Pushing the Right Buttons: How the Internet of Things Simplifies the Customer Journey

Abstract

Even in the age of online shopping and digital touch points a customer journey has many detours. These complexities in the purchasing process result that customers are ill-supported in their decision process. This can lead to an exclusion of retailers, the purchase of substitute products or churn. On top of this, consumers prefer to purchase products which can be customized or adapted to their individual needs exclusively. This creates even more complexities to the customer journey. In order to accomplish a compelling customer experience, interaction of both consumers and manufactures needs to be taken to a next level. The Internet of Things (IoT) opens for consumers many options to “leapfrog” the customer journey in order to meet before mentioned requirements. It enables to constantly learn from the customer. Thereby it offers potential to improve interaction, innovation, selling, supporting or simplification along a customer’s journey. Powered by artificial intelligence customer experience is able to adapt to the individual customer and its actual behavior or situation. This development could potentially lead Customer Experience Management on a new journey to its next paramount. Also a Telco can benefit by adopting IoT enabling an improved customer experience. But further steps have to be taken to seize these new opportunities for a Telco’s advantage.

1 A New Destination: How Affordable Internet of Things Will Change Customer Experiences in Future

When it comes to customer journey mapping, the usual approach is to arrange the existing touch points in order to optimize the different phases of the customer life cycle. To reach the customer in different environments, these touch points are spread across different channels. Hence, Customer Experience Management (CEM) used to be incremental, focusing on improving present Customer Journeys, enhancing Moments of Truth or aligning existing touch points. New touch points are rarely introduced, new technologies are hardly considered.

The introduction of affordable Internet of Things (IoT) has the potential to transform the customer journey design and its individual touch points considerably. By this, customer needs can be addressed more adequately, individually and certain in the customer’s favor. “Smart” IoT devices can now be included into the customer journey improving customer experience in the pre- as well as the after sales phase. This development could potentially lead Customer Experience Management on a new journey to its next paramount.

Even in the age of online shopping a customer journey has many detours. On closer examination each step within the journey means a point of decision (illustrated detours in Fig. 1). In the pre-sales phase already, a costumer has to choose whether to buy online or offline, select one out of a multitude of retailers, compare several brands, products and their variations or flavors, considering price differences or special offerings before it finally comes to a purchase decision. Buying online may even increase this complexity already within the pre-sales phase: After the selection of a favored product, the electronic shopping cart has to be checked-out. During this final stage even more steps are introduced: sign-in or in case of an initial purchase register, enter the entire personal confidential data including address and bank details before ultimately committing to purchase. And then waiting for delivery before it comes to utilization of the product or return.

Fig. 1

Each point of decision within a customer journey represents a potential exit

Each point of decision within the customer journey may lead to a refusal of a product or brand. This results in customers going astray from the planned customer journey. And the path may start again with the next purchase, even more at consumer goods with high turnover rates and low customer involvement. All this leads to smaller conversion rates and results in uncertainties concerning the customer relationship on both the customer’s and a company’s side. Usually without insights when and why the customer left the journey.

IoT has the potential to circumnavigate these detours. A well-known example: the Amazon Dash Button. With one device, Amazon simplifies and encapsulates customers’ decisions regarding Point of Purchase (online vs. offline), retailer & location, brand and product selection, price, offer and bundle, as well as item by a push of a button (see Fig. 2). Also registration, login and indication of confidential data needs to be entered just once. This increased ease of use prevents retailer, product and price comparison and lead customers to a convenient repurchase and steady retention.

Fig. 2

IoT-Devices like the Amazon Dash Button have the potential to cut customers’ detours

In fact, implementing IoT devices into the customer journey may lead to less points of decision and thus less exit points. Consequently, more customers will run through the defined customer journey, passing the complete pre- and after-sales phase. That means an increase in the conversion of initial purchases and repurchases. Moreover the Internet of Things offers possibilities to redefine a customer journey which can be summarized in six dimensions.

2 Route Planning: Six Dimensions for IoT Driven Re-design of Customer Journeys

When a customer leaves a pre-defined customer journey detours are not just occurring in a straight rational decision making process. Following Forrester customer experience is, “how customers perceive their interactions with your company” (Forrester Research 2010). Hence, customer experience is rather a composition of factual and emotional perception in many layers across all involved touch points. The IoT delivers expansion and control about both, layers and touch points along the customer journey. In order to shape these layers and touch points structurally, Detecon defined six dimensions the IoT offers new opportunities in: learn, interact, innovate, sell, support and simplify (inspired by Groopman 2015) (see Fig. 3).

