In the Subscription Economy, the customer becomes a user

In the Subscription Economy, the customer becomes a user
22.07.2017 Rainer Wiedmann
Nutzer

Products are connected with the Internet. This makes them more „intelligent“, allows them to be controlled and reveals information about their use. Services tailored to product usage, which are often sold by subscription, supplement the IoT offering and transfer companies to Subscription Economy. These services can be simple things like remote control of the product or more complex services such as monitoring product operation and warning of product failures. For most manufacturers, direct interaction with the customer and the service business are completely new. For the first time they have a direct channel to the end customer. However, this customer also wants to be looked after for the entire duration of product use. The customer becomes a user.

The customer becomes a user

Manufacturing companies with indirect distribution placetheir products into distribution channels such as wholesale or retail and the „business“ is done for them. In most cases there is no contact to the end customer. This changes with the digitalization of the product world. The manufacturer can suddenly address the product and thus the user. The user registers with the company to take advantage of services and updates. B2B companies suddenly become companies with B2C customer relationships. The anonymous customer becomes a „transparent“ user. Product usage can be meticulously recorded and analyzed. This offers manufacturing companies enormous opportunities, but also brings great pressure to change.

Kunde zum NutzerThe customer becomes a user
Source: iq! Consulting

The customer life cycle is changing

Up to now, the customer life cycle has consisted of steps in preparation for the purchase, the purchase itself and a somewhat diffuse loyalty phase. The digitalization of the product world brings with it a new long phase: usage. For the first time, companies can understand how, where, when and why their products are used. In order to create added value, however, this data must be correctly evaluated, interpreted and finally translated into useful services. This is more difficult than it sounds. Manufacturers must first learn from the usage data what the driver really needs in order to optimize the time spent in the vehicle or the homeowner, in order to reduce the total cost of owning a home in the long term.

Usage cicleThe IoT customer lifecycle contains a new phase – the Usage Phase
Source: iq! Consulting

But even at the upstream and downstream stages, there are some new requirements for manufacturing companies.

Awareness & Information phase

The customer must understand the many new functionalities and services of the connected product. As potential customers only have a limited attention span, appealing and well-structured information is essential. Especially important are convincing USPs that bring added value to the customer in as many usage situations as possible. For example, „connectivity“, „intelligence“ or „ease of use“ are not real USPs, but product features that the customer expects. „Time savings“, „lower costs“ or „fewer failures“ can be more appreciated by the user.

Purchase Phase

It is important that all sales channels have sufficient know-how about the smart products. Sales staff should be trained, have demo material and be able to demonstrate the products. There should be clearly structured information and videos in the eShop. It makes sense to contact a service employee who can answer further questions. In indirect sales as well, the sales staff should have sufficient knowledge about the connected offers.

In the case of an IoT product, a service contract is often concluded in addition to the sales contract. The service relationship is new for many manufacturers and must be implemented and structured accordingly.

Usage phase

Networked products bring with them a new kind of complexity. For commissioning, software is installed and a corresponding app is available. With some systems, several products can be networked with each other. In the B2B area, interfaces with existing company systems must be configured. With this set-up, the customer must not be left alone. Support offers, an appropriate hotline for problems, help with the installation of updates and additional programs support the customer to put the product into operation correctly.

Once in use, the product creates huge amounts of data for the company. It is important to meet the data protection requirements.  Then the work really begins: the data must be analyzed and prioritized.  At best, they deliver results that lead to new service offerings and improve existing services.  The real added value of the intelligent product lies only in the intelligent linking of services.  Only when the intelligent car recognizes a need for maintenance, obtains cost estimates from several workshops and proactively synchronizes a repair appointment with the calendar does it make the customer’s work easier.

Loyalty phase

After some time of use, the customer should have become aware of the advantages of the connected products. Only if they feel that the IoT product really helps them in some respects they will intensify their use and expand their range of used products.

Conclusion

An intelligent product offers real added value in combination with sensible services. In a manufacturing company, this service business is usually new and capacities must be created for it. The relationship with the customer now extends across the entire product life cycle. Most manufacturers are not familiar with this continuous contact with the customer. Additional capacities are needed and the new tasks must find their place in the organization. IoT offers can only be successfully placed in the market once manufacturers have made the transition to service providers and focus on the user.

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