How Retailers can Use the Internet of Things to Drive Customer Loyalty


That the Internet of Things offers retailers tremendous opportunities is no secret. But how to apply it effectively, usefully, ethically, and sustainably remains a mystery.

Even for the largest retailers in the world, initiatives using sensors to create meaningful customer experiences are, by and large, still in pilot mode. But for retailers, experimenting with new technologies for technology’s sake is hardly a long term goal. The big question on the minds of retailers and consumer-facing brands is how to apply IoT in ways that will resonate with customers so that they actually are compelled to adopt them– and so brands can justify what can be a hefty investment. Thus, the intent of these initiatives is to forge new drivers for loyalty and customer interaction– sustainable ways to differentiate, to engage, to stay relevant. Recent Altimeter research finds three key benefits sensors offer retailers for using IoT to drive loyalty.

Utility: Enable something actually useful

Utility is, first and foremost, the most important driver (differentiator) IoT offers loyalty programs. Call it empowerment; the ability to do– to see, access, understand, control, allocate, make decisions, etc. For retailers, perhaps more so than electronics manufacturers for instance, useful initiatives can be ‘offline’ extensions of content marketing investments made for web. And they don’t have to be complicated; simple extensions of mobile shopping experiences, only leveraging sensors in the phone or in-store. Covergirl and Sephora, for instance, now allow shoppers to ‘try out’ various make-up products by uploading a photograph or augmented reality applications– far more empowering than buying products that don’t properly match skin tone or intent, or worse, sitting through fifteen makeovers!

While perhaps not as sexy as a connected crockpot or fork, activations that actually drive loyalty solve a problem. The point of utility is not to focus on shiny technologies or tactics, such as using beacons to send more ads to more people, but to place the brand use fully, intuitively, sensitively, and centrally to how customers expect to interact with and experience the brand.

Timeliness: Be a partner now, sell later

Brands can also use IoT to drive loyalty through relevance, personalization and timeliness. In many ways, these buzzwords shouldn’t be viewed in the context of marketing, but more widely, in the context of utility, and by extension any phase of the customer lifecycle. Timeliness may be a promotion triggered to the right person at the right time, yes, but it may be a troubleshooting guide delivered on the screen of a [faltering] connected washing machine. Timeliness could be streamlining the purchase or delivery experience ‘just to make it that much easier.’ Walgreens, for example, has a partnership with TaskRabbit, a crowdsourced errands-running service, to deliver prescription refills (automated through barcodes) for sick or homebound Walgreens customers. Recipients can of course add other Walgreens items to their shopping list for TaskRabbits to deliver as well.


Again, the idea is not complicated technology deployments per say, rather intuitive ways to insert the brand first as a partner, second as a retailer. Sensors are what enable companies to do this more timely, more contextually, through integrations of historical or multiple data sets, or through real-time or predictive triggers.

Brand Identity: Stay true, and recognizable

As technology allows companies to digitalize in-store experiences, it’s especially important brands translate the pieces of the brand that make it unique, memorable, a personality.This is arguably even more important in IoT as companies are imposing digital engagement techniques into physical environments, where the risk of creepiness, lack of recognition, or annoyance is far higher. Elements such as brand voice, tone, values, empathy, and other things like transparency in communications, accessible language, regard for existing relationship all help foster trust, and by extension loyalty.

Part of bridging online activations with in-store activations is about leveraging existing programs (and investments). Integrating existing loyalty programs into mobile apps and mobile campaigns are one example. Retailers should also extend content marketing programs to in-store campaigns, as these programs are the manifestations through which companies are defining and reinforcing their identities. In-store content, signage, interactive features, calls to action, etc. resonate most when they are extensions with which the storytelling, content, voice, and tone customers are already familiar.


Home Depot integrates web, mobile, and in-store useful, timely, and on-brand assistance

Home Depot is a good example of this. The company connected its online loyalty program with mobile and in-store by integrating loyalty members’ online shopping carts and wishlists with its mobile app. Thus, when a contractor—one of HD’s primary persona’s— enters the store, not only will they receive a personalized greeting, but the most efficient route to navigate the store based on the items in their shopping cart, based on inventory. In the future, upon integrating CRM and transaction history data, a contractor might receive a personalized promotion informed by past or frequent purchases. ‘How did painting the roof go last week? Would you like 50 gallons of the same X brand or color?’ This entire experience aligns nicely with Home Depot’s motto: “more saving, more doing.”

This example prioritizes utility – what would actually be useful or empowering to these types of shoppers – while also leveraging data from loyalty, e-commerce, CMS, and potentially CRM. Finally, by using this data to contextualize the offering, Home Depot is serving as more of a partner in the consumer’s purchase than solely pushing a sales agenda.

The Internet of Things opens up a world of opportunities for retailers. Interactive touchscreens, beacon deployments for geo-targeted promotions, personalized or exclusive content, gamifying in-store environments, connected mirrors for trying on clothes are just the tip of the iceberg. But what retailers must remember when applying digital to physical to drive loyalty is that the value of IoT is not rooted in the technology. The point is how retailers can think about improving, aiding, and creating more immersive experiences for their consumers. IoT just expands the menu of technologies to spur the imagination of what’s possible.

This post was originally posted on Altimeter Group’s blog and can be found here.

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