We have heard the term Internet of Things (IoT) quite often in the loyalty industry. But, for many people, they’d like to know what it is and how it can impact the customer experience.

Frank Gillett, vice president, principal analyst, Forrester, attempted to answer those questions during his session, “IoT and Connected Products: The New Frontier for Customer Experience,” at the recent Forrester CXSF 2016 Conference.

In short, IoT refers to how a network of products or systems interacts and communicates with each other through the Internet.

“Negative customer experiences have a bigger impact, unfortunately than positive experiences,” Gillett explained. “Since the dawn of business, perhaps, we’ve been using the customer to find out when there is something wrong with a product or the experience. The IoT has the huge potential to flip things around. We’re going to use sensors in the products to learn about the customer’s experience.”

What makes IoT different from mobile, Gillett noted, is when it’s a digital device outside of our general purpose devices.

“It needs to be away from our phones and away from our PCs,” he said. “But there’s something else in the mix.”
That something else is framed by three questions that all IoT applications should answer.

What is this? “Being able to wave your phone at it, detect a sensor in it,” Gillett said. “Identity is the underappreciated possibility of the IoT. You know exactly the serial number of the device. If you can identify the device, you can go back and link to all the information about it.”

What’s happening? “The ability to send information from the physical world to the digital world,” he said.

What action can I take? “The possibility to take action to send change from the digital world back into the physical world,” Gillett added. “Remote control/automation is the third value proposition of the IoT.”

Linking IoT to customer experience is the trick.

“If you have places where you have interactions with customers or employees, you have a way to use the IoT,” Gillett said, noting products such as lawn mowers or coffee makers. “You can’t put sensors in consumable products, but you can put them in coffee makers or in tissue boxes.”

Sensors can be in the packaging. “There are sensors on some sunscreen tubes that would tell you when to reapply,” Gillett said. “We’re part way there on the packaging, but it’s much less common.”

Major League Baseball has been installing beacons in various stadiums to “enable you to know your choices nearby, based on where you’re sitting, or to buy souvenirs, or in some parks to order from your seat,” Gillett said. “Your competitors are already using the IoT to refine or hijack brand experiences.”

Gillett pointed to the auto industry to show how Allegra offers an automatic device that plugs under the dashboard and it able to track fuel economy, automatically logs reimbursement for mileage driven for business, and it can monitor your teenagers’ driving activities.

“We’re taking more information from the car that makes the mobile app experiences better,” Gillett said. “There is now a race to get that allegiance of the driver, that brand identity, that brand affinity, that ‘Wow, feels good’ customer experience. The auto industry is going from selling motorized sculpture to providing mobility services. It’s no longer just about the emotions of what people think when they see me in that car, or how I feel when I walk out and look at the car. It’s about the convenience, the ease, and the experience I have moving through the day.”

Regarding the future of customer experience, as it relates to IoT, Gillett said there will be more interaction across organizations, through the customer lifecycle, out to the distribution channels and the aftermarket services.

“We’re talking about using IoT devices to extend the mobile mind shift, that change of behavior that we’ve been telling you about that happens when people get deeply into using mobile apps,” Gillett said. “What they’re after in many cases is remapping allegiance to a new brand. With IoT, you will find you’ll have much, much more interaction across the organization. We think small teams organizing around a particular set of customer or products or experiences is how companies will have to run things on an ongoing basis.”

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