Digitizing Things and its Effect on the Customer Relationship

In the HBR webinar “How Smart Connected Products are Transforming Companies,” hosted by Harvard Business School Professor Michael Porter and PTC CEO Jim Heppelmann, one of the attendees asked an insightful question during the Q&A period. The question was: “Does digitizing everything further remove you from your customer?”

Jim Heppelmann had a very interesting response. He said that he would argue the opposite.

He explained that in most cases today, if a customer has an issue with a product – if it breaks, for example – the buyer gets angry, and the relationship with the brand is damaged.

This is because humans currently act as a “sensor” for the product. Via a phone call, email, or social media post, the consumer can contact the manufacturer and provide feedback, ask questions, or register a complaint. (And, through social media, consumers can rapidly and widely share their opinions – either positive or negative – in an unprecedented way which can be a problem for manufacturers if their customer is angry about a broken product.) But, with “human sensors” the manufacturer is in a reactive mode; they are responding to a problem and usually don’t have much information to go on.

With the Internet of Things (IoT), there is the opportunity to gather information via actual, electronic sensors built into the product and reach out to that consumer proactively to build the relationship throughout the product lifecycle.

With the IoT, sensors report information back to the manufacturer and the manufacturer can respond. For instance, if there are mechanical failures reported, the manufacturer could take the initiative to reach out to the consumer and offer to fix or replace the product. If sensors report that a product hasn’t been used, the manufacturer can reach out and send further instructions to ensure the consumer knows how to operate the product. If it is time for maintenance or to order supplies, the manufacturer can offer an easy way to do that. As mentioned in the webinar, behind every connected thing is a customer, so welcome to the Internet of Customers.

This article “CX and the CIO: How IT chiefs shape customer experience,” in i-CIO.com magazine further explains, “every customer journey is marked by a set of ‘touchpoints’ — or interactions — with the provider of the particular product or service they’re looking to buy or use. These days, though, almost every one of these touchpoints is digitally enabled: from advertising and marketing to purchase and customer service.”

The Internet of Things is a very significant step toward digitizing that customer journey. If harnessed correctly, it provides the opportunity for deeper and more collaborative relationships with customers. And, sure, this is important when your customer is buying a new mobile phone or printer or car – where the manufacturer can leverage product data to suggest a data plan or a new ink cartridge or a tune up. But it is also very significant with B2B manufacturing customers who are developing, manufacturing, and servicing products such as solar panels, heating ventilation and air conditioning (HVAC) systems, or construction equipment.

Gartner predicts that “as the presence of the Internet of Things – such as connected devices, sensors and smart machines – grows, the ability of things to generate new types of real-time information and to actively participate in an industry’s value stream will also grow.” Less expensive sensors will be embedded into more types of products. They will be able to deliver geospatial information to let manufacturers know where the product is, as well as performance information to tell them how well it is functioning. The webinar echoed this sentiment, stating that the value of product data is increasing exponentially when integrated with other types of data.

The IoT creates a competitive advantage and delivers a better customer experience in many different ways from improving visibility and efficiency of product demand and inventory to accelerating product innovation and support.

And as our products evolve into smart, connected devices, the operations and organizational structure of companies are being radically reshaped – including the customer experience.
The product becomes a means of delivering value to the customer, rather than the end solution itself. Since the manufacturer remains connected to customers via the product, it enables a new way for direct and ongoing dialogue. The product acts as a window into the needs and satisfaction of customers, rather than relying on customers themselves (the “human sensor”) to learn about problems or performance.

Watch the webinar or download the HBR article, “How Smart, Connected Products are Transforming Companies” to learn more.

Image by Kejing GU on Flickr (CC BY 2.0)