Can customer experience thrive in the age of the io t

A Business Value Exchange Research Report

Can Customer Experience Thrive in the Age of the

Internet of Things?

A research report for CMOs and CIOs on consumer sentiment around the Internet of Things.

businessvalueexchange.com

May 2015

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ContentsIntroduction

A Digital Extension of the Physical World

Evolving Customer Relationships

Is the Internet of Things a Reality?

Executive Summary

Research FindingsThe Survey

Research Findings

Leave My Data Alone

Take My Data and Give Me Products

ConculsionDelivering Consistency

What Next?

Methodology

Footnotes

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The Internet is extending into the physical world and, as such, the amount of data available on these brand interactions is set to dramatically increase. Eye movement, heart-rate, body temperature and a number of other physiological human responses to brand messaging, logos, colours, shapes and type fonts will produce real-time data. Companies can use such data to personalise and improve their products and services, while also building stronger customer relationships.

All of this data enables brands to analyse and measure consumer behaviour in real-time. But how quickly will this technology be available? According to IT specialists TATA Consultancy Services, 22% of European companies are collecting data from digital sensors or embedded digital devices. A further 23% plan to use sensors to collect data by the end of 2017.[1]

This adoption of sensors and connected devices means that we could be looking at a future where IoT technology is ubiquitous. Tech firm Cisco has glimpsed a future where machine-to-machine (M2M) communication and technology is the norm and has predicted that 99% of physical objects will eventually become part of a connected network.[2]

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Introduction

A Digital Extension of the Physical World

The amount of touch-points an organisation has with customers is about to grow exponentially. But what does this mean for CMOs and CIOs?

Whether you believe the day of the Internet of Things (IoT) is dawning or not, what can’t be denied is that sensors are everywhere. People are interacting with brands in ways they never thought possible before.

Packaging, posters, appliances, cars, clothes – all of these things emit data that can influence how a company interacts with its customers.

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What does this mean for brands and organisations – particularly their CMOs and CIOs?

Relationships with customers used to be relatively straightforward and, in the past, post-sale communication was usually sporadic. But connected devices have added a new dimension to the way brands communicate with their new and existing customers and the IoT strengthens the transition from transactional to ongoing service relationship. This new layer of customer interaction will challenge organisations trying to deliver a consistent experience across all customer touch-points.

The new sensor-laden devices aren’t the only audience touch-points – there are still a multitude of others offline, plus everything online, including websites and social media – but they are adding to the proliferation of customer interaction. The question is, how can CMOs and CIOs provide a consistent customer experience in a sensor-driven world?

Evolving Customer Relationships

How companies are gathering (or plan to gather) digital data from their customers

Currently do this

Plan to do this by end of 2015



Don’t plan to do this by end of 2020

Via wearable digital devices or devices that end customers can attach to other products not made by the respondent’s company

13.7% 18.5% 19.4% 8.5% 39.8%

Via digital sensors and/or other digital devices embedded in or attached to company’s products used by customers

21.8% 22.7% 19% 7.6% 28.9%

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Currently do this




Don’t plan to do this by end of 2020

Via digital products that the company sells and distributes online to customers’ computers

31.8% 24.6% 20.9% 8.5% 14.2%

Via other digital online connections to customers

41.7% 26.5% 15.6% 9% 7.1%

Via continuous monitoring and analysis of customer comments in public social media sites

49.3% 20.4% 18.5% 5.7% 6.2%

Via mobile apps for customers’ devices

50.2% 26.1% 12.8% 5.2% 5.7%

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The Internet of Things is the most over-hyped technology in development today. That’s according to Gartner’s 2014 Hype Cycle Special Report [3].

The research company claims that the IoT is around five to 10 years away from real productivity and that it’s currently residing at the “peak of inflated expectations”. It still has to go through the “trough of disillusionment” before it scales the “slope of enlightenment” to reach the “plateau of productivity”.

On reading that report, some might think that the IoT is currently part of an unimaginative Dungeons and Dragons game. But in reality, what this equates to is that the IoT is in an early stage of development. Companies and organisations across the world are taking it very, very seriously and are pumping money into developing and preparing for it.

