Scroll forward to Super Bowl Sunday earlier this month and that same technology was popping up in ad breaks alongside Budweiser and Doritos in the form of Amazon’s Echo speaker and voice-activated hub, equipped with the brand’s Alexa artificial intelligence system.
The internet of things, where everyday objects and appliances connect to the internet and one another, is increasingly woven into the fabric of daily life. The only danger is that there is no guarantee today’s technological obsession will be tomorrow’s routine habit. So how wise is it for marketers to invest in something that might turn out to be a fad?
Mariano Dima, global CMO at holiday rental website HomeAway, says for his brand: “There are three areas that are pain points or problems which can be solved by IoT innovation: energy efficiency within the home; convenience, where our customers have to be able to provide access to their properties in the right place at the right time; and enhanced booking through systems such as Apple TV.”
Dima explains that IoT could have a significant effect on both his major customer groups – the hosts renting out their homes through HomeAway – and the holidaymakers using it to book the accommodation. Security, he notes, is often a number-one concern for both parties and so by encouraging hosts to adopt IoT-enabled locks for their homes, peace of mind is assured.
“Many owners are starting to install wireless locks. You can download an app every time you book that provides all the information about the house – from the wireless [internet account details] to where local amenities are – but importantly the owner can provide you with a code that unlocks the door. This code can change for each user of the property. It’s secure and convenient,” he says.
For Dima, the value in IoT is that by delivering peace of mind for both customer sets, he is able to grow not only his own business but the category as a whole. He identifies security concerns as being the biggest hurdle to potential customers trying out the service, but notes that once someone experiences renting through a ‘sharing economy’ site such as HomeAway, 84% will return to let a whole property.
However, the proliferation of connected devices and objects, and the additional services they make possible, creates a huge increase in business complexity for brands. A significant digital theme for 2016 is data security – given the number of high-profile hacks in 2015 and the more stringent data protection laws agreed in the EU – and yet here are devices that do not just collect and use the first-party data for themselves but exist potentially to share that data between other companies. Data is even shared between companies that in the past may have seen each other as competitors.
Director of innovation at Npower Neil Pennington gives the example of the energy supplier’s partnership with Google-owned smart thermostat system Nest. Although he argues that the association with Nest is “credible” and that they are bringing “great technology”, he also acknowledges that it requires an unfamiliar approach for the sector.
“Large utilities do get obsessed with brand and the idea that we have to own the whole thing, that our brand has to be stamped on everything. But in a more complex world of data and the need for different companies across different verticals to collaborate, we move into the realm of the ecosystem,” he says.
Aviva’s global analytics director Adam Kornick believes that much can be achieved by maximising that most ubiquitous of connected ‘things’ – smartphones. “With a third party we are using weather information to make our flood models better,” he says.
“We’re getting better predictions from those who have opted into that programme using the weather app. Smartphones are often overlooked. We interact every day via smartphone and those are the original internet of things. Our speed app [for Aviva’s car insurance also] measures your driving and gives you a discount. Lots of companies have that opportunity to gather information and deliver something useful back to the customer,” he adds.
Indeed, there can be a tendency to overthink potential IoT strategies by gravitating towards every new device. For some of the most innovative ideas, the simplest solutions using channels already open to brands are the most effective. Although HomeAway is exploring the use of Apple TV to expand its booking platforms, for delivering bespoke in-stay content or personalised channels Dima believes that there is more than enough functionality simply via mobile.
“We are empowering our travellers through our mobile hospitality app. They can get interesting information about local wine and restaurants with content created by local hosts,” says Dima.
Active versus passive models
The format that a brand’s interactions with customers takes in the IoT ecosystem depends on the desired strategic outcome. There are two routes to engaging via IoT – passive and active.
Passive IoT technologies include Nest’s connected home appliances and British Gas’s smart thermostat Hive, where there is opportunity to interact by manually adjusting heating and lighting but, by and large, the systems simply make intelligent modifications under the radar.
An active IoT strategy involves interaction such as Aviva’s Drive app to encourage behaviour change – in this case safe driving – or any one of the many fitness wearables that encourage users to take more steps to gain badges or clock up more calorie allowance in associated diet apps such as MyFitnessPal.
The issue with more active IoT engagement is that it is dependent on the consumer’s ongoing enthusiasm. There is a danger with gamification or goal-oriented use that, once achieved, engagement falls off a cliff. But Aviva’s Kornick downplays this risk.
“If we want to build models of customer behaviour, then information from passive sources is great. But if the company’s desire is to have interaction between the customer and the brand, this approach won’t work.” In insurance, the need to interact with customers on a more regular basis is a hot topic as the industry is keen to move away from just two customer interactions – renewal and claim – to build better, less price-sensitive relationships.
To solve the problem of diminishing engagement with IoT offerings over time, Kornick suggests ignoring the ‘if you build it, they will come’ approach. Kornick believes the reverse to be true: “I do not often recommend this. Knowing what we can do to help the customer is a better place to start. We can state that we will help them to be healthier rather than offering them a blood pressure monitor.”
The internet of things is not limited to smarter ways to provide services to customers; objects are starting to have conversations with each other. Spirits brand Absolut will be experimenting with IoT this year and its collaboration with consultancy SharpEnd has led to a number of proposals.
“Thresholds and pain points are something we’ve been exploring: how much is the consumer ready to get involved with brands and download things or activate codes on the mobile phone? We will see more frictionless and seamless activations,” claims Absolut’s digital innovation manager Markus Wulff.
He is reluctant to reveal what 2016’s innovations may include but says the company has been looking at how to work with Philips Hue lighting systems, Sonos speakers and Nest. “We can’t go into details about what we will execute and activate this year,” he states, “but we have several different technologies that could be integrated.”
These could include image recognition to understand loyal customers and unlock vouchers; trackable products to improve the supply chain; or ways of branching into entertainment through augmented reality or connection to sound systems.
Wulff reveals that an active element of the IoT strategy could somehow involve triggered invitations to local brand events, while more passive elements engage the home environment to include sound and light experiences.
He adds: “There is a curve when it comes to teaching customers about IoT. In a few years’ time there will be many objects that can connect with each other but right now we are focusing on three key areas: smart packaging, activations for real world brand experiences and the connected home.”
Neil Pennington, Director of Innovation, Npower
The smart home has been around for years but it’s a case of over-promising and under delivering.
It was typified by buying a big, integrated, white plastic solution for a lot of money that had to be programmed and remained largely the realm of the gadget geek.
But technology is becoming much more usable and less intrusive. And customers are more demanding of the services and the benefits they get. It’s driven by the experience of smartphones and tablets – once you set it up, you expect it to connect every time.
It’s no surprise that Nest [the Google-owned smart thermostat, with which Npower has a partnership] should come from former Apple executive Tony Faddell. It has a design-oriented and simplistic approach. There may be three major products associated at the moment – thermostat, carbon monoxide monitor and camera – but there are 12,000 developers working in the Nest ecosystem from locks to washing machines. More importantly, it all works in the background, there is no need to interact with it.
The real challenge for us as an energy company is how to get at the emotion of our customers. Security of homes and families is about wellbeing. If their Nest Protect alarm goes off, there is an opportunity there to provide useful interventions for customers. Those user cases chime with people beyond simply energy saving.
Customers are becoming less cognisant of business verticals. Ultimately, the companies that build their experience are Amazon or Uber and so they’re expecting more personalisation and value to come across product categories.
The integration of Nest with cameras can open up different opportunities around security, which leads to insurance as well as energy benefits. Perhaps we will see the rise of the lifestyle company where we help run the customer’s life as opposed to giving them different ways to pay a bill.