Fig. 3

The IoT has the potential to enhance customer experiences in six dimensions

Learn

Due to the large amount of devices and versatile applications, the IoT is able to gather and transport data from manifold resources at almost any time and any place. Therefore, almost every IoT-device is equipped with at least one sensor. The provided internet connection makes this data available afar and without any intermediary. Exerting this data will bring new customer insights and clear dark spots in a company’s knowledge base: How do customers feel? How do they act in detail? What is there current situation? This knowledge can be applied in customer experience management within the further dimensions.

Interact

The IoT enables to gain insights into a customer’s personal situation and needs. Since communication via IoT devices is not necessarily one directional, the IoT enables instant and direct interaction with the customer. Knowing a customer’s actions enables inference concerning his emotions and thoughts. Knowing these emotions and thoughts enables to act accordingly when it comes to interaction.

In addition, communication can happen directly between a company and the customer without any intermediary. A direct line to the customer can be established, overriding retailers, sales agents etc. For producing companies, this facilitates a new way of direct interaction and communication with the customer. Operated in the right way, brand values and culture can be transmitted to strengthen the customer relationship. Using the right technology, like Artificial Intelligence this interaction can also be approached predictively or in advance.

Innovate

IoT-based information means also a new basis of information for product and business development. Additionally to or even in place of market research, up-to-date unfiltered customer insights will help to improve current products, develop new features or expand or emphasize single product benefits as needed. By this, products may change or develop in a new as yet unexpected direction.

Potentially, the new access to customer insights can also be used to refine or rethink fundamental business models. New data based services may gain importance and could amend current products or even replace them.

Sell

Beside a customer’s situation, IoT devices may also be able to detect a customer’s geographical position. This enables situation- and location-based offers during a customer’s shopping tour.

Knowing the customers profile and the dedicated preferences and needs, this information can also be utilized within a sales interaction. By this, the sales agent is able to present a suitable offer for a certain customer matching their needs. Implementing new IoT-based shopping devices has also the potential to create new methods of instore and online or remote sales approaches e.g. by sales robots.

Support

IoT devices can support customer processes. For example, decision making processes like product selection can be guided by smart devices. Or search processes like retrieval of product locations within a store can be assisted by in-store navigation.

The IoT may also be applied within the after sales phase of a customer journey. In case of an incident, gathered user and device data can be used to offer direct or automated service and support. Monitoring the customer’s usage patterns in combination with knowledge about a products limitations or critical operational thresholds offers additional potential in proactive or predictive services.

Simplify

Since the IoT offers a direct communication channel to a customer it offers also potential in reducing complexity of customer or client processes. Thereby, it could increase convenience by replacing uncomfortable or cumbersome but yet necessary touch points such as order forms. Due to remote interaction it could also digitize several stationary touch points. By this, not just process cost on the client side but also on a company’s side can be reduced due to straight processes safe process costs for both a company and its customers (e.g. the Amazon Dash Button).

Transferring these dimensions into practice, most IoT driven customer journeys have the potential to combine several of the mentioned dimensions. Combining simplified processes with additional IoT-based support and situational interaction may impact the value of the Customer Experience considerably. By this, the integrated combination may reduce the total amount of a company’s touch points and lead to a more convenient experience on a customer’s side. In fact, some few IoT-based touch points might be able to turn a customer journey into a new direction. In the matter of digitization, companies and also Telcos are already deploying IoT devices as touch points. How the IoT is applied within customer journeys already is described in the next section.

3 On the Trail: IoT-Based Touch Points in the Wild

Many companies strive to digitize their customer experience. Hence, several IoT-based touch points are already up and running. Since IoT-Applications are usually operating with mobile networks, Telcos have a certain interest in different perspectives. Sometimes Telcos are acting as network operator trying to build and utilize their infrastructure. In other cases, Telcos are in the role of a technology partner, co-creating new services and solutions. And sometimes Telcos are applying smart touch points within the customer journey of their own core business. However, the use cases are operating at least one of the six dimensions. The actual application is described in detail for the use cases Gillette Box, Paketbutler and the CarConnect.

3.1 Repurchase Made Easy: The Gillette Box

In 2015 Procter & Gamble’s brand Gillette introduced in cooperation with the e-tailer Perfect Shave the Gillette Box: a razor holder equipped with an M2M-Module of Deutsche Telekom (Computerwoche 2015 and Perfect Shave n.d.). A push of a button triggers a repurchase of suitable razor blades. The connectivity of the M2M-Module is used to transmit the purchase data to the e-tailer. The delivery is promised within 24 h right to the door. M2M connectivity means a plug-and-play application with neither need for installation nor pairing and by this an increase in convenience.

