IoT in Retail: Reaching Your Connected Customer via Proximity Technologies & Smart Automation
While IoT devices can help retailers connect with their customers on a new level, the focus is on putting customer experience, not technology, at the heart of the business.
The Internet of Things (IoT) provides many exciting ways for retailers to make their brick and mortar stores into technologically advanced, convenient customer-centric spaces. A network of various unobtrusive devices positioned strategically around the store can enable a retailer to understand customers’ emotions, needs and preferences.
Streams of data transmitted from beacons, cameras, pressure mats in the floors, augmented reality mirrors and the like can be interpreted immediately and used to enrich customer experience and, as a result, increase sales. Discounts, displays of the complete color range for an article or suggested accessories can be sent to the customer's smartphone in real time, using data both from the current situation and accumulated historical data.
It can start before they even set foot in the building. For example, with geofences for customer engagement campaigns around the store to recognize customers in the vicinity and invite them in for a special offer. Another example of IoT in retail is in-store beacons suggesting to sample a new food product as customers are nearing the shelf, with an emphasis on a personalized discount.
This is known as proximity marketing, and it creates an engaging experience for the customer who is "connected" to the store via a smartphone and likely a mobile app. An item is out of stock? The customer can be directed to the store’s website to purchase it. Better still, a brand mobile application can be used instead; app combining any number of features like an online storefront, customer tag and profile id, notification delivery system, chat options, discounts and special offers informing, home delivery status tracking, and other added-value services. This requires enterprise mobile application development and continuous support, but the benefits are immense. If done right, it’s better customer tracking and complete digital CX control tied to user-centric UI and loyalty program identifiers (if included), all wrapped in a single package. In short, something customers will use often and won’t delete any time soon.
Widespread adoption of IoT in retail is largely still a dream; however, more and more retailers are pursuing it and realizing increased sales and better customer engagement. Although there are many other industries that are exploring the possibilities, vendors, brand chains and shopping malls are still top of the list when it comes to technology implementation. Unacast's Proxbook 2018 focuses on retail and shows which industries are contracting service providers to implement a proximity solution.
There is only one problem with this ideal future; most retailers are not geared up for building a sustainable and enjoyable customer experience. This is not merely a matter of investing in some hardware and software. It requires deep introspection on how close the company is to understanding their customer's needs.
It is also non-negotiable that a retailer who wants their stores to still be in place on the local high street or in a nearby mall will have to become digitally literate. It is not enough to have a great website, the stores must be just as inviting.
Brick and mortar stores are very far from being dead; Amazon would not be moving into physical stores if this were the case. However, to stand out your venue should provide a personalized, smartly advertised, hyper-local, convenient experience for your customers. Offer unobtrusive service tailored to your visitors—from friendly humans, IoT devices, and smart tech alike.
Here's the Reality Check
In their annual review of customer experience, Dimension Data emphasize the need for organizations to not only undergo digital transformation but do it systematically and strategically, not trading quality for quantity:
"Without a cohesive [..] strategy, organizations risk getting lost in the belief that having more channels is synonymous with superior customer engagement, instead of understanding the value of CX-driven channel integration. In this case, the addition of new digital channels will create more problems than solutions".
—2019 Global Customer Experience Benchmarking Key Findings Report, Dimension Data
While almost every industry player recognizes that digital transformation must happen, not next decade, not next year, but now, at least half of the participants in this survey were woefully unprepared to evolve. Retailers may be ahead of the pack; if they did not establish a substantial and receptive online presence, they probably closed their doors in the last 24 months.
However, digital transformation is not about feverishly embracing every new technology, from beacons to chatbots; these are great devices for customer reach. But there is a fundamental truth that has to be addressed first: do you really know your customer?
Creating Great Customer Experience: Your Digital Keystone
“The SAS is ‘created’ 50 million times a year, 15 seconds at a time. These 50 million ‘moments of truth’ are the moments that ultimately determine whether SAS will succeed or fail as a company. They are the moments when we must prove to our customers that SAS is their best alternative.” (Carlzon, 1989)
All companies claim to be customer-centric; in reality, few of them are even close to understanding their customers. Where initiatives have started to map customer journeys and build personas, these are often done as marketing exercises and do not touch the core of the business.
To truly understand your customer, you need to design your business model and your processes around customer experience. This is not new thinking: it was developed and used in the 1980s at Scandinavian Airways (SAS). Consultant Richard Normann was the brains behind the concept; Jan Carlzon, CEO of the airline, wrote the book, "Moments of Truth".
