What Does the Consumer Internet of Things Mean for Marketers?

The consumer Internet of Things (cIoT) is here. But what exactly is it? It’s hard to believe, but a world in which purchasing will become seamless from thousands of new touchpoints is just around the corner. We're seeing the thin end of the wedge with FitBit, Apple Watch, Amazon Alexa, Nest and Google Home. In addition to the general trend toward digital commerce in customer behavior, the cIoT will redefine the future of commerce. New technologies are changing the way customers are buying, as well as what they're expecting from brands. Consumers expect a seamless and consistent buying experience. To develop a coherent, commerce-enabled cIoT strategy, marketers should gain a basic understanding of some of the technologies driving this transformation. Here’s a primer.

‘Things’ Are Becoming More Intelligent

First, let’s define what we mean by the cIoT. Basically, it’s a bundle of technologies that allows companies to improve customer experiences by embedding “intelligence” into internet-connected devices. Both Qualcomm and Intel are now building chips for the IoT space to capitalize on its growth potential.

These intelligent things can provide feedback (you have taken 10,534 steps!), create offers (do you need new running shoes?) and self-adjust to make in-context sales offers (Would you like 30 percent off socks to go with those new shoes?).

By commerce-enabling smart things, marketers can be more creative in how they commercially engage customers, providing a contextual experience in which customers receive offers in the moment when they're most likely to buy.

Apple and Samsung have entered the wearables and smart home markets to expand their mobile ecosystem reach. Cisco estimates the number of connected devices worldwide will rise from 15 billion today to 50 billion by 2020.

With driverless cars around the corner, it’s not surprising that vehicle manufacturers are embedding commerce capabilities into their on-board consoles.

Couldn’t afford the top model? No problem. We can upgrade your engine control software to give you supercar speed for a day. Buy it online right in the car. The software downloads and self-installs to supercharge the family car. Roll down the windows!

How Touching: A Unified Customer Experience

With all these new touchpoints, it's important to ensure customer experience consistency and continuity. Why, for example, customers ask, "Don’t I get the same offers and discounts across all channels? If I buy something through your app it costs 10 percent less than if I buy it on the website.” Or “Why is that item I just purchased on your app being offered to me now through the website?”

By focusing on individual touchpoints rather than the end-to-end customer journey, organizations can inadvertently create inconsistent experiences. In their underlying IT environment, they've siloed disparate systems that can’t provide a unified view of the customer, limiting marketers to provide a great customer experience.

And that’s with only a handful of touchpoints.

The cIoT is going to make a “unified customer experience” even more difficult.

What a customer can do using various touchpoints is obviously going to be different. However, all touchpoints must present the same brand personality and they all need to “know” the customer in the same way. That means somewhere in the background a system of record has to collect and consolidate customer purchase and intent data — no matter which touchpoint a sale has come through — then bring back a unified view of the customer to all touchpoints. This is important for two reasons. One, it increases customer loyalty because customers get the same experience in any engagement with the brand. Two, it increases revenue because customers buy more when they're exposed to offers relevant to them.

Will Machines Predict the Future?

Machine learning sounds very Sci-Fi, but what it really means is that with all these “smart” new customer touchpoints, companies can accumulate more data regarding individuals than ever before. Predictive software searches through huge datasets to detect buying patterns and correlations between customer type and purchases. This is how the machine “learns.” It’s a big step beyond “people who looked at this item also looked at these items.”

Eventually, customers’ actual buying patterns and a personalization engine will help marketers and merchandisers to auto-create special offers, dynamic pricing and custom bundles based on past purchase behavior. Taking this one step further, the personalization engine will access customer data in real time to hypertailor offers right at the moment of purchase. Everything the system knows can fuel the engine and promotions are dynamically constructed.

Elastic Computing: Like Comfy Pants

The cIoT promises to increase your number of customer touchpoints exponentially. Great, right? Yes, but to handle the resulting new transactions, you’ll need more computing power. Say, for example, you have 6 million orders on super peak days like Black Friday. Your platform has to be able to handle that load. But that’s only one day in the year. Systems built to handle peaks end up costing a lot because they're essentially overbuilt.

Public clouds like Amazon Web Services or Google Cloud can right-size computing infrastructure to handle those Black Friday peaks. Because cloud infrastructure can shrink and grow dynamically with load, it's referred to as “elastic.” Elastic computing also ensures performance and availability benefits. A 2015 study by IDC for Amazon revealed that organizations of all sizes are realizing “64.3 percent lower total cost of ownership, $1.5M in benefits per application, and a five-year ROI of 560 percent.” And with elastic computing you get the added benefit of only paying for what you use. 

API Hour?

No, we don’t mean appetizers. API stands for application programming interface. It’s a toolset and protocols that software developers use to get one program to talk to another. If you want to innovate with new business models and commercially engage with customers through new “things,” then that “thing” is a new commerce-enabled channel. The question becomes how does your e-commerce platform rapidly adapt to new customer touchpoints? Moreover, how would you orchestrate offers and campaigns across them? Sounds like a problem that an API-based strategy might solve.

APIs allow companies to easily connect new technologies together to make customer experiences more exciting, easier or fun — like Disney’s MagicBand. In the MagicBand case, there are many different solutions underlying a visitor’s experience, including sensors throughout the park, a commerce platform, a personalization engine, a customer experience system, a customer relationship management system and others. All these systems must work together behind the scenes, and the commerce platform acts like the conductor, orchestrating their interactions and surfacing the business information to the MagicBand via the API.

Gartner Group is predicting that by 2020, there will be 13.5 billion cIoT devices.

That’s only two years away. Most software-as-a-service or monolithic commerce systems just won’t be able to handle adding new touchpoints at the pace your business needs to stay ahead of the competition. Look for an API-based platform that can work with any new customer-facing technologies — the ones that already exist and even those still to come.

For marketers looking to capitalize on the cIoT, it's important to realize that there won’t be a single, all-in-one solution that can support the commercialization of the technology. To create consistently superb customer experiences, you need the best of all worlds, and you need them working together. The technologies running in the background that underpin omnichannel commerce will shape the experiences that you can create. The more flexible the technologies you choose, the better off you'll be.

Harry Chemko is the co-founder and CEO of Elastic Path, an API-based enterprise commerce platform.