Can customer experience thrive in the age of the io t

A Business Value Exchange Research Report
Can Customer Experience
Thrive in the Age of the
Internet of Things?
A research report for CMOs and CIOs on consumer
sentiment around the Internet of Things.
businessvalueexchange.com
May 2015

2
Contents
Introduction
A Digital Extension of the Physical World
Evolving Customer Relationships
Is the Internet of Things a Reality?
Executive Summary
Research Findings
The Survey
Research Findings
Leave My Data Alone
Take My Data and Give Me Products
Conculsion
Delivering Consistency
What Next?
Methodology
Footnotes
3
3
4
6
7
8
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9
10
14
18
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21
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The Internet is extending into the physical world and, as such, the amount of data available
on these brand interactions is set to dramatically increase. Eye movement, heart-rate, body
temperature and a number of other physiological human responses to brand messaging,
logos, colours, shapes and type fonts will produce real-time data. Companies can use such
data to personalise and improve their products and services, while also building stronger
customer relationships.
All of this data enables brands to analyse and measure consumer behaviour in real-time.
But how quickly will this technology be available? According to IT specialists TATA
Consultancy Services, 22% of European companies are collecting data from digital sensors
or embedded digital devices. A further 23% plan to use sensors to collect data by the end
of 2017.[1]
This adoption of sensors and connected devices means that we could be looking at a future
where IoT technology is ubiquitous. Tech ﬁrm Cisco has glimpsed a future where
machine-to-machine (M2M) communication and technology is the norm and has predicted
that 99% of physical objects will eventually become part of a connected network.[2]
3
Introduction
A Digital Extension of the Physical World
The amount of touch-points an organisation has with customers is about
to grow exponentially. But what does this mean for CMOs and CIOs?
Whether you believe the day of the Internet of Things (IoT) is dawning or
not, what can’t be denied is that sensors are everywhere. People are
interacting with brands in ways they never thought possible before.
Packaging, posters, appliances, cars, clothes – all of these things emit
data that can influence how a company interacts with its customers.

4
What does this mean for brands and organisations – particularly their CMOs and CIOs?
Relationships with customers used to be relatively straightforward and, in the past,
post-sale communication was usually sporadic. But connected devices have added a new
dimension to the way brands communicate with their new and existing customers and the
IoT strengthens the transition from transactional to ongoing service relationship. This new
layer of customer interaction will challenge organisations trying to deliver a consistent
experience across all customer touch-points.
The new sensor-laden devices aren’t the only audience touch-points – there are still a
multitude of others oﬄine, plus everything online, including websites and social media –
but they are adding to the proliferation of customer interaction. The question is, how can
CMOs and CIOs provide a consistent customer experience in a sensor-driven world?
Evolving Customer Relationships
How companies are gathering (or plan to gather) digital data
from their customers
Currently do this
Plan to do this by end of 2015
Don’t plan to do this
by end of 2020
Via wearable digital devices or devices that end customers can
attach to other products not made by the respondent’s company
13.7% 18.5% 19.4% 8.5% 39.8%
Via digital sensors and/or other digital devices embedded in or
attached to company’s products used by customers
21.8% 22.7% 19% 7.6% 28.9%

5
Currently do this
Don’t plan to do this
by end of 2020
Via digital products that the company sells and distributes
online to customers’ computers
31.8% 24.6% 20.9% 8.5% 14.2%
Via other digital online connections to customers
41.7% 26.5% 15.6% 9% 7.1%
Via continuous monitoring and analysis of customer comments
in public social media sites
49.3% 20.4% 18.5% 5.7% 6.2%
Via mobile apps for customers’ devices
50.2% 26.1% 12.8% 5.2% 5.7%

