How Internet Of Things Data Improves Product Development

Author

Dan Woods, Contributor

May 15, 2015

The data provided by the Internet of Things (IoT) is fast becoming an essential tool for product development. Five examples that I studied recently all take different approaches but show how the data collected from a product can remove much of the guesswork about consumer needs and provide a foundation for empirical decision-making. In addition, the added data collected is changing the nature of many products. As much as we all like to summon the intuition of our inner Steve Jobs or Jony Ive, things go a lot better when we have data to help us along.

Coca-Cola uses data from its Freestyle and other vending machines to gain valuable understanding about where, when, and how customers are purchasing and consuming their products. Through connected vending machines, Coca-Cola has reported that it can see spikes in its beverage consumption on college campuses before certain television shows air, a specific insight that not only leads to better understanding of customer demographics, but one that also presents opportunities for targeted marketing.

Bosch, a leading healthcare product company, has created the Health Buddy, a device that monitors the vital signs of patients and records patient inputs. Patients with chronic health conditions can stay in the comfort of their own homes while keeping medical staff up-to-date on health changes that affect their patients’ well being.

iRhythm, a company that manufactures a patch that can detect heart problems, uses the data flowing from devices to ensure that its products operate as intended and better understand usage patterns.

These three examples turn products into sensors that provide hard evidence for product designers and also improve customer service. Instead of only responding to customers’ questions, the flow of data allows for proactive notification of customers affected by an outage or who may have some other problem. Companies can also then better position their customer support centers to allow more immediate service, reducing costs and appeasing customers simultaneously. (For more on these examples, see the white paper How the IoT Is Shaping the Future of Customer Experience and Product Development at the IoT page on Splunk.com)

But as I pointed out in How the Internet of Things Is Transforming the Meaning of Product, the data collected from the IoT is sparking the creation of new types of products.  Trane, a division of Ingersoll Rand that focuses on industrial air conditioning, has changed both its product development practices and the products delivered based on IoT data.

“Connected devices are the major enablers for OEMs to recapture value that would otherwise slip away. More and more we can tell a value-added story about these pieces of equipment based on their real-time operating environment versus their initial design. The ability to deliver services related to the product is crucial,” said Joe Bergman, vice president and general manager of industrial technologies at Ingersoll Rand (see IoT Impacts Trane’s Product Development Strategy).

In addition to optimizing the operation of the products in various use cases and predicting service events, IoT data also opens the door to offering HVAC-as-a-service rather than selling equipment. Instead of selling equipment that is becoming commoditized, Trane can sell the service of keeping a building at 72 degrees and deploy the needed equipment to do so.

All Traffic, a company that makes various traffic signs used by municipalities and police departments, has used the data collected from its devices to create advanced apps for controlling networks of devices. This allows its customers to dynamically change traffic patterns from a central console.

“Once data started flowing from the devices to our cloud infrastructure, we could do a better job of understanding how customers are using our products. In turn, we were able to offer our customers more benefits and help them utilize their resources more efficiently,” said Ted Graef, president of All Traffic Solutions (see All Traffic’s Journey to a Connected Device Ecosystem).

All Traffic then created an ecosystem for collecting traffic-related data that it calls the TraffiCloud. Other devices, such as those from TomTom, can provide data to the TraffiCloud, which in turn powers advanced applications that can, for instance, display time to destination with no sensor infrastructure.

“The TraffiCloud has allowed us to become even more valuable to our customers,” Graef says. “We are not just offering apps, but are providing an ecosystem for getting the most possible value out of connected devices for traffic management.” All Traffic Solutions has had to grow new skills to become a software and services company, but the adoption has been tremendous, according to Graef.

Lessons for Product Development

The IoT will thus necessitate a significant perspective shift for many companies. The sale is not the culmination of the customer relationship; it’s just the beginning. In many ways, when a customer buys a product, the purchase is less valuable than information gleaned over the course of the customer’s interaction with the product. This may change the price of products, which could become free or even offer rewards in exchange for the data. The flow of data will certainly open up new lines of business: many organizations will be able to migrate into product service and also use sensor data from connected products to develop new applications.

The IoT vastly accelerates product R&D. By using sensor, diagnostic, and user interaction data from devices, companies get full product transparency. By seeing how customers are using their products, businesses can quickly update features or adjust future models to more closely align with customer desires and behaviors. They can also better anticipate where consumer preferences are going in the future. This insight is invaluable – rather than learning through tedious trial and error, companies can know in real time what is working and what is not, enabling organizations to make data-driven decisions and immediately react to correct or adjust issues.

This virtuous feedback loop extends to the channels and methods organizations can use to interact with their customers. With the data from connected devices, companies can better understand and predict their customers’ preferences. Thus, rather than creating a general, one size-fits-all marketing strategy, advertisers and marketers can reach individual segments of their customer base. So instead of flooding all customers with the same offer, marketing teams can create personalized offers that keep the customer engaged and satisfied with the product.

Obviously, this is good for any relationship with a customer, but it also dramatically impacts the bottom line. More targeted, successful marketing efforts mean fewer frivolous marketing expenses and a better understanding of advertising ROI. With data-driven insights from connected devices, companies can know from the start of a campaign how and where to position their new product lines on social media and elsewhere to get the best response from incumbent customers and those they’re trying to attract.

In other words, the flow of IoT data should mean better products, better service, and more value for the customer, with a lower risk for the manufacturer. It is one of the wonderful scenarios where more data leads directly to more value for everyone involved.

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Dan Woods is on a mission to help people find the technology they need to succeed. Users of technology should visit CITO Research, a publication where early adopters find technology that matters. Vendors should visit Evolved Media for advice about how to find the right buyers. See list of Dan’s clients on this page.

This article was written by Dan Woods from Forbes and was legally licensed through the NewsCred publisher network.


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