The UK government recently announced that it will be doubling the funds available to UK technology companies working on connected everyday devices, adding an extra £45m to its budget [4]. Salesforce, the customer relationship management specialists, has launched a $100m investment fund for companies creating apps and connected products that tap into its Salesforce1 platform – the core of its IoT strategy[5]. And tech magazine Wired has pointed out that 17% of the world’s software developers are working on IoT projects, with another 23% planning to start in the next six months[6].

And to bring this full circle, while Gartner currently say the IoT is at the peak of inflated expectations, it also claims that the IoT will include 26 billion units installed by 2020 and will generate incremental revenue exceeding $300 billion[7].

So is the IoT a reality? Yes, but it’s still in its infancy and needs time to develop.

Is the Internet of Things a Reality?

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The IoT is still in the early stages of adoption and, as such, consumers aren’t aware of the benefits of the technology.

People need to see productive displays from the technology before they buy into it.

Men are more comfortable than women when it comes to sharing data on connected devices to gain personalised products and services.

CMOs and CIOs need to create consistent experiences across all devices and brand touch-points if they want to win the trust and loyalty of consumers.

Young people are more open to the benefits of the IoT than older generations.

The majority of people, regardless of age or gender, are uncomfortable with sharing data with brands over connected devices.

CMOs and CIOs need to put in place strategies that will deliver consistent customer experiences while the IoT is still in its infancy.

Executive Summary

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Research Findings

Our survey of 1,000 people asked consumers about their openness to interacting and sharing data with IoT connected devices and services.

Here are the five key takeaways from our research:

The Survey

Five Key Takeaways

Regardless of age, people are uncomfortable sharing their data with companies and brands on connected devices.

Openness/interest in having internet-connected touch-points with brands decreases with age.

There’s more openness IoT services when people feel like they’re getting something that benefits them, but doesn’t appear to be marketing related.

People were more willing to track/share health measurements with their physicians than they were home security data with companies. This suggests a high level of distrust around how companies would use the information.

Males are more open than females to the benefits of the IoT, especially when it comes to sharing data in order to get more personalised products and services.

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To try and gauge the IoT readiness of consumers, we designed a ten-question survey using Google Consumer Surveys, asking consumers about their openness to interacting and sharing data with IoT connected devices and services.

We wanted to find out whether people are open to the kind of benefits the IoT offers. For instance, light bulbs. Everyone needs light bulbs. The problem is, you never know when you’re going to need new ones. If you had a smart home, you could get a notification that you needed a new light bulb just before it died. A message could be sent to your smartphone and light bulbs could even be put on to your online shopping list at your favourite light bulb store. What’s more, based on your personal preferences, details and history, your favourite light bulb store can offer you deals on your preferred light bulbs when you need to buy them, giving you a more personalised service. It’s marketing and advertising at its most useful – where it goes beyond being something that’s interruptive and becomes something that’s genuinely beneficial to consumers.

The results from this survey gave us a unique insight into how consumers currently feel about sharing their data and interacting with connected devices to gain personalised products and services.

Through this data, CMOs and CIOs can get a better understanding of whether people are ready for consistent experiences across all customer touch-points and what they need to do to prepare for the wider adoption of the IoT.

Research Findings

Wearable Tech

20%

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One of the main problems facing CMOs and CIOs, when it comes to creating a good user experience on the IoT, is that it’s currently in the stage of early adoption. If Gartner is right and the IoT is currently five to 10 years away from being on the “plateau of productivity” then there’s still a long way to go before the technology is fully integrated into people’s daily lives. This means, right now, people aren’t tuned in to the benefits the IoT can bring and our survey reflects that.

Leave My Data Alone

Which types of devices would you NOT want to share personal information with a company or brand?

None of the Above

54%

Health-Monitoring Device

24%

Smart Home Security

31%

Smart Home Appliances

Smart Car/Auto Tech

20%

18%

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The main stumbling block is sharing data. CMOs and CIOs know they need to create a value exchange to build digital trust with their audiences in order to innovate. And the vast potential of data sharing that comes with the IoT is exacerbating this concern. The survey shows that confusion around the IoT and how companies use data seems to have resulted in distrust and uncomfortability with sharing personal information.

