For centuries, the global economy has operated as an exchange of products, largely designed for a single purpose—to be consumed in a physical world.
But in a connected economy, customers enthusiastically adopt products that digitally interact with each other.
Products and services that sense and interact with their surroundings are creating a whole new level of customer delight. Detailed research from McKinsey shows how a connected economy has the potential to generate up to $11 trillion in economic value by 2025.
In a connected economy, products become multipurpose. For example, in addition to telling time, today’s watches monitor your personal health and help you achieve higher athletic performance. Your automobile automatically transmits data (derived from your driving behavior) to inform your insurance premiums. A button on your washing machine tells your neighborhood retailer to deliver more of your favorite detergent. Your smart fridge tells you you’re low on milk while posting recipes on its door based on what’s inside. Your smartphone is a navigator, an entertainment center, a calendar and an encyclopedia.
Consumption data as an economic resource
The new breed of marketer recognizes that personalization isn’t just designing communications and offers. Personalization in a connected economy derives its value from how customers actually consume their products. Such consumption data becomes even more valuable when it becomes input for other products and services.
Marketers in a connected economy also let buyers customize their own products. Consider NIKEiD’s service, which lets buyers design their shoes from scratch or simply lets them add a personal touch. Customers turn their smartphones—delivered as basic, multifunctional devices—into their own personal statements with apps, ringtones, skins and other personal features, making them into expressions of their personality. Then there’s 3D printing, which propels extreme personalization further forward. In fact, many market leaders regard personalization as the single most impactful economic event of the digital age.
The new breed of marketer also collects demographic and behavioral data to customize the experience. As customers opt to provide information about who they are, what they buy and what’s important to them, they leave a data trail behind. As a result, they expect a personalized experience. In a connected economy, the customer’s personal consumption data becomes a value-differentiating attribute by making service uniquely personal.
Blend digital services into physical experiences
Disney, the master of customer experience, provides patrons its MagicBand, a simple wristwatch that guides users through the park, showing which rides have no lines and which have longer lines, as well as where to eat, shop and find nearby rest areas. If you’ve made a restaurant reservation, a host greets you by name when you arrive, and if you’ve preordered food for hungry children, it’s waiting at your table. A wave of the band then charges your credit card. Insight from the MagicBand data is also used to advise you on how to enjoy the park even more, based on your likes, dislikes, rating of various activities and consumption patterns. Given this technology’s popularity with customers, other sectors such as cruise lines, hotels/resorts and spas are adopting similar experience customization techniques.
Supplementing physical experiences with the individual’s consumption data (which was once invisible) is a trend we expect to gain momentum in every sector, from the athletic apparel manufacturer to the automotive company’s use of telematics.