The Internet of Things has launched us into the future. Thanks to the proliferation of smartphones, user-friendly apps and inexpensive sensors, devices are now connected to the Internet and processing real-time data. Interconnected gadgets at our fingertips with the ability to create real change - it’s pretty much how we have always imagined the future to be. But, all that is just the surface. It’s our relationship with devices and the value they bring to our lives over time - that’s the stuff that’s driving IoT. The future is here now. By combining the purchase of physical products with the long-term value of subscription services, IoT creates a new relationship between business and customer. But, what does that relationship look like?
The device Although devices are physical gadgets, the transaction of purchasing an IoT device isn’t the end of the sales cycle like it is for the one-time purchase of traditional products. Today, the purchase of a device is only the beginning of a long-term, continuous sales cycle. It’s the start of a long-term customer relationship. Your customers do their research Social networking and mobility allow customers to do real-time research and judge a product based on the value it has provided to others before the purchase is even made. The social connectedness of the buying world is actually a beacon of opportunity for companies invested in the Internet of Things -- if done right.
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The subscription The subscription is where IoT relationships, if done right, diverge from one-time transactions. Your customer expects the purchased device to be engaging throughout daily life and continuously deliver real value. You provide the value In the traditional business model, it was the customer’s responsibility to derive value from products. The seller just wished the buyer good luck and moved on to the next sale. Today’s customers expect you to deliver that value. Trust and reciprocity In IoT, you have to be prepared to deliver value through a subscription service that connects your customer with the device. Subscriptions are key to engaging customers over time and providing the value that they are looking for. A recurring relationship also relies on trust and reciprocity. If you continue to offer real value, you, in turn gain the trust of the consumer. And that means more long-term business.
The relationship The device For some devices, the relationship is organic. Connected home devices with constant daily engagement are a good example. For other devices, however, your business has to create the relationship. Whether your device is innately engaging or engagement is manufactured through gamification or intelligence, the customer relationship has to be there. Usage is value The strength of the customer relationship depends on the depth of understanding and ability to deliver value based on usage. In IoT, not only does your business have a built-in measurement tool to see how consumers are using your device, but you also have the power to give them insight. Customers in both B2B and B2C markets want access to usage information. How much exercise did I do today? How much energy is my building consuming? These metrics allow you to offer real value and keep the user engaged. The constantly engaged relationship with your customer is what breathes life into the Internet of Things.
The changes Subscription changes Between upgrades, downgrades, add-ons and more, you have to be prepared for subscription changes. You have to understand your customers’ needs in order to succeed in IoT. Learn how to price based on value because this isn’t just a product - it’s a living, breathing subscription. Technology changes With today’s advancements in technology, you have to be prepared for an evolution of devices. In IoT, your responsibility is to deliver augmented value to customers over time, and you need to be detached from the device itself. Delivering the most value often means throwing away or recycling devices to adapt to new customer expectations. In a world of constant innovation, you may have to get rid of some old devices to make room for the new. So, it’s important to build your IoT strategy around the relationship rather than the device.
The money The Internet of Things isn’t about devices. Yes, having a gadget that syncs our entire home with one touch makes us feel like we are living in the future. But, the amazing thing about IoT is that it’s not driven by the “things”. It’s driven by the network that the “things” are on, and by the people that connect them. IoT has given us a new perspective on the way we do business. Engagement and value are the new drivers, with the customer at the center. The future is here, and it turns out we need relationships to fuel our flying cars.
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If you ever really want to make money around the Internet of Things, there are 5 critical things you need to take into consideration. Here is a checklist to help you cash in on IoT:
As devices become cheaper, you want your user experience to continue to create value. Make sure that you are able to capture and leverage the data coming from the device to add value. What if every device needs to talk to the mothership at the same time? Make sure that you have designed for scale. Devices will get smarter with new sensors and new data. Old devices will end up getting recycled or thrown away. Make sure you design a system that adapts to the future. Not all customers are created equal. Make sure you design your system so that you create differentiation and value at multiple levels. Your systems need to support a direct relationship with the customer, including the ability to upgrade and downgrade as their usage patterns change over time. Even if the device is sold through distribution, make sure the customer is yours.
Monetizing the Internet of Things means understanding that the value is in the relationship with your customer. The value of IoT is not in the device. It’s in the cloud, and it’s in the subscription.
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