The Internet of Things and customer segmentation: A game-changer for business

Satya Ramaswamy, Tata Consultancy Services

The emergence of the Internet of Things (IoT) is a pivotal moment in technology evolution, allowing companies to extend the benefits of the digital world across the physical world.

The productivity improvements and the business impact that this transition will bring are vast, and many organisations are already reaping the rewards. In fact, says Satya Ramaswamy of Tata Consultancy Services, according to a recent global study conducted by TCS, 83% of companies who have invested in IoT initiatives have already seen an increase in revenue as a direct result. These figures are difficult for business leaders to ignore and explain why so many organisations are looking to invest in IoT.

IoT gives businesses scope to reimagine their strategies, opening up new business models and revenue streams. Of the businesses that we spoke to 40% said that they have already been able to sell additional services to customers, because the Internet of Things makes it possible for them to monitor product performance and usage in a way that simply wasn’t possible before.

Nearly all the companies questioned projected revenue gains from the IoT initiatives between now and 2018. In all, 42% of the companies surveyed said that they expected to see revenue increases of between 1% and 10%, and a further 29% said they expected their revenue to increase between 11% and 20%. Just 2% of businesses are not forecasting any revenue increase.

Customer-centric initiatives

At this early stage for IoT, businesses are focusing primarily on customer-centric initiatives. When we asked companies to name the biggest impacts of IoT initiatives, the top benefit cited was the ability to deliver more tailored and precise customer segmentation.

By using the IoT to better understand how customers use their products and engaging with their brand, organisations will give themselves a competitive advantage. As IoT makes digital connectivity all pervasive, businesses can take into account a broader range of factors affecting customer behaviour – everything from their device of choice and commuting habits to the weather forecast in their location or their favourite restaurant. This data – when harnessed effectively by Big Data analytics – makes it possible for businesses to target services and offerings far more effectively and in a more granular fashion than has ever been possible before.

Customer segmentation

The customer segmentation made possible by IoT will increasingly become an essential tool for marketers and customer service representatives. However, it is clear that getting buy-in from C-level executives is vital if a business is to make the most of the Internet of Things. In fact, the TCS Global Trends Report found that having support from business leaders was one of the biggest factors in determining which projects were successful, alongside technological issues such as having an infrastructure that can handle Big Data efficiently.

IoT requires both technical and cultural changes and the adoption process must therefore start at the very top level and work its way down throughout the business.  As ever, those businesses that can best exploit this emerging technology before it becomes widely adopted will stand a great chance of giving themselves a genuine competitive advantage in the years to come.


The author of this blog is Satya Ramaswamy, VP and global head of
Tata Consultancy Services


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