6
The Internet of Things is the most over-hyped technology in development today. That’s
according to Gartner’s 2014 Hype Cycle Special Report [3]
.
The research company claims that the IoT is around five to 10 years away from real
productivity and that it’s currently residing at the “peak of inflated expectations”. It still has
to go through the “trough of disillusionment” before it scales the “slope of enlightenment”
to reach the “plateau of productivity”.
On reading that report, some might think that the IoT is currently part of an unimaginative
Dungeons and Dragons game. But in reality, what this equates to is that the IoT is in an
early stage of development. Companies and organisations across the world are taking it
very, very seriously and are pumping money into developing and preparing for it.
The UK government recently announced that it will be doubling the funds available to UK
technology companies working on connected everyday devices, adding an extra £45m to its
budget [4]
. Salesforce, the customer relationship management specialists, has launched a
$100m investment fund for companies creating apps and connected products that tap into
its Salesforce1 platform – the core of its IoT strategy[5]
. And tech magazine Wired has
pointed out that 17% of the world’s software developers are working on IoT projects, with
another 23% planning to start in the next six months[6]
.
And to bring this full circle, while Gartner currently say the IoT is at the peak of inflated
expectations, it also claims that the IoT will include 26 billion units installed by 2020 and will
generate incremental revenue exceeding $300 billion[7]
.
So is the IoT a reality? Yes, but it’s still in its infancy and needs time to develop.
Is the Internet of Things a Reality?

7
The IoT is still in the early stages of adoption and, as such,
consumers aren’t aware of the beneﬁts of the technology.
People need to see productive displays from the technology
before they buy into it.
Men are more comfortable than women when it comes to
sharing data on connected devices to gain personalised
products and services.
CMOs and CIOs need to create consistent experiences across
all devices and brand touch-points if they want to win the
trust and loyalty of consumers.
Young people are more open to the beneﬁts of the IoT than
older generations.
The majority of people, regardless of age or gender,
are uncomfortable with sharing data with brands over
connected devices.
CMOs and CIOs need to put in place strategies that will
deliver consistent customer experiences while the IoT is still
in its infancy.
Executive Summary

8
Research Findings
Our survey of 1,000 people asked consumers about their openness to interacting and
sharing data with IoT connected devices and services.
Here are the ﬁve key takeaways from our research:
The Survey
Five Key Takeaways
Regardless of age, people are
uncomfortable sharing their
data with companies and
brands on connected devices.
Openness/interest in having
internet-connected
touch-points with brands
decreases with age.
There’s more openness IoT services when
people feel like they’re getting something
that benefits them, but doesn’t appear to
be marketing related.
People were more willing to track/share
health measurements with their
physicians than they were home security
data with companies. This suggests a
high level of distrust around how
companies would use the information.
Males are more open than
females to the benefits of the
IoT, especially when it comes
to sharing data in order to
get more personalised

9
To try and gauge the IoT readiness of consumers, we designed a ten-question survey using
Google Consumer Surveys, asking consumers about their openness to interacting and
sharing data with IoT connected devices and services.
We wanted to find out whether people are open to the kind of benefits the IoT offers. For
instance, light bulbs. Everyone needs light bulbs. The problem is, you never know when
you’re going to need new ones. If you had a smart home, you could get a notification that
you needed a new light bulb just before it died. A message could be sent to your
smartphone and light bulbs could even be put on to your online shopping list at your
favourite light bulb store. What’s more, based on your personal preferences, details and
history, your favourite light bulb store can offer you deals on your preferred light bulbs
when you need to buy them, giving you a more personalised service. It’s marketing and
advertising at its most useful – where it goes beyond being something that’s interruptive
and becomes something that’s genuinely beneficial to consumers.
The results from this survey gave us a unique insight into how consumers currently feel
about sharing their data and interacting with connected devices to gain personalised
Through this data, CMOs and CIOs can get a better understanding of whether people are
ready for consistent experiences across all customer touch-points and what they need to
do to prepare for the wider adoption of the IoT.
Research Findings

Wearable Tech
20%
10
One of the main problems facing CMOs and CIOs, when it comes to creating a good user
experience on the IoT, is that it’s currently in the stage of early adoption. If Gartner is right
and the IoT is currently five to 10 years away from being on the “plateau of productivity”
then there’s still a long way to go before the technology is fully integrated into people’s
daily lives. This means, right now, people aren’t tuned in to the benefits the IoT can bring
and our survey reflects that.
Leave My Data Alone
Which types of devices would you NOT want to
share personal information with a company or brand?
None of the Above
54%
Health-Monitoring
Device
24%
Smart Home Security
31%
Smart Home
Appliances
Smart Car/Auto Tech
20%
18%

