Can the Internet of Things (IoT) increase customers’ engagement in a loyalty programme?

Pierre Boces, Head of Product Marketing & Consulting
17 May 2016

With the inexpensive addition of sensors, captors and microchips to any physical product and the emergence of specialized internet connecting million of objects, a digitally-connected physical world has become a reality. It seems like the right time to reflect on how the Internet of Things (IoT) can become a new opportunity to increase customers’ engagement and build a stronger relationship with them.

More specifically, we will examine here how IoT could increase customers’ engagement in loyalty programmes.
IoT seems to be a great extension to loyalty programmes

IoT provides many points of interactions available through objects already blended into our environment. Those devices extend the number of points of interactions already used by loyalty programmes.

In fact, IoT has all the characteristics that make modern loyalty programmes successful: the ability to take decisions based on big amounts of customer data, coming from a wide range of channels that provide real-time and real-life answers to consumers in a very personalized way.

Loyalty programmes maximizing the use of IoT should interact better with customers and will increase their engagement in a long term relationship with the brand and in the programme.

IoT will amplify the need for Big Data

With millions of physical objects sending data potentially convertible into priceless insights, IoT will reinforce the use of Big data tools and solutions.

Brands, merchants, retail banks with loyalty programmes will need to position themselves to access and crunch those data.

The new insights generated by IoT will provide opportunities to reach new levels of targeting and personalization of loyalty programmes.

A bed that communicates how bad the sleep of their owners was can generate the communication of offers for spa sessions, discounts on new mattress, yoga classes…etc.

Taking efficient actions based on the information collected will be key to this new way of engaging with customers.

IoT will stress the need for data privacy

With zillion of information accessible on how customers live their life, brands merchants and retail banks with loyalty programmes will need to be cautious in their exploration and exploitation of the data.

Trying to be too intimate with a customer may lead to the inevitable inappropriate communication and may generate some violent reactions.

The information communicated from a bed that there was a lot of unusual and wild activity during the last night may end-up in the mobile of the wrong recipient.

Of course the traditional opt-in and opt-out process will be put in place but those mechanisms will have to be proposed to customers for potentially any physical object with which we interact.

Will we do an opt-in/opt-out for each object, or multiple times for certain categories of objects, or only once with whoever aggregates the data for multiple objects?

Will we have the possibility to ask and ensure that the data coming from objects we interacted with will be deleted?

Conclusion: IoT multiplies exponentially some of the challenges loyalty programmes already face

With the Internet of Things, a whole new set of possibilities will soon be available to brands, merchants, banks with loyalty programmes.

Loyalty programmes, promotions, deals, discounts will all exploit those newly generated insights coming from millions of objects, if they can access the data.

Brands, merchants, banks will engage even better with their customers. However, they will have to overcome challenges they already face but which will be exponentially multiplied with IoT: more big data to manage, more accurate opt-in and opt-out mechanisms, and more caution to take for the interpretation of data and delivery of messages.

But the real question to sort out first is: who will access and own the data in the first place? The seller of the connected object? The provider of the specialized IoT internet? Aggregators of data?