CRM & the Internet of Things: The Perfect Marriage

According to some authors, the Internet of Things (IoT) represents the start of another industrial revolution and will rival past technological advances such as the printing press, the steam engine, and electricity[1].

A recent IEEE publication defines the IoT as the network of items, each embedded with sensors, which are connected to the Internet[2]. That said, there are many other definitions, all of which announce the convergence of our digital and physical worlds. Gartner indicates that 4.9 billion connected things will be in use in 2015 – up 30 percent from 2014 – and will reach 25 billion by 2020[3]. Gartner also predicts that CRM will be at the heart of digital initiatives in coming years and named IoT as the fifth driver of CRM after social media, mobile, big data and cloud. In addition, one of the top takeaways from the 2015 CRM Evolution conference (chaired by Paul Greenberg) is that if companies don’t participate in the IoT, then they’re going to get “Uber-ed”.

In light of these expectations, the post will examine what this marriage between IoT and CRM will be able to offer us in the near future.

For those of you less familiar with the IoT, be aware that there is nothing fictional about any of this. Consider a pair of sport shoes with sensors embedded within that measure the pace, distance, time or calories burned. In this example, the sport shoes is the “Thing” but the thing about the IoT is that is embraces all kinds of devices from vehicles to infrastructure objects to domestic appliances. These objects will be able to acquire, analyze and transmit huge quantities of data that stems from the activity of businesses and individuals. In order to make business sense, all of this data and interaction points must be orchestrated; thus, CRM solutions play a crucial role, as we will see.

Historical Perspective

The first steps towards the development of IoT took place during the early 1990s, when IBM engineers developed and patented an ultra-high frequency (UHF) RFID system. IBM did some early pilots with Wal-Mart, but never commercialized this technology; in the mid-1990s, IBM sold its patents to Intermec. UHF RFID’s prospects would get a boost in 1999, when the Uniform Code Council, EAN International, Procter & Gamble and Gillette provided funding to establish the Auto-ID Center at MIT. Research was made to put low-cost RFID tags on all products to track them through the supply chain, with a serial number being the only feature of the tag. Data associated with the serial number on the tag would be stored in a database that would be accessible over the Internet. Between 1999 and 2003, the Auto-ID Center gained the support of more than 100 large end-user companies, plus the U.S. Department of Defense and many key RFID vendors[4].

In recent years, the rise of the smartphone – which freed people from exclusively accessing the Internet on a desktop computer – in combination with the dissemination of cloud applications (that could be accessed anywhere) were factors that paved the road for the rise of the IoT. It’s no surprise that industry players as AMD, ARM, Cisco and Intel are investing seriously in IoT and API standardization which will facilitate the adoption of sensors, chips or tags in a wide variety of products, systems and infrastructures. Two months ago, Microsoft released Windows 10; it included IoT Core, a slimmed-down version of its operating system intended for operation on “smart” devices that may or may not have screens. Windows 10 IoT Core joins a host of other IoT-compatible operating systems, which work with a variety of open source languages to facilitate the work of the App developers that disseminate IoT solutions.

 The Perfect Marriage

Relationships rely on interactions. Traditionally, people and business interacted through appointments, phone calls, mail or email. Online presence and social media pushed these traditional boundaries, forcing sales, marketing and customer service teams to monitor, communicate and engage with customers online and use online chat, Facebook or Twitter.

CRM solutions are the natural hub to orchestrate all these interactions in an effective and intelligent way, assuring that we are able to manage relationships despite of the diversity of channels available. However, the human being is still limited in the number of interactions he can handle. IoT is changing the landscape dramatically as our “things” are becoming proactive and learning to interact on our behalf.

The main entities that are often associated with CRM are “companies” and “contacts”. However, CRM already manages our “things”. Loyalty cards, resources, facilities and vehicles are just examples of entities being managed in CRM systems. In fact, every company that manages assets under guarantees, service agreements, and maintenance or field service contracts should certainly use a CRM system. At my company, we have a customer that is a good example of this, as they manage roughly 1 million coffee capsule machines on Microsoft Dynamics CRM.