The Gillette-Box offers the consumer a new way to repurchase razor blades straight from the basin. By this, Gillette offers a solution that reduces complexity within the decisions making process and thus has a share in the dimension Simplify. Due to the clear focus on repurchases the Gillette-Box is also contributing to the dimension Sell.

3.2 Heading for New Businesses: Deutsche Telekom’s Paketbutler

In cooperation with DHL Telekom Deutschland released in 2017 the Paketbutler. Paketbutler is a container to receive parcels in absence (Telekom Deutschland GmbH 2017a and feldsechs service Gesellschaft mbH 2017). The container of robust and fire-resistant material is attached to the house, flat or office door of the addressee. In case of absence, the parcel carrier can place parcels in the Paketbutler. To avoid undesirable charging or unauthorized withdrawals, the Paketbutler is equipped with a combination lock. After delivery, the addressee receives a notification via smartphone app. By this, failed delivery and parcel pick-ups at neighbors or pick-up-stations should be avoided. Therefore, Deutsche Telekom promises the customer to become “independent from delivery periods and opening hours” (Telekom Deutschland GmbH 2017a).

The Paketbutler operates a NB-IoT-Module and is thereby a plug-and-play application with neither need for installation nor pairing. From the perspective of the cooperation partner DHL the reduced amount of failed delivery attempts means a reduction of unnecessary tours and hence, costs.

Due to the ease of parcel retrieval, the customer decreases efforts for pick-ups. In addition, he gains security for his deliveries. By this, the Paketbutler means a contribution to the dimension of Simplify. In addition, the costumer gains security for his deliveries what may result in an increase of delivery orders. By this, the Paketbutler is also active in the dimension Sell from the perspective of DHL. As original Telco provider, Telekom Deutschland is entering a new area of business: logistics. Hence, the Paketbutler means a share in the dimension Innovate.

3.3 Internet Access & Services for Cars: CarConnect by Deutsche Telekom

In September 2017 Deutsche Telekom announced the release of CarConnect (Deutsche Telekom AG 2017). CarConnect is a retro-fit device for cars which offers mobile internet access for passengers. Connecting the device via the current standard interface for on-board diagnostics (OBD) grants also access to localization and further vehicle data. In fact, CarConnect is not just offering on-board connectivity via mobile radio telephone services but also additional services (Telekom Deutschland GmbH 2017b). Via App, the current position and navigated routes are accessible in real time via GPS. The registered user is notified when the car is moved in his absence or leaves respectively enters a predefined area. Based on this information, Telekom Deutschland promotes an increase in security in case of parking dents, towing or theft. Over OBD the device is also able to gather data about the vehicle status.

Accessing the internet within the car means a reduced complexity in customer processes. Being off-line or arranging tethering with other mobile devices means efforts resulting in inconvenience. Furthermore, the customer gains security for his vehicle. Thus, CarConnect contributes to the dimension Simplify.

With its diverse functionalities, CarConnect creates new features for existing products. Given that cars are not part of the original core business of Deutsche Telekom, CarConnect is a new touch point in a different market and hence, supporting the dimension Innovate.

Developed further, each use case has the potential to cover additional dimensions. For example, all of them are able to contribute to the dimensions Learn or Interact by gathering deep customer insights (Learn) and initiate correspondent communication measures (Interact). But new developments need investments in R&D, IT, infrastructure, knowledge development etc. to be successful. At this point, due to the starting situation and partially initiated activities within the industry, Telcos are in a head start position (further reading in chapter “The Artificial Intelligence Challenge: How Telcos can obtain a Grand Prix for Insights Monetization”). In addition, Marketing and CRM, usually the home of Customer Experience Management are cost driven. Its value creation is based rather on ‘soft’ than on ‘hard’ factors and thereby difficult to measure. But IoT-driven customer journeys are still able to add value for a Telco. How this works is described in the next paragraph.

4 Towards Summit: Value Creation with the IoT

Besides the contributions to the six dimensions, each IoT-based touch point offers a common opportunity: The IoT-inherent access to the internet. By this, each connected device offers the opportunity to gather and transmit data. “The more IoT Solutions scale, the greater the incentive will be to leverage this data” is stated by the GSM Association (GSMA 2015). Thereby, the IoT becomes an enabler of Big Data.

