The industry has been talking about the Internet of Things (IoT) for years, but in my opinion, few companies have really captured its possibilities aside from a very select view like Tesla, whose products remain out of reach for many consumers. IoT is a $1.9 trillion industry not because of its shiny gadgets, but because it opens up an ecosystem of novel interactions and disrupts the “wash, rinse, repeat” cycle of consumer culture.
To me, the value of IoT is in creating stickiness for everyday products and service. IoT builds loyalty based on value — in other words, I rely on a particular company because I value their service and integrations, not because I’m locked in or too lazy to switch. Consider that 85% of iPhone 6 customers are repeat customers. Yes, many of them like the design and software, but I’d venture that most prefer the ease of operating within the Apple ecosystem and transferring their personal data when trading up to a newer model.
Here are three ways I see IoT helping brands achieve stickiness:
1. True personalization. Beyond the iPhone, any Internet-enabled device becomes my device, shaped by my data and every interaction I have with it. Let’s say I make coffee every morning in a smart home-enabled Mr. Coffee machine. One morning, I don’t have time to brew a pot before leaving, but since the coffee maker communicates with my iPhone, it’s aware I didn’t get your coffee at the usual time. It also knows I have a meeting on my calendar in 45 minutes, located 20 miles away. It communicates with a service that finds a Starbucks along the way and triggers a coupon for my favorite drink, then sends the coupon and directions to my phone. This is the kind of personalized service that I want. It delivers incremental value beyond self-brewing coffee — which is now a commodity. Building an entire experience around a connected coffee machine is useful, novel, and, most of all, sticky.
2. Convenient integration. I’ve found that IoT is only useful when data integrates across different types of devices and technologies. This interconnectedness changes how people consume — both in terms of products and experiences — and expands opportunities for up-selling. For instance, I recently watched a cooking show through my Xbox 360, and an app on my tablet showed me the recipes demonstrated on the show. This app could provide more value by showing me the products used on the show, highlighting the ones it predicts I’d find most compelling based on my profile and buying history. It could also connect to my Amazon and Instacart accounts for streamlined ordering and next-day delivery. These gentle nudges would encourage me to consider additional relevant products and services. I see the promise of IoT as connecting the all the services and devices I use into my ecosystem, where everything is connected, and I'm at the center of it.
3. Connected intelligence. Smart devices can provide intelligent services that relate to a specific context, usage patterns, and even global trends. There’s a reason it’s called the “Internet of Everything” — IoT connects every device with the world beyond it. You’re probably familiar with cars that provide Wi-Fi and driving directions, but what about other intelligent services that save time and resources? For example, a smart garden device like Edyn can help with water conservation by sensing soil water levels and adjusting how much to water your plants — a particularly welcome service now that California is in the middle of an historic drought. If IoT delivers on its promise, it's not just about making things easier for me; it's about doing actual good, and doing it smarter. In my view, these kinds of contextualized, intelligent and beneficial services will be the catalyst that drives widespread adoption of internet-enabled devices.
Ultimately, IoT is as much about the behaviors a device encourages as the device itself. I think of IoT-enabled devices taking on software-like characteristics, powered by how people use them. As brands store the context about how devices are used, I see the savvy brands shifting away from piling on ridiculous and useless new features. Instead, they’ll begin creating experiences that deliver personalized services, integrate with other devices and technologies, and build loyalty for the long run.