For instance, one of the most talked about benefits of the IoT – and the one most likely to be adopted quickly – is the ability to track more data on home appliances and to make them smarter. But when asked about this in the survey, 71% of females and 50% of males were uncomfortable with sharing information with companies in order to get more personalised home appliances products and services.

The lack of trust when it comes to personal data goes beyond the online world and into touch-points in the offline world. When asked if they were comfortable with brands contacting them with personalised offers via mobile, when consumers were shopping in their store, 46% of males and 48% of females said they it made them uncomfortable. The concern about companies using consumer data and making personalised offers based on information gained from connected devices on the IoT differed among the various age brackets.

71%of females were uncomfortable with sharing their information

50%of males were uncomfortable with sharing their information

of females of males OFFER 48% 46%

were uncomfortable with brands contacting them with personalised offers via mobile

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The older generation were much more uncomfortable with data sharing and company actions based on data sharing than the younger generation. 67% of people aged 55-64 were uncomfortable with personalised offers being sent to their phones while in store, versus 21% of people aged 18-24.

The older generation were also against general product recommendations based on location, with 75% of people aged 65+ uncomfortable with this compared to 37% of people aged 18-24.

67%

55-64

21%

18-24VS

How comfortable are you sharing personal data with a company through a smart or internet-connected device in order to receive a more personalised customer experience?

23%comfortable

54%uncomfortable

8.4comfortable

45.2%uncomfortable

13%comfortable

69%uncomfortable

Male Female

Overall

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How would you feel if a company tracked and notified the status of your house appliances (e.g. Stove on, doors unlocked, sink running)?

29%comfortable

50%uncomfortable

9.1comfortable

49%uncomfortable

16%comfortable

71%uncomfortable

Male Female

Overall

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Take My Data and Give Me Products

Wearable Tech

15%

26.4% 7.9%

What types of devices would you most likely use to share personal information with companies or brands (E.g., To get a better service or to lower costs)?

None of the Above

68%

Health-Monitoring Device

12%

Smart Home Security

14%

Smart Home Appliances

Smart Car/Auto Tech

10%

9%

16% 3%

18% 6%

In order to get a better service or product, people feel more comfortable sharing data using wearable tech than any other device. Despite the majority of people being against sharing data with companies and brands over smart home security devices, people were more open to using devices to monitor home security (17%) than they were automating home appliances (13%).

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Out of all our scenarios suggested in our survey, consumers were most interested in having their smartphone inform them when there was congestion along their normal route to work. This suggests that people are open to M2M services and communication, as long as it benefits them and doesn’t appear to be a form of up-selling or marketing.

There is also a gender divide when it comes to openness to the IoT. Men seem much more open to the kinds of benefits that the new technology will offer. For instance, when we asked about the possibility of brands communicating offers to consumers if a connected device needed fixing or replacing, 25% of males found this desirable compared to 19% of females.

Again, this difference in openness to the IoT between genders transfers to touch-points that straddle both the online and offline worlds. When we asked how comfortable people would be if a brand sent them personalised loyalty and promotional offers via their mobile devices while they were shopping in-store, 33% of males were comfortable with this compared to 27% of females.

of females of males 19% 25%found it desirable for a brand to communicate offers to customers if a device needed fixing or replacing

OFFER

27%of females were comfortable with personalised offers while shopping

27%of males were comfortable with personalised offers while shopping

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Which scenarios would you consider using a smart or internet-connected device that shares personal data/information with a company?

How comfortable would you be if your mobile device sent you notifications when your normal route to work was experiencing congestion?

YES to tailored products

17%

Not willing to share data with companies

24%

To monitor home security

17%

To connect multiple devices

16%

To suggest products tailored to my interests

10%

None of the Above

47%

To automate home appliances

13%

18%uncomfortable

38%uncomfortable

22.8%very

uncomfortable

29.4%very

comfortable

Overall

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How comfortable would you be if a brand sent you personalised loyalty and promotional offers via your mobile device while you were shopping in their store?

Would you find it desirable if brands contacted you when it was time to replace past purchases (vacuum/water filters, light bulbs about to die, worn out trainers)?

