We are at a critical point in the evolution of the internet of things. Earlier this year, Gartner forecasted that 8.4 billion connected things would be in use worldwide in 2017, outnumbering the human population, and reaching up to 20.4 billion by 2020. As if that’s not impressive enough, the total IoT market will reach anywhere between $3.9 trillion to $11.1 trillion by 2025, according to McKinsey.
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IoT is the driving force behind the digital transformation which, consequently, is propelling unprecedented levels of customer demand. In a society increasingly shifting towards automation, customer experience has become the ultimate differentiator. As the digital and physical worlds continue to merge together, it’s more important than ever that companies provide improved customer experience across their physical locations to remain competitive. IoT has the power to transform and transcend the customer experience across all industries, and organizations must apply a high level of strategy when implementing technology and understand exactly how to derive maximum benefit.
Multi-facility operations often think of their technology in three layers: front of the store, back of the store and headquarters. As a general rule of thumb, front of the store indicates anything that directly interacts with the user, and back of the store is associated with everything the user can’t see or the behind-the-scenes operations of a business. The third layer, headquarters, typically stores all data generated from individual locations in the cloud where it’s transformed from unstructured data into actionable insights. In this process, in-store data is combined with online data as well as third-party sources (social media, weather, trends and others relevant to the business). All layers play a role in contributing to customer experience, but the front and back of the store are where improvements are needed most in order to adapt to the experience economy.
IoT for the front of the store
Data is the new goldmine — if properly excavated and analyzed, you’ll be rich with insights. In short, the critical component of IoT is the data it can generate, and more importantly what you can do with that data to improve efficiency and customer experience. Successful companies know that informed, data-driven differentiated experience trumps everything else. One example is retailer Restoration Hardware, which reinvented itself by pioneering the customer-centric revolution, transforming its stores into “galleries” with an emphasis on the aesthetic versus the sales. The goal? To disrupt the furniture market by implementing a customer experience informed by data.
In order to create a quality customer experience, you have to understand your customer — and you can’t do that without data. “Smart” buildings provide infinite value, and using IoT tools, companies can better capture data and understand the metrics that are crucial to their business, like store traffic or even store temperature. For retailers, front-end IoT technology can easily monitor store traffic, customer demand and sentiment in real time — a game-changer when it comes to customizing the in-store shopping experience. IoT can also help retailers target connected consumers in-store, sending customized offers straight to their mobile devices — a much more targeted (and preferred) approach to just blasting customers with mass promotions.
IoT for the back of the store
The “back of the house” is equally important to the customer experience, even if it’s invisible to the customer. Back-end IoT tools and technology also equip businesses with data-driven insights. Combined with proper analysis, reporting and action, this data can provide much greater visibility into equipment and the maintenance ecosystem enabling businesses to make more informed decisions. It can even arm the largest retailers with information from headquarters, and give them the ability to transform stores nationwide overnight (or even in real time) to introduce new products, new displays and layouts to improve customer experience quickly. It’s clear that IoT has the potential to increase efficiency, productivity and profits by collecting, processing, filtering, sorting and acting on the large amounts of data. Of course, none of this would be possible without the sophisticated analytical tools that live in the back-end operations and are responsible for monitoring data and identifying key findings once data is aggregated from disparate locations.
As another example of back-end IoT at work, “smart” equipment can optimize maintenance, extend the life of the equipment and predict when things are going to fail. For example, in restaurants, IoT can be used to remotely monitor ovens and other cooking equipment so that cooking efficiency is optimized and consistent product quality is maintained. Additionally, IoT applications can remind operators when maintenance is required, let them know the correct procedures to take and even order replacement parts or supplies automatically. Better maintenance and increased efficiency ultimately impacts customers and improves their experience.
In the retail industry, IoT is often incorporated in back-end processes like inventory management (for example, RFID tracking chips). To meet today’s on-demand expectations, retailers are turning to IoT in supply chain and logistics management. The process of moving large shipments of perishable, temperature-sensitive goods, like food items or flowers for instance, is complex. IoT presents an opportunity to make this process much more efficient by providing companies with reliable technology that enables them to measure and control the many variables, like tracking assets and preempting disastrous malfunctions — which is imperative to avoid failures in the supply chain.
We’re living in an age where customer loyalty is determined by the customer’s experience, making it more important than ever that companies across all industries incorporate IoT technologies into both their front-of-house and back-of-house strategy. In 2016, 82% of customers stopped doing business with a company after a bad experience — up from 76% in 2014, according to Mary Meeker’s “Internet Trends 2017 Report.” Likewise, as stated in Forrester’s 2017 predictions, “today’s customers reward or punish companies based on a single experience — a single moment in time,” and “one poor experience can trigger an immediate — and possibly prolonged — shift in spend to a competitor.” In addition, Forrester reported that interest in IoT “has hit fever pitch” and that “IoT holds the promise to enhance customer relationships and drive business growth.” Looking ahead, we can expect to see companies increasingly turning to innovative, connected technologies to unlock new revenue, reduce costs and enhance the customer experience.
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