What really matters is that these business processes managed on CRM will improve significantly with IoT, as traditional touchpoints might be eliminated but customers’ expectations will be even higher. Let´s examine these challenges:

Challenges for CRM

 

  1. Rich and Contextual Data: The IoT generates significant quantities of data. Within the proper context, data turns into valuable business information about customer needs, behaviors, location or patterns. CRM can take advantage of this information to anticipate opportunities and create specific tailored services for each customer; however, powerful analytical capabilities must be assured. Cloud services such as the ones provided by Microsoft Azure are important for facilitating the connection of different sources and devices across platforms and for providing advanced analytics capabilities.
  2. Real-Time Interaction: IoT provides real-time interaction. This demands more from a CRM in terms of workflows and process automation in order to improve lead-times and increase customer satisfaction.
  3. Predictive Service: Sensors, chips or tags built into IoT devices can detect potential problems and trigger maintenance requests, which affects warranties and SLAs in addition to allowing the monitoring of the device’s performance. The traditional business scenario of an agent receiving an inbound call and opening a case on his CRM will be replaced by events generated from connected devices, which trigger workflows, notifications and outbound calls if necessary.
  4. Support for Marketing and Sales: As companies learn more about how and where customers are using the products that have been purchased, marketing strategies can incorporate more accurate and timely data about customer needs and behaviors. CRMs should be able to transform insight into action. CRMs should also be proactive about when a product is approaching the end of its lifecycle and needs renewing.
  5. Value-added Services: The IoT has the potential to increase the services offered on top of each sale and make these services a key differentiator between obsolete and innovative products. This transforms the way we market, sell and support products. Traditionally, most business models only relied on the supply chain integration with suppliers in order to sell products. Companies used to know nothing about their products besides sales totals, at least until a warranty was activated. Questions such as, “Who bought it? When or where? How are it being used?” weren’t always easily answered. The IoT, however, unlocks new business models with value-added services that strongly encourage customers to register the product in order to be eligible for warranties and other services. Therefore, brands are relying more on their ability to connect with their final customer. This a process that requires a CRM.
  6. Cost of Operations: As the price of IoT technology continue to decline, IoT will reduce the cost of operations. If we consider that an inbound agent from a contact center can barely respond to 100 calls per day, the IoT contributes towards eliminating bottlenecks as it can reduce many of these costs with support. A recent research published on The Economist argues that “call center agent” is the job that is most threatened by technological advances, with a 99% chance that it will be rendered obsolete in 20 years[5]. CRMs should be able to easily integrate with IoT-ready devices and work with all types of information flows.

 

What’s Next

There are consumers for everything that can potentially be connected, besides the phone, tablet and computer. Consider that clothes, appliances, vehicles, medical devices can all make life easier in this regard. Technology vendors are hungry to market a new generation of IoT-ready products. Companies in general need to innovate in order to be competitive, as IoT is ready to transform products, services and supply chains.

As Manuel Castells assumed, technology is as good as what people choose to do with it[6] and the evolution of IoT will rely on innovative products and the nature of offered apps for our vehicles, houses, machines or wearable devices. The advent of IoT-compatible operating systems such as the new Windows 10 IoT Core are important milestones for this journey. IoT-ready products must be able to support a set of business rules and logic throughout their lifecycles; thus, programming flexibility is mandatory for supporting both existing use cases and future innovation paths.

CRM is critical for exploiting the opportunities with the IoT. For those companies that are now selecting a CRM system but don’t feel ready for the IoT yet, my advice is that you should select a solution that doesn’t limit your abilities in the near future. Although we can´t be sure yet that the IoT is another industrial revolution, I do think that we are witnessing exciting changes to the way we live and do business.

References

  • [1] DuBravac, Shawn: “Digital Destiny: How the New Age of Data Will Transform the Way We Work, Live, and Communicate”, 2015
  • [2] IEEE, “Internet of Things” 2014
  • [3] Press Release from Gartner Symposium/ITxpo 2014, in Barcelona, November 9-13
  • [4] Minerva, Biru and Rotondi, IEEE, “Towards a definition of the Internet of Things (IoT)”, 2015
  • [5] “The Future of Jobs – The Onrushing wave”, The Economist 2014
  • [6] Castells, Manuel: “The Internet Galaxy: Reflections on the Internet, Business, and Society”, Oxford University Press, 2001

(Header image courtesy of Flickr user “dmje”. Available via Creative Commons license 2.0.)

This article was originally published on Jorge Xavier’s LinkedIn. To learn more, please connect with him on LinkedIn or follow him on Twitter.

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