How the Internet of Things Will Change Consumer-Product Relationships

By Tim Scargill

From fitness trackers to thermostats, bike locks and even socks, more and more of our products are getting connected. The opportunities for enterprise are huge – the research firm Bain predicts annual revenues for IoT products could exceed $470B by 2020. But in order to be successful in this space, it’s essential to understand how this technology will alter the complex relationships between consumers and their products. Not only will we interact with our devices in a different way, but the role they play in our lives will fundamentally change, impacting every aspect of business from product development to marketing.

Functionality

Companies are currently walking a tightrope when it comes to developing IoT products. They are desperate to capture the imagination of a still largely uninformed public with innovative features, yet it is addressing the everyday problems that ensures long-term engagement. Time will tell if consumers decide they really have a use for smart scarves and hairbrushes, but some elements of our new connected world are definitely here to stay.

What’s key is that companies engage with their customers for feedback on the latest developments. Products such as the new ‘Samsung Family Hub 2.0‘ (no longer only a fridge but an entertainment center, offering TV and Spotify) have the potential to transform the very nature of home appliances, from single-purpose tools to devices that we interact with in multiple different ways. However, consumers are wary of paying for what they don’t need, so research is needed on how exactly IoT products are being used, and which elements drive purchases.

Personalization and Brand Loyalty

As consumers interact with their connected devices, they produce large amounts of valuable data. Through those interactions, retailers can learn about a customer’s preferences, analyze their behavior and target them much more effectively. That’s why companies are investing so heavily in ‘data wrangling‘, collecting and organizing that information so it can be used to inform strategy and operations.

Enabling personalized recommendations is an essential part of that, whether it be marketing promotions or suggestions within the product itself (Netflix being leaders in that area). Multiple studies have shown that personalized recommendations build brand loyalty by improving the user experience and making consumers view products in a more favorable light. The ideal situation is to create ‘brand enthusiasts’ who are not only willing to pay more, but also share their love of a product on social media.

Another aspect to personalization is the functionality of the system itself, for example the saved presets on a washing machine. The more ways in which a user configures a device to their own preferences the more valuable it becomes to them, the less disposable it is. Developers should consider how easy it is to transfer those settings when upgrading to a new device as another way to build loyalty.

Compatibility and The Smart Home Network

As consumers begin to own a range of different connected devices, the more desirable it is for those devices to work together, bringing added benefits. So when it comes to purchasing IoT products, a key factor is compatibility – you might love the features of Google’s Nest Thermostat, but why buy it if it’s not supported by the Apple HomeKit system you already have set up?

As such companies are keen to promote how products can be used together to achieve additional functionality. For example, in response to the aforementioned Samsung Family Hub, LG have partnered with Amazon to enable Alexa voice control of their latest refrigerator. And it’s not only a case of manufacturers aligning themselves with existing ecosystems or interfaces, there is significant potential in partnerships between products with related functions in the smart home. A recent link-up between Netatmo and Velux will use the detection of indoor climate parameters to automate roof windows and sunscreens.

Companies developing a product need to be acutely aware of its place with the smart home – how it will be used and which other devices a consumer would like it to interact with. Compatibility should be maximized if possible, but common existing set-ups of the target audience should also be considered. Finally, enterprise in general should be aware of the smart home ‘fragmentation’ caused by rival ecosystems, which could cause consumer dissatisfaction and reduce adoption of the technology.

Products as Advisors

One of the key elements of ‘smart’ products is that communication between consumer and product is no longer one-way; devices are now able present information to a user, acting as an advisor. This has opened up a huge range of possibilities, from smart fridges that can suggest recipes based on their contents, to smart toothbrushes that provide feedback on brushing habits. The idea has been taken a step further by smart kitchen startup Innit, who have created a system that guides you through the entire cooking process, from automatic detection of available ingredients to sending instructions to a Wifi-enabled oven. It might be a while before that kind of technology is commonplace, but working with intelligent assistants may well be something we soon encounter in many aspects of our lives.

As well as aiding day-to-day interactions, a product can also provide information to help a consumer look after it better. One example, unveiled at CES 2017, is a smart lawn mower which prompts users when blades need to be replaced or the oil needs to be changed. Similarly, manufacturers are using data from embedded sensors to offer after-sales services such as proactive maintenance. They can also use that data to monitor component performance and inform future design decisions.

The Future: Object Consumers

So what does the future hold for IoT devices? How will consumer-product relationships continue to change with further advances in technology? The clearest answer is more autonomy for products, at least where it is desirable for the consumer. Machine learning algorithms are already enabling products to function and optimize independently. For example, the Nest thermostat features an ‘auto-schedule mode’, which allows it to learn your changes and program itself, as well as learning how long it takes to adjust your home to a certain temperature.

Perhaps more significantly, products may begin to take on tasks beyond their traditional function. Take Amazon’s Dash Replenishment Service, which allows printers, washing machines, pet-feeders, water filters and potentially a multitude of other devices to re-order supplies when they need them. This leads to an interesting situation where products themselves can be considered consumers, what academics from George Washington University termed ‘Object Consumers‘ in a recent paper. In the future, might we even transfer purchasing decisions to our devices – imagine giving your fridge a weekly budget to restock itself as it sees fit, by detecting what’s required and finding the best online deals. Could retailers even market directly to those object consumers, and what form would that take? One thing’s for sure, the IoT is the start of a very interesting journey when it comes to the relationship between us and our products.

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Tim Scargill is a former IBM consultant and electronic engineering graduate, now writing about all things technology-related. He is particularly interested in how emerging technologies will affect enterprise in the future. After completing a Masters degree in Electronic Engineering at the University of York, he moved on to become an IT consultant at IBM UK. Gaining knowledge and experience of big data and its business applications, he specialized in the analysis and processing of sensitive data. Specific interests include big data analytics and strategy, natural language processing and machine learning.