Customers and Companies have common goals in the Economy of Things

Customers and Companies have common goals in the Economy of Things
18.11.2019 Kathrin Kempf
Using Economy

In the Economy of Things, EVERYTHING becomes digital – our car, clothes, kitchen appliances, the lawnmowers, tools and many more. Whereas in previous years, the Internet could only be used via digital devices like computers or mobile phones, in the Economy of Things everything is connected. Via connected products it becomes possible to bill only the use of the product that remains in the possession of the manufacturer. And customers are increasingly demanding this type of business relationship. They only want to pay for driving a car, watching a movie or using a tool. It is no longer important for them to have a car in the garage, a DVD in the closet or a drill in the shed.

That means, that for the first time in economic history, the interests of companies and customers are in complete harmony. Both sides have the common goal of making product use as intensive and satisfying as possible.

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The Economy of Things is about USING

In a broader context, the Economy of Things is the third wave of digitization:

In the beginning, the Internet was about Research & e-commerce. This has made companies like Amazon and Google big. Then, in the second phase, the users got connected and began to distribute their own content via the Internet. The time had come for Facebook and YouTube.

In the current wave of digitalization, the focus is „Using“ and „Sharing“. Customers want to use digital products and no longer own them. Today, Uber or Netflix are gaining millions of users.

Waves of Digitization

Waves of Digitization
Source: iq! Management Consulting

USERSHIP models are Subscription models

The new business models for the usage-based Economy of Things are subscriptions. Various variants exist. Uber bills the distance driven; Netflix customers pay monthly fees. Heidelberger Druckmaschinen cashes up per sheet printed. From the company’s point of view, sales are being postponed into the future, but they are becoming more stable and in some cases higher than the product price would have been. In addition, the great advantage is that the customer relationship can be intensified immensely via a subscription model and a connected product.

Raise of Usership

Raise of Usership in the Economy of Things
Source: iq! Management Consulting

Users and Companies have common goals in the Economy of Things

After selling a DVD, the publisher usually didn’t care how the customer liked the movie or how often they watched it. Netflix has a completely different approach: the company lives from the fact that the customer appreciates the film offer and maintains the subscription. And Netflix does a lot for that: The Online video provider analyses the preferences of its customers in detail and tries hard to identify recommendations for them that they also like.

Common goals of Companies and Customers

Common Goals of Customers and Companies in the Economy of Things
Source: iq! Management Consulting

The same applies to the automotive industry: In the past, it was completely irrelevant for Mercedes or BMW how often their vehicles were used and where they went. Certainly, product use should be so pleasant that the customer remained loyal to the brand. But this was to be achieved through convincing product features. Apart from service and maintenance orders, there were no points of contact with the customer until the next vehicle purchase. Uber, on the other hand, is highly interested in getting to know the routes and routines of its customers in order to serve them as well as possible. In addition, the driving experience must be optimized, otherwise the customer will already be with the next provider on the next trip.

These two examples show that the interests of companies and customers (who become users) are aligned in the Economy of Things. They both want the same thing: a satisfactory product experience.

Conclusion

Something completely new is happening in the Economy of Things: corporate and customer interests are in unison. This requires companies to deal decisively with the needs and preferences of their customers. Product usage must be analyzed and understood (read more about Data analysis here). On the other hand, it opens up incredible sales potential. If the customer is satisfied, then he will maintain the customer relationship and be a long-term revenue generator.

Iq! has shown how this works in the new Subscription Funnel, which depicts customer management within a Subscription Model (see Blog article: “The Sales model for the Economy of Things – the Subscription Funnel”).

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