IoT Based Thing Commerce Requires a Differentiated Customer Experience

Organizations regard the Internet of Things as a top customer experience technology, but are not treating it as a serious commerce channel. Application leaders for digital commerce technologies should offer differentiated commerce experience to make IoT-based thing commerce successful.

Key aspects

1. Organizations face the challenge of making thing (IoT) commerce easier to use, as sometimes customers have to memorize trigger words or structured commands to activate services.

2. Often, thing commerce offers limited value to customers, as organizations focus on commerce-only functions and restrict product selections to their own offerings.

3. Customers don’t yet fully trust the machine or the organization to delegate all purchase decisions, relegating thing commerce to handling simple, repetitive purchases.

Differentiated CX for thing commerce

In 2019 Customer Experience Innovation Survey, respondents listed the Internet of Things (IoT) as one of the top-five emerging technologies that will have the biggest impact on their CX initiatives in the next three years. Today, only a few leading organizations have deployed thing commerce — i.e., using the IoT as a channel for digital commerce. Some examples include:

• Amazon Dash Replenishment Service (DRS)

• Amazon shopping with Alexa

• HP Instant Ink

• Disney Magic Band

• Domino’s 15 ways to order pizza, which include smartwatches, TVs, wireless speakers and connected cars

• Manufacturers such as Siemens, Bosch and Tesla offering predictive maintenance

Most organizations still focus on mainstream channels such as websites, mobile and social for commerce transactions. Their reluctance to treat the IoT as a serious commerce channel is partially due to poor ROI compared to mainstream channels, since customer behavior of using the IoT to shop is yet to be established. However, organizations haven’t exactly made this channel easier for customers to use. Specifically:

1. The customer experience isn’t effortless. Customers often have to memorize trigger words or specific commands to prompt the right service. The service may support a single interaction mode, which takes a lot of “back and forth” to get one task done.

2. The service only supports limited functions. Even when the shopping experience works, the customer can only shop for one item or a few items at a time. The inflexibility to configure for more product options and the lack of value-added functions make thing commerce and the related IoT devices “nice to have” but not essential.

3. Customers don’t yet trust the machine or the organization to fully delegate purchase decisions. Customers still want to have control when it comes to buying decisions. While simple, repetitive purchases may be automated, complicated decisions need to be approved by humans. This will only change when customers have developed trust in the providing organization and the technology.

Organizations are missing the big picture by not including the IoT in their commerce strategy. Thing commerce will not only help fulfill customer expectations to transact over a growing number of channels, but will also contribute to trusted customer relations.

The following article advises application leaders on how to offer differentiated customer experience for thing commerce, as summarized in Figure 1.

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Offering a Differentiated CX for Thing Commerce

Figure 1. Offering a Differentiated CX for Thing Commerce

Support Multimode UI/UX to Offer an Effortless Experience

#1: B2C Experience

IoT equipment doesn’t always support a rich UI and many devices don’t support the conventional way of shopping using displays and keyboards. While a single-mode interface can be sufficient in some cases, multimode interfaces make the buying experience a lot easier, especially when combining voice, vision, gesture and touch. For example, when customers want to check a product specification and price using a wireless speaker, they have to go through a list of questions to get the precise information. This means they could easily forget the answers by the end of a long and winding conversation. But if the speaker comes with a display that shows the product image together with stock, price and delivery time/costs all at once, this makes product selection much easier. The display can also support touch so customers can point and swipe for an easy checkout. Such multimode UI reduces customer effort in product discovery and check-out, leading to higher conversions and customer satisfaction. Amazon Echo Show is one example of an online shopping experience being improved over a voice-only Echo speaker.

#2: B2B Experience

B2B commerce is often associated with achieving better efficiency and productivity while growing sales. IoT technologies are used in operational processes for asset tracking and monitoring, where commerce is a value-added function. Thing commerce in the B2B setting often targets employees and partners, reducing their efforts in getting tasks done, which ultimately improves the end customer’s experience. A few examples:

1. Industrial vending machines on the factory floor give workers quick access to tools and components, and can automatically replenish stock based on the inventory level. This helps improve cost optimization and productivity on the factory floor, and ensures timely delivery for end customers.

