enabled by IoT merchandising, payment processing, fulfillment, delivery and customer service technology, all networked to communicate in sync for your convenience.

Hello, IoT World 

This IoT-powered realm in which technology and consumer expectation intersect is decidedly different from what existed just a few short years ago. In the blink of an eye, we’ve gone from simply being pleased that we could browse and buy books at our convenience from an online retailer, to expecting that retailer’s technology to remember what kinds of books we like, tell us when a favorite author writes something new and suggest similar material we might enjoy. 

We can process our payments using the methods we prefer, receive notifications of when our deliveries can be expected, and to top it off, we can choose whether to do all of this on our laptops, tablets, phones or watches. 

IoT Is Running the Show

Microsoft issued a report last year noting that consumers now routinely demand easy access to service, especially online, as well as timeliness and personalized and consistent experiences at every stage of their interactions. 

What’s more, customers are willing to share information with organizations in exchange for these enhanced experiences. But Frost & Sullivan’s 2016 IoT-Enabled Customer Experience Report notes that brands need to be able to collate all this data, analyze it and proactively engage with customers to predict and influence what their future interactions may be, even before the customer decides on that next step. 

This is where IoT is running the show.

Precise and Personalized Use Cases

The IoT’s ability to connect numerous devices and sensors into a cohesive networked structure, enabling both the collection of data and the ability to use it, is leading to ever more precise and personalized use cases. 

Consider the collection of sensor data in cars that is allowing insurance companies to offer usage-based policies with differing premiums based on individual driving activities and behaviors. Or how about Disney World’s MagicBand, an all-access bracelet that automatically allows entry to, and purchases at, Disney’s theme park attractions and hotels, while also tracking the best routes and shortest lines? 

IoT Meets NPS

What’s more, IoT initiatives that can personalize customer experiences across any interaction have measurable returns.

The Frost & Sullivan study showed a positive correlation between organizations that had already implemented IoT for customer experience and their Net Promoter Scores (NPS), with much higher NPS scores recorded for organizations that had already implemented IoT as part of their customer-facing strategies.

Beware the Downside

Yet, such a shift in customer expectations also has its downside. The rise of data-driven omnichannel service also introduces more opportunities for customer experiences to go wrong. What if you haven’t incorporated IoT functionality into your business model? What if you’ve implemented it poorly? What if you drop the ball with integration and maintenance?

After all, it’s immeasurably more annoying for customers when they’ve grown accustomed to those handy retailer delivery alerts and they suddenly fail to arrive. IoT-augmented customer service is wonderful — but only when it’s done right.

From Dream to Imperative

Still, conservative estimates indicate the market for connected IoT devices will reach 20 to 30 billion units by 2020. And by 2020, customer experience is projected to overtake price and product as the key brand differentiator. 

The combination of those two factors indicates that leveraging IoT for increasingly enhanced personalization in consumer interaction isn’t just a tech market dream. It’s a broad business imperative.