11
The main stumbling block is sharing data. CMOs and CIOs know they need to create a value
exchange to build digital trust with their audiences in order to innovate. And the vast
potential of data sharing that comes with the IoT is exacerbating this concern. The survey
shows that confusion around the IoT and how companies use data seems to have resulted
in distrust and uncomfortability with sharing personal information.
For instance, one of the most talked about benefits of the IoT – and the one most likely to
be adopted quickly – is the ability to track more data on home appliances and to make
them smarter. But when asked about this in the survey, 71% of females and 50% of males
were uncomfortable with sharing information with companies in order to get more
personalised home appliances products and services.
The lack of trust when it comes to personal data goes beyond the online world and into
touch-points in the offline world. When asked if they were comfortable with brands
contacting them with personalised offers via mobile, when consumers were shopping in
their store, 46% of males and 48% of females said they it made them uncomfortable. The
concern about companies using consumer data and making personalised offers based on
information gained from connected devices on the IoT differed among the various age
brackets.
71%
of females were uncomfortable
with sharing their information
50%
of males were uncomfortable
with sharing their information
of females of males
OFFER 48% 46%
were uncomfortable with brands contacting
them with personalised offers via mobile

12
The older generation were much more uncomfortable with data sharing and company
actions based on data sharing than the younger generation. 67% of people aged 55-64
were uncomfortable with personalised oﬀers being sent to their phones while in store,
versus 21% of people aged 18-24.
The older generation were also against general product recommendations based on
location, with 75% of people aged 65+ uncomfortable with this compared to 37% of people
aged 18-24.
67%
55-64
21%
18-24
VS
How comfortable are you sharing personal data with a company
through a smart or internet-connected device in order to receive
a more personalised customer experience?
23%
comfortable
54%uncomfortable
8.4
comfortable
45.2%
uncomfortable
13%
comfortable
69%uncomfortable
Male Female
Overall

13
How would you feel if a company tracked and notified the status of
your house appliances (e.g. Stove on, doors unlocked, sink running)?
29%
comfortable
50%uncomfortable
9.1
comfortable
49%
uncomfortable
16%
comfortable
71%uncomfortable
Male Female
Overall

14
Take My Data and Give Me Products
Wearable Tech
15%
26.4% 7.9%
What types of devices would you most likely use to share personal
information with companies or brands (E.g., To get a better service
or to lower costs)?
None of the Above
68%
Health-Monitoring
Device
12%
Smart Home Security
14%
Smart Home
Appliances
Smart Car/Auto Tech
10%
9%
16% 3%
18% 6%
In order to get a better service or product, people feel more comfortable sharing data
using wearable tech than any other device. Despite the majority of people being against
sharing data with companies and brands over smart home security devices, people were
more open to using devices to monitor home security (17%) than they were automating
home appliances (13%).

15
Out of all our scenarios suggested in our survey, consumers were most interested in having
their smartphone inform them when there was congestion along their normal route to
work. This suggests that people are open to M2M services and communication, as long as it
benefits them and doesn’t appear to be a form of up-selling or marketing.
There is also a gender divide when it comes to openness to the IoT. Men seem much more
open to the kinds of benefits that the new technology will offer. For instance, when we
asked about the possibility of brands communicating offers to consumers if a connected
device needed fixing or replacing, 25% of males found this desirable compared to 19% of
females.
Again, this difference in openness to the IoT between genders transfers to touch-points
that straddle both the online and offline worlds. When we asked how comfortable people
would be if a brand sent them personalised loyalty and promotional offers via their mobile
devices while they were shopping in-store, 33% of males were comfortable with this
compared to 27% of females.
of females of males
19% 25%
found it desirable for a brand to communicate
offers to customers if a device needed fixing
or replacing
OFFER
27%
of females were
comfortable with
personalised offers
while shopping
27%
of males were
comfortable with
personalised offers
while shopping

16
Which scenarios would you consider using a smart or
internet-connected device that shares personal data/information with
a company?
How comfortable would you be if your mobile device sent you notifications
when your normal route to work was experiencing congestion?
YES to tailored
products
17%
Not willing to share
data with companies
24%
To monitor home
security
17%
To connect
multiple devices
16%
To suggest
products tailored
to my interests
10%
None of the
Above
47%
To automate
home appliances
13%
18%
uncomfortable
38%uncomfortable
22.8%
very
uncomfortable
29.4%very
comfortable
Overall

