Analysts have termed the Internet of Things (IoT) as the next industrial revolution that will change the way businesses, governments, and consumers interact with the physical world. Particularly because, the recent advancements in products like wearables and home-management systems has caused IoT to gain traction at every corner of the planet, right from the developed world to the developing world. What’s even more remarkable, is the speed at which this change has occurred – while there were about 500 million devices connected to the Internet a decade ago, today, there are about 10 to 20 billion. In five years, there could be 40 to 50 billion devices constituting the IoT ecosystem.
And it goes without saying that retail is one of the primary industries that IoT has had a disruptive effect on. The two fronts at which IoT promises benefits to you as a retailer are primarily operational efficiencies and the ability to develop deeper, long-lasting relationships with customers. Of these, as many of you would already know, operational efficiencies are coming much more easily. This is evidenced by the rate at which RFID tags are being used to instantly track sales trends and create a smarter supply chain. Meanwhile, developing deeper customer relationships via a device-agnostic connected customer journey is likely to a little longer as retailers are still testing and learning to unlock how IoT can best help them solve — or at least simplify — a raft of everyday customer situations.
However, quite a few analysts are of the opinion that, IoT is likely to have a bigger effect on businesses. It is not just about the kind of products that you can make ‘smart’, or how information could impact your business efficiencies but also about viewing the world through a different lens. In other words, IoT could change everything, and being a retailer you need to consider its implications when devising a business model.
In this blog we will discuss in detail the five fundamental questions that you need to focus on while developing an IoT retail strategy.
1. What are your IoT objectives? What are the problems you are trying to solve?
This can be done by widely organizing your objectives in terms of operational efficiencies and the customer journey – each of which will yield different starting points and short- and long-term payoffs on how your company should invest. Lets dive a little deeper into this.
(a) On the operational side – IoT here can help you determine the extent to which you and your suppliers are currently ready to actually act upon that flood of data. It will give you a clear picture on the degree to which a smarter supply chain, more efficient distribution center processes and other internal functions will benefit you in the short and longer term. While you crunch these numbers, keep in mind other factors such as organizational, supplier and company culture, that will play a critical role in determining how and where you can test and implement these retail strategy changes.
(b) On the customer side – IoT here can help you develop a richer customer journey and deeper, long-lasting relationships with customers. A few questions you should be asking yourself are:
(i) What are different ways in which you can enhance your customer’s shopping experience as he/she engages with your brand both via offline and online channels, your store associates, and customer service representatives?
(ii) What are the customer problems you can help solve? For example you could proactively tell a runner that it’s time for a new pair of shoes based on the number of miles that he/she has run. You could also suggest complementary products based on what he/she recently purchased. This is exactly where beacons come into the picture. Say, Michelle purchased a lemon yellow shirt at your retail store outlet. The next time she walks into your store you could leverage beacons to send her a notification on a brown trouser that’ll go along with the shirt.
(iii) What are new opportunities you are trying to capture? For example you could leverage IoT devices such as beacons to serve customers in proactive ways by delivering content that the customer will truly value. For example, say a customer is detected to be standing in the houseware department, right next to the display of Coffee/Espresso Makers. You can use beacons to push product demo videos that will educate the customer on the brewing flexibility of the Coffee Maker, thus helping them make the right decision.
2. Is your organization ready to test and learn from IoT initiatives?
This includes determining if your digital and core IT capabilities are ready to start testing and researching on IoT initiatives. If your company is still struggling to get online and omnichannel operations in order, IoT is probably not where you should focus for now. Not having few things such as an app strategy (with a clear goal that you plan to achieve with your app) in place will only serve as a roadblock once you set out to define your IoT retail strategy.
Once you begin to explore and invest in a few trials, you need to put some deep thought into devising the right IoT strategy that complements your overall marketing strategy. Another important thing to take note of is that, not every new technology will succeed or deliver as expected. This is especially true for consumer-facing technologies, since customers hold great control over what truly adds value to their lives (and will quickly discard anything that doesn’t).
3. How you will organize and manage the customer data that is being captured?
It goes without saying that, the customer data generated by IoT is key to developing those much anticipated deeper relationships with your customers. With the massive rate at which consumers are adopting myriad devices in the IoT ecosystem, right from fitness trackers to home automation systems and much more, you now have access to a wealth of information about your customers’ ‘offline’ lives. If collected and managed accurately and truly with consumers’ interests in mind, this data can help you unlock real revenue from increasingly loyal customers. Here are a few questions you need to ask yourself about, before you start with capturing customer data:
(i) What data should you capture in the first place?
(ii) How long should it be stored and who will have access to it?
(ii) Which are the data elements that will truly spur your company to deliver a better customer experience that will in turn help you grow your business?
Another important thing to note here is that customers will want to know specifically what you as the retailer will provide them in exchange for their personal data (location, activities etc.). According to a recent survey conducted by Lightspeed GMI, when enquired about the primary concerns that consumers had regarding sharing their location data, both security and privacy were found to be equal causes for concern, at 34% each. As the retailer, if you are banking on using customer data to grow your business you need to come to terms with the fact that aggressive data collection is bad. The key here lies in more nuanced guidelines that align the interests of retail brands with those of their consumers and ensure that both parties benefit from personal data collection. Head that way and you’ll be on the path to success, whereas companies that instead simply turn the data into advertising will fall back.
4. How will you harness the power of IoT to benefit your customers and your employees?
As IoT grows, it will be less about the online world and more about enhancing and changing the real world (offline) experiences. This blurring of online and offline worlds will also result in a number of “last mile” fulfillment issues and opportunities. For example, you can leverage beacons to remind customers if any of the items on their wishlist are available in-store and even direct them to the respective aisle. Adding on to that, IoT can also help your store associates face real-world issues by providing them access to smart clienteling and service solutions and access to inventory located elsewhere.
5. What are the factors that are most important to your customer in an IoY (Internet of You) solution?
If you already have a mobile website in place, chances are that you have learned that an effective mobile experience isn’t a scaled down e-commerce experience. Merely replicating the desktop experience on a mobile device only results in an experience that ignores how and when consumers actually use the two different devices and for which (often very different) purposes.
The same holds true for IoY devices – you need to stay close to your customers (and the intimate data that these devices generate) to learn how, where and when your customers interact with these different devices and thereby ensure that the experience directly addresses the real needs and wants of your customers.
Has this article been helpful in helping you devise a successful IoT retail strategy? Are there any challenges that you faced during your trial? Let us know in the comments below.
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