The connected world offers abundant opportunities to connect minds to machines and to create meaningful experiences. Internet of Things (IoT) transforms the way consumers interact, making their work and life more efficient. The challenge, however, is for consumer products companies to keep up with these connections by being where their consumers are, to have relevant conversations and to drive conversions.
A recent Capgemini report in conjunction with The Consumer Goods Forum and Intel – Making the Connection – explores the Internet of Things and the impact it will have on consumer industries.
The growth of IoT is staggering. Gartner predicts a whopping 26 billion devices on IoT by 2020. 10% of all data in the world will come from machines talking to one another. IoT could add up to $15 trillion to global GDP by 2034.
IoT enables machine-to-machine conversation between “smart” connected devices and is incredibly powerful at gathering, sharing and enriching data. Data acquisition and analysis tools can draw inference from vast volumes of data at velocity. Its strength lies in its simplicity. Who doesn’t want a share of this wallet?
At its core, the IoT is about data and insight. Every interaction leaves a data trail. Data can be aggregated from multiple sources and analysed to generate unique actionable insights. Companies can use these insights to better understand what consumers need and want, and how to offer it to them, thus winning their attention for continual engagement.
The insights feed new product development and inspire innovation. This provides companies with big opportunities to create value networks that generate additional revenue streams as well as long-term brand loyalty and creates new ways of collaborating with suppliers, other businesses and consumers themselves.
However, IoT is easily misunderstood. Business leaders turn off when the technology industry begins to spout technical jargon. But the IoT is not just about technology. IoT transcends technology in the way it generates benefits by augmenting radical change in consumer behaviors. Here’s how.
Keeping in step with consumers
IoT gives retailers and consumer products firms richer insights into shopper behaviors. For example, video cameras and motion sensors in-store data provide intelligence about how consumers use the store location, products of interest, dwell times and so forth. Bluetooth and WiFi beacons can track permissible smartphone data and integrate with customer profile information and previous purchase history for more personalized recommendation.
Combining this with social media data and external sources such as weather forecast can lead to creative audience targeting. Haircast make recommendations on Pantene solutions based on the forecast and geo-targeted messages for redeemable coupons at nearby Walgreens stores.
Helping to nurture trust
IoT monitors the supply chain by tagging components to allow companies to aggregate the data needed to provide timely information to their consumers, reducing the need for expensive surveys or research. Drinks giant Diageo is deploying ThinFilm packaging to combat counterfeiting. Italian Food firm Barilla, in partnership with Cisco, is creating QR codes that can be scanned to view tagged information at various stages of the supply chain including the origin of the ingredients used through a linked website.
Agile supply chain and better delivery
IoT offers oversight of the end-to-end processes in logistics, replenishment, merchandising and store operations using analytical tools to seek out and improve their efficiency and productivity. For example, Levi’s has been working with Intel to offer real-time inventory visibility of every item in its flagship store in San Francisco with an RFID tag, making inventory replenishment more accurate for store staff.
Products talk back after purchase
The IoT can connect products so they supply data on their usage and conditions to back-end systems long after they have left the retailer. This can predict when replacements might be needed and help design product improvements better suited to evolving consumer needs. The Amazon Dash buttons linked to a household WiFi can reorder detergent via an Amazon account.
Consumer goods…as a service
Consumers are looking for solutions to the challenges they face in increasingly busy lives. It’s not just buying what they need but persuading them to buy from the right brand that offers them a service around their need. Consumer goods can leverage opportunities to align paths to purchase and after-purchase care, blurring the line between goods and services and placing a premium on information, quality, connectivity, and convenience. This requires a collaborative network of companies and industries not only supporting the consumer but continually engaging them.
Implementations of the IoT can vary significantly in their levels of sophistication. This can range from the basic alerts and notifications to the most mature organisations using sensor data to provide customers with high value performance improvements based on actionable insights. The value of IoT is created not through the “things” themselves, but from the use of data. How companies process, analyse and act on the increasing amount of data will set the winners apart from the rest of the field.
Businesses can start by defining a strategy to win the new digital shopper. It might mean offering personalised recommendations, reminders, and services that ease the process of making a decision and create loyalty to the retailer or consumer goods brand.
For a cheat sheet on IoT for consumer industries, take a look at the report – Making the connection: how the internet of things engages consumers and benefits business.