33%comfortable

46%uncomfortable

16.1%very

comfortable

37.8%very

uncomfortable

27%comfortable

48%uncomfortable

Male Female

Overall

of females

of males

60%

58%

19%

25%

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The results may show that people - particularly the older generation - aren’t quite ready for the IoT. Perhaps this is because, as Gartner pointed out, the IoT is still five to 10 years away from becoming a productive technology that seamlessly fits into everyone’s day-to-day activities.

But can organisations afford to not start planning how their customer experiences will look when the IoT does become a reality? The answer is no. Consider past technology trends like cloud computing and bring your own device (BYOD). Many companies stuck their heads in the sand when these innovations moved from the fringes into the mainstream. These companies were left with outdated IT policies and archaic infrastructure, battling desperately to retrofit technologies that competitors had planned for and adopted in the early stages.

The IoT has the potential to redefine the relationship between humans and things. For the companies that want to provide consistent experiences across all customer touch-points, there are certain things that need to be considered, starting with what the customer wants.

In order to deliver consistent experiences across all touch-points, companies in the age of the IoT need to know their customers and be relevant to them, as well as showing they are trustworthy, competent, likeable and available. And herein lies the rub – as our survey shows, there is a lack of consumer trust, especially concerning how companies might use personal data. Without trust it’s hard for companies to prove that they can be all those other things.

And trust is hard to gain when the news is full of stories about data breaches. A recent example is American retailer Target, which suffered a data breach that affected an estimated 110 million people[8]. While data breaches are terrible things, what made this one

Delivering Consistency

stand out is that the hackers allegedly gained access to Target’s systems using login details stolen from a heating, ventilation and air conditioning company that carried out tasks like remotely monitoring energy consumption and temperatures at the company’s stores.

After news of this broke, Stephen Boyer, CTO and co-founder of BitSight, a company that specialises in third-party risk management, told CIO.com

Conclusion


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The IoT has the potential to redefine the relationship between humans and things. For the companies that want to provide consistent experiences across all customer touch-points, there are certain things that need to be considered, starting with what the customer wants.

In order to deliver consistent experiences across all touch-points, companies in the age of the IoT need to know their customers and be relevant to them, as well as showing they are trustworthy, competent, likeable and available. And herein lies the rub – as our survey shows, there is a lack of consumer trust, especially concerning how companies might use personal data. Without trust it’s hard for companies to prove that they can be all those other things.

And trust is hard to gain when the news is full of stories about data breaches. A recent example is American retailer Target, which suffered a data breach that affected an estimated 110 million people[8]. While data breaches are terrible things, what made this one

stand out is that the hackers allegedly gained access to Target’s systems using login details stolen from a heating, ventilation and air conditioning company that carried out tasks like remotely monitoring energy consumption and temperatures at the company’s stores.

After news of this broke, Stephen Boyer, CTO and co-founder of BitSight, a company that specialises in third-party risk management, told CIO.com

“In today’s hyper-networked world, companies are working with more and more business partners with functions like payment collection and processing, manufacturing, IT, and human resources. Hackers find the weakest point of entry to gain access to sensitive information, and often that point is within the victim’s ecosystem”

Stephen Boyer, CTO and co-founder of BitSight [9]

Building security into IoT connected devices is a priority for all organisations that leverage the technology. Any breach could end up with a loss of data, as well as disruption to customer experiences. This, in turn, could lead to losing customers, potentially to competitors. Brands and organisations won’t be able to deliver consistent customer experiences if they are constantly vulnerable to attack.

“While the Internet of Things will connect and unify countless objects and systems, it also presents a significant challenge in fending off the adversary given the expanded attack surface,” said Mike Armistead, vice president and general manager, Fortify, Enterprise Security Products, HP.


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“With the continued adoption of connected devices, it is more important than ever to build security into these products from beginning to disrupt the adversary and avoid exposing consumers to serious threats”

Mike Armistead, Vice President and General Manager, Fortify, Enterprise Security Products, HP

If smart security precautions are put in place – precautions that reassure consumers – then the IoT becomes open for providing the kind of experiences that will truly benefit people. However, more needs to be done before the technology becomes accessible.

Right now, too much data resides in silos. Until common standards are introduced so that data can be shared without risk to privacy, the IoT won’t properly take off. A move from vertical siloed data to horizontal secure accessible data is needed before consumers can experience the benefits of the IoT and M2M communication. If this doesn’t happen then what we’ll be left with is proprietary experiences that don’t give a detailed, relevant and nuanced picture of consumers’ behaviours and actions.