2. Medical asset tracking services can locate equipment and audit the number of supplies in real time, and reorder when supplies run low. This saves time for medical workers so they can spend more time caring for patients and save lives by getting the right equipment quickly.

3. Service engineers repair equipment using augmented reality (AR), and order spare parts from the AR interface. This shortens the downtime for end customers.

These examples integrate commerce functions with service and operational processes, leveraging IoT and multimode interfaces.

#3: User Authentication

Since many IoT devices don’t have a mouse or keyboard, biometrics thus becomes useful in supporting an effortless CX. The service can recognize customers via voice, face, fingerprint or gesture, search products based on their personal settings and preferences, and check out using their registered payment information and shipping details. These steps take place without the customer repeating their requirements or confirming personal information. In addition, consumer IoT equipment is often shared between family members, and biometrics authentication allows each member to access their own accounts and shop with their personalized settings. Parents can also control the spend limit and/or product category and range from which children can buy, giving households better control of their purchase experience. All these factors lead to higher customer satisfaction.

With the use of biometrics, application leaders need to consider privacy concerns, as not all people are willing to store their biometrics data with their provider. Besides communicating security mechanisms built into the system, providing alternative options such as password and pin code are viable solutions. In addition, building customer trust is something that needs to be addressed at both the service and organizational level (see the section on customer trust further down).

Another best practice of using biometrics is to provide backup authentication options in case biometrics don’t work properly; for example, enabling password and pin code log-in, and supporting contactless cards such as bank cards or employee badges.

#4: Unified Experience

While thing commerce enables commerce through IoT equipment, organizations should not treat it as a separate channel from other mainstream channels. Customers should have a consistent experience across channels and touchpoints, such as for accounting settings and personal preferences. They should also have a unified experience where processes seamlessly hand over across touchpoints. For example, customers can order online and pick up from self-service kiosks in the store. They can check the order status using a chatbot in the app or over a wireless speaker after the IoT equipment makes a purchase.

Delivering a unified experience may also require secure over-the-air (OTA) provisioning of user credentials or sensitive content such as room keys, tickets, vouchers, payment tokens and digital-rights-protected content. Customers can have credentials on their IoT devices shortly after the purchase. The purchase activity may take place on another channel (such as a website or mobile app), while the delivery of the services or the rights to access the service takes place on the IoT device (such as a smartwatch or connected car). This allows thing commerce to contribute to a unified experience and increases customer satisfaction by giving customers immediate gratification.

Increase Value Propositions by Enabling Configurability and Value-Added Functions

#1: Enable More Configuration Options

Thing commerce offers customers convenience by automating the purchase process, while organizations can also enjoy the lock-in effect. Yet giving customers a reasonable range of brand and product choices, as well as letting them configure the way purchases are made, will greatly improve CX. There are three scenarios in which configurability can be offered, as outlined in Table 1.

Table 1: Three Scenarios for Thing Commerce Configurability

*Based on volume, usage or life cycle

IoT = Internet of Things; OEM = original equipment manufacturer

IoT equipment manufacturers selling essential consumables should consider supporting alternative products if they can meet the OEM’s quality and performance requirements. Consumable manufacturers should consider supporting partner products, especially if they are in a different category. For example, providers of office supplies could support catering and travel booking services for the office, which complements the supplies business. This may weaken the lock-in effect for the manufacturers’/providers’ own products in the short term, but in the long term they will benefit from improved customer loyalty as customers see better value with more choices (see the section on customer trust below).

#2: Include Value-Added Functions

The value proposition can be further improved when value-added functions and even noncommerce functions are included, so customers can use thing commerce as a one-stop shop. There are two paths to achieve this, outlined in Figure 2.

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​Two paths to Offer Value-Added Functions in Thing Commerce

Figure 2. Two Paths to Offer Value-Added Functions in Thing Commerce

The first path is to add value-added functions such as complementary products, content and maintenance services to existing thing commerce platforms. The second path is to embed commerce functions into existing IoT-enabled processes to enable purchase from a unified UI and process. Taking Path 1 means starting with thing commerce as a commerce-centric offering. Organizations can include other functions customers would use on a regular basis that complement the IoT device. This is especially beneficial for products with infrequent purchase intervals; for example, connected cars. In this case, thing commerce isn’t designed to automate the purchase of cars, but to enable customers to order food, get maintenance services, buy spare parts, control home devices and access digital content, all from the car dashboard. The key is to include high-frequency services such as food ordering, digital content access (e.g., music and video) and home devices control. This increases usage of the extended functions of the car, strengthening the value proposition and mind share for thing commerce.

