What does the Internet of Things mean for loyalty?

Marketers tend to have a bit of a love-hate relationship with new tech. We love to get creative, imagining the possibilities and potential of the platforms, devices and gadgets that are constantly springing up. And we certainly don’t want to be seen as laggards in adopting new ways of connecting with our customers.

On the other hand, we’ve watched hyped-up developments fail to gain traction in the mass market, time and again. This is often accompanied by the sting of knowing that the time and money our team invested in preparing for – or even implementing – a new piece of tech will now go to waste.

Internet of Things

We’re inspired by new technology, but at the same time, we almost expect it to fizzle out.

And for a while now, this mix of excitement and cynicism has been the prevailing attitude towards the Internet of Things – the name given to the network of devices, appliances and other objects connected to the internet and each other. But with Apple’s HomePod now entering into the smart speaker fray and new connected products – from refrigerators to lightbulbs – popping up left and right, IoT is beginning to cross the threshold into wider adoption.

And brands are jumping on board, too. You can now order a Domino’s pizza, a Starbucks latte or even an Uber with just your voice and a smart speaker.

So what does this mean for loyalty marketers in particular? Where does the loyalty program fit in the connected world?

Building trust

Research has found that customer loyalty is primarily founded on trust and positive emotional connections. And, much like in a real relationship, these feelings aren’t cultivated by lots of self-promotion. Yet this kind of salesy talk is often the focus of loyalty programs and marketing communications, particularly on digital channels.

Consider a real-life conversation. You don’t make many friends by talking about yourself all the time. Instead, you get much further by listening – and then sharing helpful, interesting or entertaining information in response.

Marketers are now recognizing this and are beginning to create loyalty programs, and customer experiences in general, that are more relevant to their customers’ needs and interests. The trouble is, a customer’s primary need or interest can change quite a bit from moment to moment – and from one interaction to the next.

For many loyalty marketers, this context is the missing link to personalization and the hardest part to get right – it’s dependent on relevant, real-time data and proactive decision-making, which can be difficult to do at scale.

But IoT could be set to change that.

Connected devices make it easier to share contextual data with the customer’s approved organisations automatically, through apps and API connections. Combined with predictive (and prescriptive) analytics, this information enables marketers to respond with – or even initiate – hyper-relevant conversations.

This may or may not be specifically in the context of loyalty scheme – even without a formal program in place, personalised, relevant interactions go a long way towards cultivating loyalty.

Still, there are lots of potential applications for IoT when it comes to loyalty programs. Current implementations (of which there are few) have stuck to the basics, like checking your points balance with the help of a voice assistant.

But imagine that the loyalty program, by way of the voice assistant, could recommend relevant, contextually-appropriate rewards – such as a free umbrella from a retailer along your daily commute, when the day’s forecast is rain. Personalised service like this will have more of an impact on a customer’s loyalty than the ability to ask Alexa how many loyalty points they have.

More than a sales channel

So far, most examples of brands integrating with connected devices are focused on joining up and simplifying the ordering process. And while that’s a useful – and soon-to-be expected – application, it’s important that marketers don’t see IoT as simply another sales (or promotional) channel. Doing so would be a disservice to the customer and brand alike.

IoT devices give marketers an unprecedented opportunity to reach customers in a more authentic way, at a variety of key moments, to truly build relationships and, by extension, loyalty.

Of course, greater access comes with risks. To avoid isolating customers, marketers must be careful to use data appropriately and transparently, keep things relevant, and make serving (rather than selling) the priority.

Connected devices are, by their very nature, closely integrated with the customer’s daily life. They live in the home, the car, the office, and even on your wrist. IoT devices, in the consumer market, are highly personal – and that means brands must earn their place on this channel, by keeping the primary focus on adding value, rather than driving sales.

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As consumer adoption of IoT grows, so does the imperative for businesses to integrate connected devices into the customer experience. In our latest ebook, Smart Loyalty: Winning Hearts in the Connected Future, we explore the rise of IoT tech, its impact on customer experience and how loyalty fits into the picture.