THE CONNECTED HOME
CREATING ADDITIONAL VALUE THROUGH DATA-DRIVEN PRODUCT INSIGHTS
The home is an extension of our personalities. It’s where we spend the majority of our time with friends and family and at any given time we are plugged in and connected to a least one connected device.
Our homes generate a tremendous amount of sensor data and as device manufacturers and solution providers we have the opportunity to leverage all of these individual interactions (sensor points) to improve our go-to-market strategies and product branding, to ultimately build better products and improve the customer experience.
Last week mnubo had the opportunity of attending the annual Parks CONNECTIONS event in San Francisco, where some of the industry’s most influential thought leaders gathered to discuss their experiences and vision in the burgeoning smart home space. Reflecting on the event, we have pinpointed three megatrends influencing the smart home space.
PRODUCT USAGE FEEDBACK – AI IMPACTING THE USER EXPERIENCE
Today, every successful consumer application is powered by AI. Tomorrow, every successful business will be powered by AI. AI and machine learning applications have been in existence for some time, but only now are we coming towards the right richness of data to be able to make more intelligent models that can help transform raw data sets into something more valuable for the customer.
AI and machine learning will further empower service-based/subscription-based business models because we have more data, more intelligence and more customized data science models that can help understand behaviour, performance and patterns.
As AI takes over more of the user experience, it grows beyond just an intelligent interface. With each customer interaction becoming more personalized, AI and machine learning move into an even more prominent position. It will empower companies with ‘real-time focus groups’ that can save them millions of dollars in R&D investments and speed up time-to-market for new products. It also provides companies with a wealth of sales and marketing data that can be used to enhance customer engagements, customer service and serviceability.
OPERATIONAL EFFICIENCIES – REDUCE R&D SPEND AND TRUCK ROLLS
Operational efficiency is one of the key business outcomes in the Industrial IoT (IIoT). While it is also used to justify IoT investments in the consumer space, it is not the primary benefit. With consumer IoT, ROI should be focused on consumer experiences, customer service and building better products…less on operational efficiency because it is still a product at the end of the day. Apart from a smart home service, everything is a one shot product.
The average smart appliance company spends millions of dollars designing new features and applications, but how many of them know that these features are actually translated into user benefits? With historical and real-time product usage insights, device manufacturers can reduce their R&D investment and design features that they know their customers will use. This is one way to connect back efficiency in R&D investment based on real usage and feedback.
Another example can be found in truck rolls. Where truck rolls are sent out for replacement of equipment, service technicians often either don’t have the necessary replacement parts at hand, or the incorrect product was identified as a problem and it is actually something else. Saving the cost of sending out truck rolls and truck rolls that could hit a number of homes in one location is a huge opportunity for cost savings. With insights on the product health/performance you can nail down what the specific issues are or which products are faulty. This can influence the service providers truck roll cost and rollout schedule.
Optimizing spare parts inventory is another opportunity for operational efficiencies. Many companies carry the same amount of spare parts in every retail location around the country. With product insights, you can identify regions or locations that are security conscious or elderly care conscious or green conscious, and store your retail outlets with products geared towards usage.
There are many key metrics to quantify operational efficiency – truck rolls, downtime, maintenance, calls, etc. – but where it really makes a difference is the way that all of this data goes back into building better products and features from a product development perspective.
AFTER-MARKET SERVICES – PRODUCT-AS-A-SERVICE
Connectivity has become commoditized and is no longer a perceivable benefit, so charging a premium for a products connectivity will no longer work. Ultimately, device manufacturers need to leverage things like data and smarter applications to show the value of the service they are offering while possibly offering monetizable services as well. The more you can show value in the service you are offering and the data that is associated with it, the more cooperation and engagement you will get from subscribers.
One of the more interesting use cases that allow the customers to see value can be found in the HVAC market with filter replacements. After-market filter replacements are a great data-driven use case that allow not only additional revenues for the manufacturer, the distributor and the entire value chain, but also the end user because they don’t have to worry about this anymore. How many times in the summer do you find yourself thinking, ‘is my filter clean’ ‘is it ready for replacement?’ .. ‘oh damn its so hot in the house, I have to call somebody and fix it’. You don’t need that when you have IoT-enabled smart devices. Instead, someone is going to say “Hey, your filter is dirty go change it now and guess what, it has already been shipped!”
Usage behaviour patterns allow device manufacturers to create different profiles/clusters of their customers. Device manufacturers do not have to force them into a purchase. They finally have the option of driving very targeted marketing and sales initiatives based on consumption profiles. Going back to the HVAC example, if someone was consistently using 80% of their ACs BTU, they might be better off using a different model. This is a clear opportunity to take advantage of capacity utilization upselling.
Many of us are guilty of using one AC for the entire apartment. But before shutting it down (due to overcapacity) after three hours, if they had two devices they could have it on for one hour and avoid any unplanned downtime… that is a clear upsell opportunity. User consumption and behaviour will drive targeted marketing and upsell opportunities, and device manufacturers are not taking advantage of that today.
There is no doubt that standalone connected products are progressing towards more data-driven smart solutions. In the last year, the conversation has shifted from ‘connectivity and remote monitoring’ to ‘data-driven aftermarket services and improved customer experiences’. While a number of breakthrough technologies have hit the smart home space in the last year, the market is still in an early stage and will continue to see consumer adoption in the form of siloed products and services.
It will be interesting to see how additional stakeholders (i.e retailers and insurance and utility providers) will make their mark and expand on their existing home-related businesses and services. Time will tell!
A big thank you and congratulations to the team at Parks Associates for hosting a great event. We have been attending their events for a number of years and it is clear that they are valuable contributors to the smart home conversation!