The Internet of Things to come: How Nespresso, Apple, Nest grind out predictability

 
April 13, 2016 | by Bryan Pearson

Courtesy of Nepresso

Smartphone technology can warm my feet, water my grass and brew me a latte machiatto. What it can do for retailers, however, may still be brewing in the minds of consumers.

Increasingly, retail products are exploring Internet of Things technology (IoT), or the ability of everyday objects to receive and send information through network connections. As more brands adapt this technology, it has the potential to provide many benefits to consumers, but it also has the capacity to change retail, because the technology also provides consumers the means to filter out the exceptional experience from the mere expected one.

An apt case in point arrived to me recently courtesy of Nespresso, the home-order coffee service. The online operator of the Nespresso Club has introduced a Bluetooth-enabled coffee machine, Prodigio, which works with my smartphone to brew my coffee, track my replenishment needs and simplify machine maintenance.

Such digital technology will slowly reshape what today's consumers expect from IoT-enhanced products — and in turn influence their retail expectations  — in the near future.  One compelling finding reveals the IoT's power to change shopper behavior: 27 percent of consumers who said they used to hate shopping now love it because of their wearable IoT devices such as smart watches, according to a survey of more than 1,000 consumers by COLLOQUY. Fifteen percent of those surveyed said they look forward to expanding their use of wearable technology.

Utility + service, a prodigious blend

Wearables such as the Apple Watch may not have surpassed mainstream consumption just yet, but the IoT is approaching it, fast. For me, the technology may soon expand to my daily cup o' Joe.

For the unfamiliar, Nespresso is an online service that supplies each member a compact brewer and a wide offering of color-coded coffee pods. Since joining the Nespresso Club in 2010, I’ve noticed the brand's steady efforts to amp up the customer experience.

In 2015, for instance, I received a customized package from Nespresso that included two sleeves of coffee pods, neither of which I’ve tried, but both intense blends I tend to like. A note with the package explained the pods were especially selected for me, making for an experience I will remember.

Now Nespresso is giving me the ability to better control that experience with Prodigio, its first connected machine. Through its app, Prodigio could prepare specific brews on a schedule, alert me when my stock of pods gets low (I can reorder with the touch of a button) and advise when the machine needs to be cleaned of built-up water impurities, or descaled.

Not bad for a little coffee machine. The scheduling feature is not substantially different from the good old-fashioned timer on a coffee maker, but it's cooler because I get to set it via the app. The pod tracker and reorder function is a great mechanism for enhancing utility and sales — it’s just so darn easy to tap the re-order button, and fun to choose a new blend while on the fly. And maintenance notifications not only ensure the machine operates well, but also encourage customers to order more descaling services, introducing the opportunity to enhance a retail revenue stream.

If Nespresso would just close the loop to auto replenishment, then we would really have something.

We want more

And that desire alone speaks volumes to what retailers can expect from progressing consumer expectations.

It's the old "give them an inch" axiom, though perhaps in this case we can apply it to coffee: Give them a short pour and they'll ask for a long one (or lungo). As the little girl in the AT&T commercial put it: We want more, we want more.

Today, dozens of branded items, including an array of wearables, use IoT. However, it seems to me niche products have the greatest potential to redefine the customer experience now. Products such as Droplet, a smart watering system that uses weather station data, soil samples and plant information to determine when, where and how much water to dispense. Or Digitsole's Smartshoes, smartphone-controlled shoes with adjustable heating, shock absorbency and tightening.

Whether newly created products or existing ones adapt the Internet of Things, three key qualities are essential if a retailer wants to build on its successes and introduce this sort of sizzle into its own relationships:

The ability to anticipate: The products foresee a practical or relevant consumer need and provide a simple, but somewhat shiny, solution that provides help along the way. Nest, the home climate-control device, markets itself not simply as an automated solution to the thermostat, but as a lifestyle accessory that complements the contemporary home.

The ability to earn trust: Retailers and manufacturers that capitalize on IoT rely heavily on hardware to deliver, but trust secures customer engagement. Apple, for example, markets trust as a key product feature. This is necessary, because without trust, consumers would not provide the personal information required for Apple to make the device-to-device connections that sell its products. Earning that trust means delivering (or over-delivering) on the promise of service and easy use.

The ability to jump: If 27 percent of consumers who once hated shopping now love it because of IoT, then retailers have at their fingertips a powerful purchase influencer — if used correctly. With the right analytical tools, they should be able to identify customer behavioral patterns that hint at unmet needs. This will only work, however, if IoT technology is easily integrated into the retailer's own marketing and replenishment systems, so retailers have to ensure the product is built to suit this consideration.

The trick, as always, is wowing customers with products and services they do not expect. Consumers have an ability to adapt to technology faster than technology is able to advance itself — possibly faster than the time it takes to replace my lungo coffee pods order, as Nespresso has made evident to me.

The Internet of Things itself is not good enough. It must be the Internet of things to come.

For more insight on IOT, check out the Interactive Customer Experience (ICX) Summit which features a session on IoT on June 2. Learn more here.


Topics: Connectivity, Consumer Behavior, Customer Service, RFID Technology, Technology


Bryan Pearson / Bryan Pearson is President and CEO of LoyaltyOne Inc. and the author of the best-selling book The Loyalty Leap: Turning Customer Information into Customer Intimacy.
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