Taking Path 2 means integrating commerce as a value-added function into an IoT-based operational process. IoT-based processes often aim to improve efficiency and productivity such as asset tracking, security monitoring, marketing, maintenance and customer service. Commerce in this case adds value to the solution by facilitating purchases related to the context. For example, service engineers can order the exact parts from the maintenance process without leaving the service UI. The service will obtain the part number, customer account and shipping information, and schedule the replacement appointment based on the engineer’s and customer’s availability. This is done without the engineer juggling across a number of applications trying to fetch the right information to place the order and arrange the appointment. The maintenance process is streamlined and the experience for both the customer and engineer is improved by including the commerce function.

Deliver Consistent CX and Give Customers Control and Influence to Gain Customer Trust

Thing commerce today mostly handles simple and repetitive purchases. This is partially due to technology constraints that it cannot accurately predict customer needs to automate the entire process, especially for complicated needs. But more importantly, customers don’t always trust the machine or the organization to delegate all purchase decisions. They want to retain control, especially for nonroutine and complicated purchases. Gaining customer trust is key to taking thing commerce to the next level to handle more complex purchases.

In addition, increasing customer trust brings great financial benefits to organizations in terms of customer acquisition costs and customer lifetime value. According to a British Brands Group study, the most trusted brands have twice as many customers and twice as many customer recommendations as the least trusted. They are also growing at a faster rate and have customers who are willing to pay higher prices. Yet many organizations are scrambling to be compliant with privacy regulation, and have yet to build trusted customer relations. While building privacycompliant systems and trust in the overall organization may take years, there are some quick fixes that organizations can adopt in thing commerce to increase customer trust.

#1: Be Consistent in Customer Experience

Customer trust in the overall organization takes a long time to develop, but organizations can build customer confidence in their ability to deliver certain services in a consistent way. For example, customers trust organizations to consistently deliver products in the promised time frame. They trust they can get the same, if not lower, prices from the organization. They trust biometrics authentication gives them personalized account settings and check-out. They trust secure access to content and services is immediately available after the purchase. If organizations can identify areas that matter the most to customers and put in place mechanisms to ensure consistent delivery of that experience, they can win customer trust on those fronts.

#2: Give Customers Control and Influence

A lot has been written on the privacy topic in terms of giving customers control of their personal data. In thing commerce, service configuration is a key area to let customers have control. In the section above, we listed configuration options for three scenarios. Only equipment manufacturers not selling essential consumables give the widest choice of brands and products. Other manufacturers often limit product choices to their own. This is self-serving as organizations enjoy the lock-in effect at the expense of taking options away from customers, which consequently reduces the value proposition.

Organizations should look into the possibility of expanding the range of configuration options to increase the value of the service and contribute to customer trust. They should include the selection of alternative brands and products that offer equivalent performance to those of their own. If they include providers with complementary offerings, they can not only expand product ranges and categories, but also build total solutions that enhance the value to customers.

Organizations may also allow customers to suggest or vote for products and brands they want to have among the configuration options. They should look at top search requests that turn in zero results and see whether to stock those products or include those in the configuration options. This makes customers feel they are being respected and that they can influence the product offering. Expanding configuration options to other brands and providers may dilute the lock-in effect in the short term, but it differentiates the thing commerce experience from other offerings in the market. This will increase customer trust in the long run that brings financial benefits to the organization.

In addition, customers should be able to configure the ordering process to review orders before they are processed. This puts customers in control of repurchases because some nonroutine usage patterns such as replacing the equipment or holiday shutdown can impact the repurchase cycle. Customers can remove that step if they are confident with the automated process.

While offering thing commerce through IoT equipment, privacy best practices should be applied that range from allowing customers to turn off background listening, to excluding data from analyses.​

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