The Internet of Things (IoT) market is bursting with potential. With annual revenue potentially exceeding $470 billion by 2020, investments in industrial IoT is expected to top $60 trillion in the next 15 years.
Hoping to secure a first-mover advantage, the world’s best brands are diving into the IoT market. However, in a feverish attempt not to be left behind, companies are creating connected products without fully understanding the value they will bring to customers. Sinking significant resources into IoT comes with big risks, especially without a clear view of the pain points these devices will address.
Companies can’t afford to launch connected programs without a plan and tools to understand their consumers.
Understand what your customers want
It sounds basic but, despite the buzz around IoT, most consumers aren’t convinced they need connected devices. The 2016 Accenture Digital Consumer Survey found that adoption of IoT devices is much slower than brands are hoping for.
Kevin Ashton, technology pioneer and founder of the term ‘Internet of Things’ believes the key to success lies in providing genuine value to customers. To validate the high price tag, brands need to identify what customers want and need before considering investment into the IoT space. Although the revenue potential for IoT is high, according to Ashton, “the way businesses win with IoT is to invent for the customer, not for the c-suite.”
Companies need to make tough decisions around where and how much to invest by answering the question: how can we provide real value to our customers? Instead of relying on their gut, product teams need to validate and inspire the direction of innovation with customers at every stage of development.
Listen and respond
Loyal customers hold the secret to success; But that’s not to say loyalty comes easy. A study by Gartner found that almost one-third of wearable-technology users have already abandoned their fitness trackers and smartphones. Angela McIntyre, research director at Gartner, says the high
abandonment rate is because people don’t find their gadgets useful enough after the initial excitement rubs off.
It’s important to detect potential issues and offer solutions before consumers even consider abandoning their connected product. As product developers test concepts and assess products, they need continuous customer feedback to validate changes. Listening to customers, engaging them continuously and responding to their feedback can create the loyalty that will make or break the success of your product.
It’s all about value
The greatest challenge for any marketer is to communicate value to customers. According to Accenture, 62 percent of consumers find IoT devices too expensive. This perception is consistent across all age groups and countries, suggesting that consumer goods companies aren’t doing a great job of communicating latent value to consumers.
A strategic approach to marketing can help change perception around connected devices, but only if companies understand their customers’ mindsets. More than anything, brands need a firm grasp of what drives perceptions of value. Lowering the price is not necessarily the answer. To boost value, companies need to truly identify ways smart devices can make consumers’ lives easier and more convenient.
Developing a long-term relationship with IoT consumers
IoT is in the midst of high growth, but unless companies deliver what consumers want and need, the momentum of this space will be stunted. As the market matures and becomes more competitive, it’s important to develop a close relationship with IoT consumers. Ultimately, success in the IoT space will not necessarily be determined by having the best technology, but instead by effectively marrying innovative technology with ongoing and deep consumer understanding.
Would you like to hear more from Kevin Ashton himself? Watch the on-demand webinar here.
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