Relationship status - Connected; Analytics for Agency

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“When it comes to the Internet of Things, the future clearly belongs to the Things”. I made this brash statement in a previous post (“Cloud encounters of the Fifth Kind”) referring to machine-to-machine (M2M) being the fastest growing component of non-human traffic on the Web. I say “brash” because that sweeping generalization overlooked one other factor – the human factor.

For those on the technology / data / IT / manufacturing / device side of the IoT, the conversation is in fact typically about the THINGS.  My colleagues from the services, financial, media, telecom, retail and health care sectors, however, largely couldn’t care less about such THINGS - what’s important to them is the Customer.  From their perspective it’s not primarily about smart devices or connected cars – it’s the connected customer/consumer that matters.

What does the connected consumer want out of being connected?  A.T. Kearney identifies four motivations in this study, “Connected Consumers are Not Created Equal”:

  • Interpersonal connection (i.e. Facebook, texting)
  • Self-Expression (i.e. this blog, Tweets)
  • Exploration (i.e. curiosity, education, researching purchase options)
  • Convenience (i.e. email, weather updates, ecommerce)

It’s primarily through that last one, convenience, that the internet of devices and things intersects with both the internet of the human consumer and with the business models for providing value over the IoT.  Breaking convenience down a bit further, based on this infographic from AdWeek (“Why the 'Internet of Things' Hasn't Really Caught On Yet”), we find these functions to be in the highest demand:

  • Remote access (i.e. Warm up my car, my house, my coffee)
  • Predictive analytic ability (You will run out of cereal in 13.7 hours – better pick up some on the way home)
  • ‘Push’ notifications   (i.e. Don’t forget tonight’s game, and don’t forget to pick up the kids first)
  • Data aggregation and analysis (No need to turn on the evening news - here’s your top five stories for the day)
  • Personalized recommendations (i.e. Put that shirt right back where you found it - this one goes much better with what you’ve got in your closet.)

Take these five functions to the next level and you get “agency” – your device attaining real smartness by learning your preferences and behaviors from past history and then taking action on your behalf without your direct involvement.

Getting to agency will require some powerful analytics operating behind the scenes, such as:

The potential benefits from agency are limitless, but agency is also very, very scary.  From that same AdWeek infographic, the number one fear consumers have regarding the IoT is privacy and security.  You can’t get effective agency without these devices, and the ominous, anonymous servers behind them, amassing a huge database on you, and analyzing that data often to the point where the device seems to know more about you than you do yourself.

Trust.  Getting to agency requires trust.  Do you remember the first time you entered your credit card number online?  Of fed a cash deposit into an ATM?  I’ve been a victim of identity theft, and will therefore always jealously guard my Social Security number, often to the point of turning down otherwise beneficial transactions (it was a limited breach, but it did take about eight months and the services of a lawyer to sort out).

Agency is where this is inevitably headed, though.  My recommendation is that when your devices are smart enough for agency that you engage the connected customer in tiers.  Don’t make agency an all-or-nothing feature of your offering.  Let the more cautious, less tech savvy customer opt-in to agency at a relatively nonthreatening level.  Next, provide a middle tier where you make lots of recommendations and decisions on behalf of the consumer but give them plenty of opportunity to examine, concur, approve or override.  These two lower levels of agency will require that you provide the customer with a great deal of transparency – transparency into the process as well as the outcome.   Lastly, as trust is built up, agency can be given a freer rein in a more automated tier.

If you are interested in keeping abreast of developments in this arena, I recommended this website, “Center for the Connected Consumer” at George Washington University.  And a good place to get an introduction to the importance of agency in the long term direction of the IoT would be this short video by co-director Donna Hoffman – “Marketing on the Internet of Things”.

When you get to the level of agency, your customer is essentially in a relationship with their smart devices, and all good relationships are built on trust.  So whether you are designing smart devices or writing smart apps, keep that connected customer in mind, as well as the trust you are going to have to bake into the system before your smart device has earned the right to say to that customer: "You are NOT leaving the house dressed like that."

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About Author

Leo Sadovy

Marketing Director

Leo Sadovy currently manages the Analytics Thought Leadership Program at SAS, enabling SAS’ thought leaders in being a catalyst for conversation and in sharing a vision and opinions that matter via excellence in storytelling that address our clients’ business issues. Previously at SAS Leo handled marketing for Analytic Business Solutions such as performance management, manufacturing and supply chain. Before joining SAS, he spent seven years as Vice-President of Finance for a North American division of Fujitsu, managing a team focused on commercial operations, alliance partnerships, and strategic planning. During his 13-year tenure at Fujitsu, Leo developed and implemented the ROI model and processes used for all internal investment and commercial decisions. Prior to Fujitsu, Leo was with Digital Equipment Corporation for eight years in financial management and sales. He started his management career in laser optics fabrication for Spectra-Physics and later moved into a finance position at the General Dynamics F-16 fighter plant in Fort Worth, Texas. He has an MBA in Finance, a Bachelor’s in Marketing, with a Masters in Analytics currently in progress. He and his wife Ellen live in North Carolina with their three engineering graduate children, and among his unique life experiences he can count a singing performance at Carnegie Hall.

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