From “smart” hairbrushes to lawn mowers, the Internet of Things (IoT) has created a slew of slick products, but there have also been many failures: too many connected devices have gone by the wayside, and in most cases, this is preventable. This scenario, recognized as the Abandonment of Things, is the land where connected devices go to die. Several factors drive the Abandonment of Things: a lack of a proper monetization strategy for connected services; failure to create a community around a smart device; even security issues and clunky backend processes. If a company wants to avoid the digital scrap pile, and subsequent loss of potential revenue and customer gains, it must have all the right parts working in sync.
Keeping an Eye on Profitability
Companies are always looking to expand their user bases, but as that base grows, so do infrastructure costs. Think increased server capacity and the people needed to manage the technology aspect of a subscription service. If the right infrastructure is not in place, profitability takes a hit.
It comes down to data collection and value. What data do companies collect and how do they use it? Where is the value? Take some of the popular connected health bands for example: their freemium models allow consumers to track food and exercise and then compare and compete with friends. On the other hand, their premium models cost around $100 annually and give consumers the option to compare themselves with strangers who are just like them.
Does the data revealed by the premium model — data about strangers rather than friends — provide enough value to convert 3-5 percent of the consumer base into paying customers? That’s the question the marketer must ask and answer.
Getting in the Consumer’s Head
With traditional, non-connected devices, the relationship between brands and consumers ends with the purchase. But with a smart device, the purchase is the beginning of that relationship. IoT is actually not about the thing — it’s about the service as well as the value provided by the service. A company must therefore consider more than the transaction, or the value of the product, or even the initial needs of the consumer. Companies must understand the value a consumer — or better yet, a member — gets from the service. An integral part of that value is the community consumers join when they subscribe to a service.
The new subscription generation requires companies to think of their consumer base as a membership base, which requires very different communication strategies. Transparency is key, both in terms of the solution offered and the financial aspect of the solution. Companies start to achieve success when they build out these relationships and consumers begin to take in new information, not just as marketing, but as an added value.
Awareness of Regulations
Security is paramount in the era of IoT. Striking the balance between value for consumers and protection of their data will be an ongoing challenge for marketers. One example that showcases the delicacy required in this new order is TVs that watch us — noting not just what you’re viewing, but who is in the room when the device is on. Even for those consumers who see great value in, for example, targeted commercials and programming, real questions revolve around how that data is collected and what companies do with it.
Consumer rights also change with every border crossing. Uber transactions are seamless in the U.S., but are more complicated in India. It’s not just about securing data, but also securing the complex payment processes inherent in a subscription-based, hyper-connected global economy.
How companies adapt to the regulatory environment is key to their success. One important thing to understand is that government is not necessarily proactive about regulating IoT — regulations will most likely come after some company is caught misusing data. One bad apple can affect an entire industry, so companies need to be transparent and meticulous about data collection and how data is used to create value.
Avoiding the Abandonment of Things
The new world ushered in by IoT is just dawning, and already the path forward is littered with abandoned things. A subscription-based economy demands flexibility, convenience and value. But those aren’t the only challenges your company faces when forging ahead. The right balance between monetization, transparent communications and security can create the environment your product needs to thrive.
Photo Credit: Becky