Today’s consumers are used to the idea of an interface where they view a screen and manually interact through a device. That won’t be the case as much in the future. The challenge now is for marketers to create an ongoing relationship with their customers when communication is happening without an interface.
Recently, I took part in an Adobe Think Tank panel where we discussed how the Internet of Things (IoT) affects the ability to brand and create delightful customer experiences. In a world where interactive devices no longer have screens, the topic is getting more interesting. The discussion quickly moved to the question of what happens when the transaction occurs in the background. By “in the background,” I mean that consumers receive products ordered on their behalf; they’re not necessarily in the middle of that process.
Where the Market Is Right Now
We’re at the beginning stages of this new paradigm. Some technologies currently in the market enable purchasing without interfacing with a screen. You might say to Amazon Echo, for instance, “I need more diapers” and the machine will instantly create an order for that product. You don’t have to sit down and type the order or pull out your smartphone.
Some other examples are further out, like Nest, where you’ll have a completely intuitive home automation system that takes in and pushes out information about when an action needs to be taken. Some are supported by retailers right now, and others are on the horizon. The dawn of the interoperability interface is where we are right now.
We’re seeing inroads already by some retailers offering “subscribe and save” programs (Amazon’s name for this service). These are subscription services where everyday supplies are replenished without you having to transact in the quid pro quo. You’ll get a discount for automatic renewal of the purchase.
How Brands Will Create a Delightful Experience
So, the real question is, what experience will brands deliver to consumers?
We’re going to see brands developing passive experiences. In a passive experience, such as a subscription service, the machine might notify you that a 64-ounce jug of laundry detergent was ordered for you. You’ll need to confirm the order prior to shipment, or you can note in your account profile that you want automatic shipments. So there will be two parts to the experience: the transaction and the approval of that transaction.
These notifications will be a brand’s opportunity to be front-and-center in a consumer’s thoughts. The quid pro quo for brands is to offer discounts in exchange for accepting passively ordered automatic shipments, similar to Amazon’s Subscribe and Save program. Amazon might provide a 15 percent discount on these orders, which will likely be lower than the shelf cost.
IoT Enables Customer Insights
This concept of marketing to the machine will be driven by data collection. In the past, whatever the physical product—toilet paper, mattresses, and so on—marketers had no idea what was going on with the customer once the purchase was complete. The marketer might receive a repair request if the product was under warranty, but that’s about it.
Now, the IoT architecture will allow brands to follow the customer home. Brands will be able to serve delightful experiences because they’ll have insights collected through the architecture. IoT will enable industries that previously had very little data on how to generate repeat sales. For instance, a chip embedded in a mattress could signal that the springs are starting to weaken and notify the consumer that replacement will be necessary soon.
We’re now seeing previously data-poor brands like Under Armor and Ford claiming to be technology companies rather than product companies. They realize that differentiation is based on how well they understand how, when, and where their products are being used, what the timeframe is for reengaging with their customers, and the sales cycle. They’re enabled by technology. They can run more effective new product launches, engage more deeply in marketing, and generate automatically served repeat sales.
Will Passive Transactions Become the Norm?
One of the key points that came out of the Think Tank experience is that the possibility exists for consumers to start receiving shipments because a machine told the delivery to happen. However, the consensus was that these passive transactions probably won’t grow very quickly. Maybe 20 percent of all transactions driven through IoT will be passive in the near term.
The onus will be on the brands, or marketers and retailers who push those brands, to figure out what their roles should be in that relationship. As they understand, they can influence brand decisions even after somebody has made a commitment to those brands. I think the next of couple of years will be telling, but the key indicator from the Think Tank debate, in my eyes, is that IoT isn’t just about data. IoT is about understanding how that data evolves into interactions with a customer.
Consumers will have to actively choose to have machines buy things for them. So, if you’re going to go down this path to the passive order world of Columbia House, you’ve got to make it a positive experience. The Columbia experience wasn’t always positive. Every month their offer sent you a CD that you had to either keep or send back, and you couldn’t get out of that negative option routine for a year. That’s why it’s called “negative option”—your only option was to say no after the fact. In the IoT world, marketers could recreate a more positive option in a very fluid way.
As the brave new world of marketing to the machine unfolds, we’ve got to do an even better job of understanding customers and integrating IoT technology to accurately and completely serve their needs with passive transactions. There will be more to come on this topic—stay tuned.