A "moment of truth" (or MOT) is an interaction between a customer and the company ("customer touchpoints" is a synonym, but does not have the same emotive power of MOT). This can be person to person (P2P), machine to person (M2P) or machine to machine (M2M). Every MOT can enhance or damage customer experience. While the idea of a MOT is not new, the significance of M2M has a new importance with the emergence of the Internet of Things (IoT). Practices such as customer journey mapping are based on finding the MOTs in the customer journey. The "Outside-In" business model is an expansion of the original idea, where the customer really is at the heart of the business.
Normann and Carlzon were way ahead of their time. In an interview in 2006 with Customerthink, Carlzon said:
"In today’s global competitive world, the code I have found to success is that we must focus on customers as individuals, not as buyers of our products and services but as consumers of our products and services."
What is so remarkable about what Carlzon accomplished in the 1980s is that so many companies today are still struggling to implement similar solutions in their own businesses. If a company wants to become digitally literate, they need to understand that each time their device connects with the customer's device of choice, that is a M2M MOT, and that the experience should be positive.
The conversations between machines (in the internet of things) will explode in volume in the next five years. Businesses want to engage customers in meaningful conversations, not distract and annoy them with incessant chatter. From this angle, connected omnichannel architecture, predictive analytics, and smart automation are crucial.
Still, according to Adobe, most retailers consider personalization (along with targeting) their priority number one, on average compared to other sectors:
What Is the Hype about the Internet of Things?
The internet of things has been a hot topic for some years now. At first, the focus was on IoT use in smart cities and smart grids, with some consumer experience in the Smart Home. For years, IoT has been close to the top of Gartner's Hype Cycle of emerging technologies, and this has not changed. In fact, IoT now has its own Hype Cycle as the supporting technologies have emerged and developed.
Recently, IoT has been taken up by a variety of industries, ranging from airlines to event managers, and retailers were quick to pick up on the trend. The potential of IoT in retail is first and foremost an in-store experience that integrates with and complements customers’ online experience.
The caveat is that, in addition to building a robust customer engagement model, there are some technological changes that have to be undertaken, the first of which is ensuring that a true omnichannel environment is implemented. In order for the customer to have a truly seamless experience, retailers should be able to engage via any channel this customer wishes. This cannot be achieved in an organization with disparate systems. Brightpearl found that many companies were struggling to build their omnichannel environment, with 45% considering the technology and platforms at their disposal are not enough.
It's not about Devices, It's about Data
The power of IoT in retail is that it generates huge volumes of unstructured data about each customer. This means that big data databases are required, not to mention the analytics that support them. Again, most companies are struggling to get to grips with both the analytics and the velocity of such data, as well as combining it with their traditional data stores. Most companies are implementing hybrid solutions, using a mix of on-site servers and cloud storage, but this might not be enough.
It does not help that your customer is in-store and you are receiving data about them, which you are filing away to use at a later date. You need to get and analyze that data while they are in-store and use it before they leave. If you are using the cloud for your big data store, issues like bandwidth can compromise your ability to analyze that data in time, and should be considered as fog.
It's the Internet of Everything
The Internet of Everything is a phrase and a philosophy thought up by Cisco that makes good sense for a case of implementing IoT in retail. There are four components of the Internet of Everything:
This makes inherent sense because the interaction between customers and devices will create data, all of which needs to be supported by underlying processes. It also represents what is required to implement a cohesive and successful digital strategy.
- People. Your customers, their friends, their social networking contacts, and your employees are all part of the mix. There must be harmony between what your employees tell customers and what messages are being sent to their phone.
- Data. Huge volumes of data that needs to be processed as fast as possible and as close as possible to the IoT devices generating it, and received as quickly by your customer.
- Processes. You have to revisit and reinvent all your customer-facing processes, from lead generation through sales to lifecycle maintenance. This will be the hardest part of your digital journey but when done well should totally disrupt your business.
- Things. From the simplest and cheapest RFID tags costing approximately 1 cent to expensive object-oriented cameras that can register biometrics, there are many "things" to choose from. Experts, however, advise not to become too attached to the devices available today, as there is one certainty—they will become cheaper and easier to use.
As of 2018, beacons were well ahead of the pack:
Attaining Digital Maturity
The IoT market will provide huge volumes of data from all sorts of devices and sensors, streaming to all categories of industries in all regions.
These connected devices will bring us zettabytes of data. Cisco estimates that by 2022 global annual traffic will reach 4.8 zettabytes. The graph below shows a considerable portion of traffic will be generated by IoT devices.
To round off this discussion, a sustainable digital solution is primarily about the customer. For those of you who were unconvinced by pundits from the 1980s, here are some takeaways from Salesforce's State of the Connected Customer report published in November 2018:
- Put customer experience at the center of your business
- Personalize with the holistic approach
- Be transparent about data privacy and safeguard customer information
- Embrace the culture of immediacy
- Reinvent the sales process
- Lead with instant, omnichannel, and personal customer service
- Don’t fear disruption—become a disruptor.
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