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What happens when the IoT is fully functioning, productive and part of our daily lives? We already know that the IoT will shift customer experience beyond web and mobile sites and the real-world. But rather than exporting the experiences that are offered now onto a new technology platform, different and innovative ways to build awareness and encourage action (be it a purchase, sign-up, or something else) need to be developed. Bringing together data from a number of sources, including sensors, means that consumer needs can be anticipated. As such, the experiences can’t be reactive or interruptive – many of the devices will be in people’s homes, after all, and won’t be built for that kind of messaging. Instead, experiences will have to become beneficial to the user, where offers are contextually relevant and based on behaviours, interests and history.

For the marketing function, this could mean an end to scatter-gun approaches to consumer targeting. Instead, offers and services will be delivered to the people that need them, when they need them and, perhaps, before they even know they need them. The technology will be there to ensure businesses don’t waste money on irrelevant advertising and marketing. These experiences need to be seamless. They need transfer from channel to channel and from connected device to connected device without complication and without losing any of the impact or customer benefits.

And to get this done there has to be a huge commitment to understand what a business wants to achieve by adopting the technology, how it’s going to affect internal infrastructures and policies and whether it’s beneficial to the audience. This is something CIOs and CMos need to work together on. As Kevin Laahs said in a recent BVEx post,

What Next?

“Focusing on how you can leverage connectivity to better service your clients, employees and citizens is something that should be at the front of every CIO’s mind and you should be doing so safe in the knowledge that the Internet of Things means there are no barriers to what is possible. The major challenge is in figuring out what you want to do - not how to do it”

Kevin Laahs

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We designed and conducted a ten-question survey using Google Consumer, asking consumers about their willingness and openness to the benefits of the Internet of Things.

The questions were each designed to be stand-alone. Each question received 988 to 1,022 responses and was shown to a randomly selected participant, independently of the other nine questions.

The questions were shown across a network of premium online news, reference and entertainment sites, where it was directly embedded into content. On the web, respondents answered questions in order to gain access to specific content; on mobile, respondents answered questions in exchange for credits for books, music and apps.

Users either answered demographic questions themselves or the Google platform inferred it, based on the respondent's browsing history and IP address. The Google Consumer Surveys platform employed stratified sampling – using the most recent Current Population Survey (CPS) Internet use supplement as its target population – in order to maintain a representative allocation of respondents across survey questions. Upon survey completion, it used post-stratification weighting to compensate for sample deficiencies.

Methodology


http://sites.tcs.com/stateofdigital/region/europe/

http://www.forbes.com/sites/quora/2013/01/07/how-many-things-are-currently-connected-to-the-internet-of-things-iot/

http://www.gartner.com/technology/research/hype-cycles/

http://www.bbc.co.uk/news/business-26504696

http://www.zdnet.com/salesforce-launches-100-million-dedicated-fund-for-internet-of-things-7000033430/

http://www.wired.com/2014/07/platform-wars

http://www.gartner.com/newsroom/id/2636073

http://www.cio.com/article/2379701/data-breach/target--up-to-110-million-affected-by-data-breach.html

http://www.cio.com/article/2378946/data-breach/target-breach-happened-because-of-a-basic-network-segmentation-error.html

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Footnotes

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Nobody has all the right answers on how to stay ahead of the competition and be agile in the current market environment. In this increasingly uncertain world, what’s required is combined wisdom.

Business Value Exchange is the place where you can explore different perspectives on how digitisation is advancing today’s enterprises - whether that’s delivering a better experience for the customers, empowering employees, or enabling greater innovation.

The Business Value Exchange research paper series offers you insights into audience behaviour and sentiment.

Read it, be inspired and deliver even greater value as the digital leader of your business.

Take a look at more of our resources on the Business Value Exchange website.

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Read it, be inspired and deliver even greater value as the digital leader of your business.

Take a look at more of our resources on the

Business Value Exchange website.

Businessvalueexchange.com is brought to you

by HP Enterprise Services, in partnership with

CIO Magazine and IDG.

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