17
How comfortable would you be if a brand sent you personalised
loyalty and promotional offers via your mobile device while you
were shopping in their store?
Would you find it desirable if brands contacted you when it was time to
replace past purchases (vacuum/water filters, light bulbs about to die,
worn out trainers)?
33%
comfortable
46%uncomfortable
16.1%
very
comfortable
37.8%
very
uncomfortable
27%
comfortable
48%uncomfortable
Male Female
Overall
of females
of males
60%
58%
19%
25%

18
The results may show that people - particularly the older generation - aren’t quite ready
for the IoT. Perhaps this is because, as Gartner pointed out, the IoT is still five to 10 years
away from becoming a productive technology that seamlessly fits into everyone’s
day-to-day activities.
But can organisations afford to not start planning how their customer experiences will look
when the IoT does become a reality? The answer is no. Consider past technology trends like
cloud computing and bring your own device (BYOD). Many companies stuck their heads in
the sand when these innovations moved from the fringes into the mainstream. These
companies were left with outdated IT policies and archaic infrastructure, battling desperately
to retrofit technologies that competitors had planned for and adopted in the early stages.
The IoT has the potential to redefine the relationship between humans and things. For the
companies that want to provide consistent experiences across all customer touch-points,
there are certain things that need to be considered, starting with what the customer wants.
In order to deliver consistent experiences across all touch-points, companies in the age of
the IoT need to know their customers and be relevant to them, as well as showing they are
trustworthy, competent, likeable and available. And herein lies the rub – as our survey
shows, there is a lack of consumer trust, especially concerning how companies might use
personal data. Without trust it’s hard for companies to prove that they can be all those
other things.
And trust is hard to gain when the news is full of stories about data breaches. A recent
example is American retailer Target, which suffered a data breach that affected an
estimated 110 million people[8]
. While data breaches are terrible things, what made this one
Delivering Consistency
Conclusion

19
stand out is that the hackers allegedly gained access to Target’s systems using login details
stolen from a heating, ventilation and air conditioning company that carried out tasks like
remotely monitoring energy consumption and temperatures at the company’s stores.
After news of this broke, Stephen Boyer, CTO and co-founder of BitSight, a company that
specialises in third-party risk management, told CIO.com
“In today’s hyper-networked world, companies
are working with more and more business
partners with functions like payment collection
and processing, manufacturing, IT, and human
resources. Hackers find the weakest point of
entry to gain access to sensitive information, and
often that point is within the victim’s ecosystem”
Stephen Boyer, CTO and co-founder of BitSight [9]
Building security into IoT connected devices is a priority for all organisations that leverage
the technology. Any breach could end up with a loss of data, as well as disruption to
customer experiences. This, in turn, could lead to losing customers, potentially to
competitors. Brands and organisations won’t be able to deliver consistent customer
experiences if they are constantly vulnerable to attack.
“While the Internet of Things will connect and unify countless objects and systems, it also
presents a signiﬁcant challenge in fending oﬀ the adversary given the expanded attack
surface,” said Mike Armistead, vice president and general manager, Fortify, Enterprise
Security Products, HP.

20
“With the continued adoption of connected
devices, it is more important than ever to build
security into these products from beginning to
disrupt the adversary and avoid exposing
consumers to serious threats”
Mike Armistead, Vice President and General Manager, Fortify,
Enterprise Security Products, HP
If smart security precautions are put in place – precautions that reassure consumers – then
the IoT becomes open for providing the kind of experiences that will truly benefit people.
However, more needs to be done before the technology becomes accessible.
Right now, too much data resides in silos. Until common standards are introduced so that
data can be shared without risk to privacy, the IoT won’t properly take off. A move from
vertical siloed data to horizontal secure accessible data is needed before consumers can
experience the benefits of the IoT and M2M communication. If this doesn’t happen then
what we’ll be left with is proprietary experiences that don’t give a detailed, relevant and
nuanced picture of consumers’ behaviours and actions.

