Architect Your Business to Engage, Interact and Serve 'Things' as a New Customer Segment

By: Don Scheibenreif, VP-Distinguished Analyst, Gartner

Don Scheibenreif, VP-Distinguished Analyst, Gartner

In the era of digital business, where physical and digital lines are blurred, CIOs and IT leaders — especially those supporting customer-facing business processes and CRM — must consider what the new relationships between people, businesses and things mean for the enterprise as a whole. And, as 20 billion things are connected to the Internet by 2020, we think this dynamic will redefine the customer relationship and customer experience because, as things become more intelligent, they will gain the capacity to become customers and respond to the same things that human customer do today. This involves the ability to move beyond providing information to:

• Receiving messages — such as advertising, email or information from the surrounding environment

• Making their own purchasing decisions

• Negotiating for the best deal — such as finding the best value for the transaction and executing the purchase

• Requesting service — such as repairs, upgrades or even replacement

• Reporting disputes — such as for an order the thing did not place

As the density of connections between people, businesses and things increases, the sheer number of opportunities for engaging things as customers, and the resulting economic benefits, will increase, making the concept hard to ignore. At Gartner, we see three key impacts of this disruptive trend and what innovative IT leaders can do to ensure their organizations are ready to face this future:

Support for IoT-driven Machines

Customer service organizations are charged with handling support requests coming from people over the phone, email, Web chat, Web portals, mobile applications, social networks and even in person. Yet, the biggest challenge to IT leaders supporting customer service organizations and infrastructure may be the high volume and velocity of requests that are bound to arrive via connected devices. Even today, things like alarms can request support from a security company when tripped; however, by 2018, Gartner estimates that more than billion Internet-connected things will have the necessary intelligence or capability to request support.

In the near term, many of these requests will be for very simple actions, such as the need to replace or recharge a battery, and most will require physical human intervention. But, as the computational intelligence of Internet-connected things increases, so will their ability to request more complex support — and the expectation that they'll be able to receive it in real time remotely. Examples we see today include medical devices from Biotronik that allow doctors to monitor patient health for remote evaluation, and Tesla Motors electric vehicles that call the company to request corrective software downloads, independent of their human owners.

Marketing to an internet-connected thing

When things become the equivalent to human customers, the entire practice of marketing will need to change. Instead of appealing heavily to emotion, marketers will need to appeal to logic and reason when marketing to things. This could place low-end commodity suppliers in a stronger position, because this is the language they always use. High-end/luxury suppliers tend to appeal to emotions and aspirations, which will be wasted on things. Marketers will need to appeal to the factors that things perceive to be in their best interest (price, quality, service and sentiment), based on the algorithms that have been put in place. This is a radical shift for marketers that have mastered the art of changing a customer's perceptions — since with a thing, this is impossible to do without access to a thing's programming. IT will need to help business intelligence and marketing leverage the data from things to come up with new promotional and pricing strategies, what we call “Thing Marketing.”

However, as long as things are acting on behalf of humans, it is still incumbent on marketers to understand human motivators, through such insight exercises as observation or customer journey mapping. For example, if a marketer of confectionary products wants to get a "smart home" to add its products to the shopping list (versus those of its competitors), it must first understand the human occupants of the house and the right factual information the house would need to authorize a purchase. The two factors — human insight and machine insight — must go hand in hand. We also believe that evaluating trust and authenticity will take on a different dimension in thing marketing. Will things be able to algorithmically validate if claims from other things are true? What are the implications of "letting down" a thing, and what that could mean for the reputation of a thing or the company behind it?

Selling to a Machine

When things are treated like human customers, and selling is largely programmatic, traditional sales incentives models and loyalty programs will not work. Algorithms that sell can't be motivated by a trip to Hawaii, and smart houses that buy can't be taken to nice dinners as a reward for loyalty. To respond to an increasing number of things as customers, enterprises will employ smart machines to sell to things, such as rewards or feedback mechanisms for smart machines that close a sale. Gartner believes that in the world of things as customers, sales will be largely programmatic and salespeople will become redundant. The role of digital marketing will become increasingly important to understand how to interact with things that are negotiating and ordering on behalf of their human owners.

We see this initially playing out in enterprises that employ some type of vendor-managed inventory (VMI) system, such as a manufacturing facility or fleet maintenance facility. For example, industrial vending machine company AutoCrib offers a machine called RoboCrib — an automated industrial supplies vending machine capable of reordering items on its own. Just as in the previous marketing example, selling to things does not negate the need for human purchase motivators in a B2B environment. If you don't understand the business requirements of the humans ultimately responsible for the purchases, you won't understand the right information needed for the sales process.

The Roadmap

CIOs can engage their enterprise architects to use business scenarios and persona-based analysis to rethink the notion of what a customer is, and determine if their enterprise has the right capabilities and systems to identify, serve, communicate and accept payment from things as customers. We recommend identifying one highly impactful business scenario that will allow you to envision how things that you deploy to customers, or that are present in your customers' locations, could impact how you approach customer service, marketing or sales.

Internet-connected things will become your customers in the future. We believe embracing this future early will be a prime source of competitive advantage in the world of digital business.

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