Following the Oxford Dictionary data are “things known or assumed as facts, making the basis of reasoning or calculation” (Oxford Dictionary n.d.). Hence, more or deeper data means a broader basis for decision making. But further processing is needed to generate value with insights: First, processing data can increase the informational value. Hence, it will lead to ‘better information’. But ‘better information’ does not create added value on its own. Applying the better information could lead to better decisions (‘decision agility’) (Wisselink et al. 2016). Following this, the added value of big data is the difference between the outcomes of a decision made without better information and a decision utilizing ‘decision agility’ based on ‘better information’ (Alpar et al. 2016).

Condition of value creation is trustworthy handling of customer information. Besides legal limitations, customers must be aware of the application and dealing with their confidential information within a company. Unconsenting or unbeknown use of customer information will destruct customers’ trust. The aftermath: customer churn and a damaged image. Both with a lasting effect on the entire company. By this, any value creation will be abolished or inverted. Hence, IoT-driven value creation should always prevail the potential risk (as illustrated in the balance in Fig. 4) and strictly respect customers’ privacy.

Fig. 4

IoT-based value creation must prevail potential risks

Especially Telcos are regarded as trustful companies predominantly (Institut für Demoskopie Allensbach 2016). Hence, factoring the risk is important to retain this status. Considering the risk, prospective use cases must be reasonably selected to benefit from the potential value creation. This is valid for both, information-driven applications outside of and within Customer Experience Management. How the definition of value creation is applicable for Customer Experience Management is specified in the following section.

5 Panoramic View: The Meaning of “Learning” in Artificial Customer Intelligence

Transferring the definition of value creation to Customer Experience Management the IoT generates value based on better customer information and its application for agile decision making within CEM. Within the Six Dimensions ‘better information’ is represented by the dimension of Learning. This ‘better information’ should be used for decisions in regards to the other dimensions to benefit from the ‘decision agility’. Therefore, Learning is a key element and basis for the value creation of IoT-based Customer Experience Management.

Examining present approaches in Customer Management, CRM is operating within a limited frame of retrospective data and data quality. Current CRM-Systems are gathering customer information across several channels at a certain point of time with occasional updates. In Customer Experience Management, this information can be used along the customer journey as basis for customer interaction. Therefore, current situation, emotions or events are unknown and cannot always be addressed adequately. Up-to-date changes at the customer side or situational conditions are not considered. In particular, “speed” in fast responses and a quick retrieve of information are crucial for an ideal Customer Experience (Li et al. 2017).

The IoT means a new ecosystem to gain customer information continuously and near real-time. This includes deep customer knowledge based on real customer information instead of punctual broad inference. In fact, this information can be used as market research and deliver real-time customer insights. Considering the six dimensions, this will bring new chances for Customer Experience Management.

But gaining the most value out of ‘better information’ and ‘decision agility’, actions have to be taken immediately to be responsive to the customer’s current situation. And there is a challenge occurring: Continuous and direct reaction on current customer situations is not manually manageable. Therefore, new solutions are needed which must be able to analyze available customer information near real-time. Based on the analysis, the solution must be able to make decisions concerning the customer treatment automatically and trigger appropriate actions. Here, Artificial Intelligence (AI) comes into play.

Artificial intelligence describes computer science applications that aim for intelligent behavior (Bitkom 2017). Therefore, certain core capabilities are needed: perceive, understand, act and learn. In comparison to conventional information processing systems, the elements of understand and learn are novel. Conventional systems are following predefined, fixed programmed rules. In contrast, modern AI-systems are able to train their processing and by this to learn to reach better results or decisions.

Applying Artificial Intelligence in Customer Experience Management the dimension of Learning is basis to understand customers and act accordingly. This means direct and individual customer interaction corresponding to their current needs along the entire Customer Journey. Precondition: IoT-based customer journey design and touch points factoring the six dimensions. But further steps have to be taken to create new experiences.

6 Optimize Your Ascend: The Path to IoT-Based Customer Experience

The way to IoT-based Customer Experience and smart touch points is a progress affected by technological innovations and societal developments. In general, the following steps are providing a frame for the trial of new use cases and applications:

• 1. Rethink your Customer Journey

• 2. Consider IoT as element of your Customer Journey

• 3. Factor the six dimensions in touch point design

• 4. Emphasize the dimension of Learning for value creation

• 5. Optimize Customer Experiences by customer insights

• 6. Deliver immediate customer experience by Artificial Intelligence

All these steps have to be taken under one basic principle: always respect customers’ privacy.

The race for the paramount is already started and competitors are pulling in into the track. Telcos need to embrace the Grand Prix and accelerate now to achieve the winners’ rostrum.