21
What happens when the IoT is fully functioning, productive and part of our daily lives? We
already know that the IoT will shift customer experience beyond web and mobile sites and
the real-world. But rather than exporting the experiences that are offered now onto a new
technology platform, different and innovative ways to build awareness and encourage
action (be it a purchase, sign-up, or something else) need to be developed. Bringing
together data from a number of sources, including sensors, means that consumer needs
can be anticipated. As such, the experiences can’t be reactive or interruptive – many of the
devices will be in people’s homes, after all, and won’t be built for that kind of messaging.
Instead, experiences will have to become beneficial to the user, where offers are
contextually relevant and based on behaviours, interests and history.
For the marketing function, this could mean an end to scatter-gun approaches to consumer
targeting. Instead, offers and services will be delivered to the people that need them, when
they need them and, perhaps, before they even know they need them. The technology will
be there to ensure businesses don’t waste money on irrelevant advertising and marketing.
These experiences need to be seamless. They need transfer from channel to channel and
from connected device to connected device without complication and without losing any of
the impact or customer benefits.
And to get this done there has to be a huge commitment to understand what a business
wants to achieve by adopting the technology, how it’s going to affect internal
infrastructures and policies and whether it’s beneficial to the audience. This is something
CIOs and CMos need to work together on. As Kevin Laahs said in a recent BVEx post,
What Next?
“Focusing on how you can leverage connectivity to better
service your clients, employees and citizens is something
that should be at the front of every CIO’s mind and you
should be doing so safe in the knowledge that the Internet
of Things means there are no barriers to what is possible.
The major challenge is in figuring out what you want to do
- not how to do it”
Kevin Laahs

22
We designed and conducted a ten-question survey using Google Consumer, asking
consumers about their willingness and openness to the benefits of the Internet of Things.
The questions were each designed to be stand-alone. Each question received 988 to 1,022
responses and was shown to a randomly selected participant, independently of the other
nine questions.
The questions were shown across a network of premium online news, reference and
entertainment sites, where it was directly embedded into content. On the web, respondents
answered questions in order to gain access to specific content; on mobile, respondents
answered questions in exchange for credits for books, music and apps.
Users either answered demographic questions themselves or the Google platform inferred
it, based on the respondent's browsing history and IP address. The Google Consumer
Surveys platform employed stratified sampling – using the most recent Current Population
Survey (CPS) Internet use supplement as its target population – in order to maintain a
representative allocation of respondents across survey questions. Upon survey completion,
it used post-stratification weighting to compensate for sample deficiencies.
Methodology

http://sites.tcs.com/stateofdigital/region/europe/
http://www.forbes.com/sites/quora/2013/01/07/how-many-things-are-curre
ntly-connected-to-the-internet-of-things-iot/
http://www.gartner.com/technology/research/hype-cycles/
http://www.bbc.co.uk/news/business-26504696
http://www.zdnet.com/salesforce-launches-100-million-dedicated-fund-for-i
nternet-of-things-7000033430/
http://www.wired.com/2014/07/platform-wars
http://www.gartner.com/newsroom/id/2636073
http://www.cio.com/article/2379701/data-breach/target--up-to-110-million-a
ﬀected-by-data-breach.html
http://www.cio.com/article/2378946/data-breach/target-breach-happened-b
ecause-of-a-basic-network-segmentation-error.html
1
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3
4
5
6
7
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Footnotes
23

Nobody has all the right answers on how to stay ahead of the competition and be
agile in the current market environment. In this increasingly uncertain world,
what’s required is combined wisdom.
Business Value Exchange is the place where you can explore different perspectives
on how digitisation is advancing today’s enterprises - whether that’s delivering
a better experience for the customers, empowering employees, or enabling
greater innovation.
The Business Value Exchange research paper series offers you insights into
audience behaviour and sentiment.
Read it, be inspired and deliver even greater value as the digital leader of your
business.
Take a look at more of our resources on the Business Value Exchange website.
Businessvalueexchange.com is brought to you by HP Enterprise Services,
in partnership with CIO Magazine and IDG.
Read it, be inspired and deliver even greater value as the digital leader of your business.
Take a look at more of our resources on the
Business Value Exchange website.
Businessvalueexchange.com is brought to you
by HP Enterprise Services, in partnership with
CIO Magazine and IDG.
Copyright © 2014 HP

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