The Internet of Things (IoT) digitizes the product world. A digital product may be enhanced with a vast array of Services. Lawn mowers do not only mow any more, they are able to measure humidity or the length of grass, to turn on the irrigation system, to submit error codes to another device, to be telecontrolled, etc. A digital product collects data constantly. This data can be translated into other Services. The potential IoT Service portfolio is abundant. But often, less is more. Services should not be added just because they are possible now. Every Service should be designed to fulfill a distict and proven customer need.
IoT Service portfolio: reach vs. functionality in the Connected Car market
IoT Service portfolio: Less is more
Source: iq! Managementberatung; Analysis 2017
iq! analyzed the Service offer and the reach of different connected car providers in Europe, the US and China. Almost all OEMs have a broad range of Services in different categories (e.g. traffic control, entertainment, security, etc.). But when it comes to reach, Google with Android Auto and Apple with CarPlay dominate the market. Interestingly, they only offer a very selected range of Services. Their easy to use, OEM-independent offer convinces the customer.
IoT Service portfolio: rules of success
Less is more. This simple rule applies not only to the Automotive industry but other IoT product families and markets as well. But why is it better to concentrate the offer to some key USPs?
- Reduce development time: a focused offer allows a fast time-to-market scenario and minimizes R&D time and investment
- Don’t ask to much for the customer: Customers are more likely to understand and therefore accept a small set of Services. Today’s IoT product systems are often so complicated to install and to use that potential users shy away
- Set a low entry barrier: a selected offer makes it easier for the customer to choose. Entry prices may be much lower than for more complex Service arrangements
- Concentrate on customer needs: Fulfilling customer needs has to be the key priority when designing a convincing IoT Service portfolio
- Make a few good ones: selecting the most promising Services gives IoT companies the chance to focus on quality and optimize Services fast
- Gain reach fast: Increasing the own installed base fast may be the decisive factor in the run of market shares
- Reach first, extension second: The IoT Service portfolio should be extended carefully as soon as a sufficient reach base is installed in order to stabilize market shares and bind customers
There are many convincing reasons to start with a simple, reduced but very relevant IoT Service portfolio. Choice of Service should be based above all on customer needs. The probability to gain reach fast is much higher with a limited set of Services. Once the installed based is satisfyingly large, additional services may enrich the offer. It all sounds so simple, but a surprisingly high number of IoT offers are very technology and data focused. But it is neither necessary nor wise to tap the full potential of technological possibilies. It makes companies often forget the customer and how simple it can be to enhance product usage with a few key features.