This content is part of the Essential Guide: IoT analytics guide: Understanding Internet of Things data

Is the future now for the Internet of Things?

Imagine a world where almost all devices can connect to the Internet and send a steady stream of insight about consumer preferences and produces.

Customer data can offer a treasure trove of insight for companies to act on regarding customer preferences and behavior. This wealth of information provides a competitive advantage that helps companies attract and retain customers and grow revenue. But until now, much of this data was only available to tech companies.

Unlike their tech-savvy counterparts, old-fashioned physical companies have to settle for a sliver of this vast mass of data today. "These companies have had to rely on skimpy consumer warranty cards, retailer point-of-sales data, focus groups that cover a fraction of customers and customer complaints," said Matt Duffy, vice president of marketing at Xively. "At best, this data provides small glimmers of insight. At worst, it creates blind spots in how to better serve customers and sell more products."

But that world is rapidly changing.

Now, imagine a world where almost any item can be connected to the Internet or company network via a mobile device, low-energy sensor, beacon or RFID chip. In this world, data flows seamlessly from consumers and business devices to companies via the Internet, enabling new and improved products and services.

That Internet of Things (IoT) world is already here for some consumers: We've seen cars that share driving habits with insurance companies in exchange for lower rates like Progressive Insurance's Snapshot, fitness trackers such as Fitbit, connected home monitoring from Nest, RFID tracking wristbands such as Disney's MagicBand, in-store beacons that send personalized messages via geolocation to users' smartphones and more. IoT is also being used in manufacturing, healthcare and government.

Industry watchers predict that IoT will be big. Analyst firm Gartner predicts that there will be 25 billion connected "things" by 2020, compared with 4.9 billion by the end of 2015. By the end of 2015, 1.9 billion people will have smartphones, according to Regardless of the hype, the connected world of IoT is rapidly approaching, and now is a good time to consider the implications of your marketing and CRM strategies.

New opportunities

IoT's massive influx of real-time data opens up new marketing, sales and customer service opportunities:

New insights, new marketing opportunities. IoT provides opportunities to glean insight about customers from their "digital trails," said John Stetic, group vice president, products for the Oracle Marketing Cloud. "Connected products enable companies to understand which features are used most and least," said Xively's Duffy. "Instead of waiting to receive feedback, marketers can obtain usage data in real time and proactively educate users on unused features so they can get the most use from the product."

High-volume and cost-effective personalized customer service. With the steady stream of data that IoT provides, companies can offer personalized service without compromising efficiency. "IoT offers the potential for organizations to better target, communicate and serve customers in a more personalized, one-to-one manner -- and do it at scale," said Kate Leggett, vice president and principal analyst at Forrester Research.

Proactive customer service. IoT provides new opportunities for companies to solve customer issues instantly and pre-empt problems before they escalate. Continuous monitoring enables companies to anticipate -- and fix -- problems before the customer is aware of them. "Companies can remotely monitor mission-critical machinery and pre-emptively intervene, which prevents or reduces problems and lowers costs," Leggett said. For example, New England Biomedical Services Inc. uses IoT to monitor science lab usage of their recombinant and native enzymes for genomic research so they can restock supplies immediately.

IoT changes marketing and CRM

Unlike traditional CRM, the high-volume data flows from the Internet of Things should be heavily automated and augmented by human intervention only when needed. While each data record might be small, devices send more records with real-time updates. By contrast, typical CRM and marketing automation systems, for example, have a smaller number of relatively large records, each with many fields and updated at best a few times a day.

Marketing and customer service functions need to evolve to get ready for IoT. As these tools adapt, marketing tech, CRM and service systems that support -- and enable -- them will also need to change. Prepare your company for this pending shift by following this strategy:

Spell out business objectives. As with any IT project, start with clear goals, definitions of success and know what you want to accomplish. Be ready to adjust. "Marketers should begin to take an experimental, R&D-like approach to these new technologies," said Oracle's Stetic. "In today's fast-moving world, companies need to be prepared to try a variety of new approaches, moving forward with those that succeed and leaving behind those that don't."

Invest in a communication platform. You will need a standards-compliant communication platform to manage the volume of incoming data and act as an intermediary between devices, data storage and analytics and operational CRM/marketing systems.

Determine the necessary level of data warehousing. With so much data coming in, you'll need an intermediate place to store and manage incoming data, such as a data mart, data warehouse or even a data lake.

Share insights by creating integrated systems. Analyze data to gain insight into markets and individual customers, such as context around how they're using your product. Share that insight and summary data with CRM and marketing systems. For example, you might run marketing campaigns to users whose low usage data indicates that they are at risk of defecting. Plan on automated and ad hoc insights, depending on your use case.

Institute automated triggers as preventative measures. Depending on your scenario, as new data comes in, use event triggers that fire off to the CRM or marketing system, to warn of a potential malfunction, for example. You can set up event-based workflows in your CRM and marketing systems based on the triggers and data you receive to use the data as part of your marketing campaigns.

Navigating the downsides of IoT

[The Internet of Things'] massive influx of real-time data opens up new marketing, sales and customer service opportunities.

Although we're beginning to see more and more connected devices, remember that on the whole, IoT is still very immature. This can create disruptive opportunities for early adopters. But it's also causing many companies to wait to see what happens before they jump into IoT. Let's take a look at a few of the top issues around gleaning insight from vast amounts of IoT data, security and privacy concerns, standards support and market immaturity:

  • Insight and action. You already know you'll need to store and analyze the data -- but you must be able to glean actionable insights and also use that data to trigger customer service and marketing workflows. Otherwise, you've spent a lot of money and missed a huge opportunity. Before you build or buy, consider the questions you'd like to answer and the actions you need to enable, and then build or buy to answer those questions and actions.
  • Security and privacy. With the vast amount of data being captured by sensors and devices, transmitted and then stored, you need to ensure that every piece of data is secure and used as the consumer expects throughout its lifecycle. You should consider how you'll get security updates to remote devices. And you should collect only the data you need. Finally, companies should provide notice to consumers of how their data will be used and ideally give them a choice of whether or not to provide that data. The best advice: consider security at the outset, not at the end of the development process.
  • Standards. Several different industry consortiums are pushing various communication standards today including the Industrial Internet Consortium, Open Interconnect Consortium, the Thread Group, AllSeen Alliance, and IPSO Alliance. While some will share information, others are likely to compete with one another. Consider standards support, as well as the vendors who are participating in each standards body, as you build or buy technology.
  • Immature market. Finally, weigh the risks of this evolving and immature market. Expect a rapid pace of change including evolving technology and standards support, as well as industry consolidation, mergers and acquisitions. You may need to build out missing pieces of the infrastructure needed to support your strategy. To some extent, with their prebuilt integrations, cloud platforms like Xively and toolkits like the Salesforce Wear Developer Pack may be able to alleviate some, but not all, of this pain.

Like many emerging technologies, the Internet of Things presents potential risks and rewards to marketers and customer service teams. Now is the time to see if IoT is right for your company, and weigh the costs and benefits of IoT to see if it can help you to reach your business objectives.

Next Steps

Security, acceptance holding IoT back

How IoT works

Mobile technology, wearables coming to the forefront

Customers and their data at vanguard of CRM

IoT applications moving into healthcare

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