Quantifying Value: IoT Connected Product Deployment
by Exosite, on October 23, 2015
It is important to build a realistic business model that shows how value is quantified and captured. The following sections describe an approach to quantify and optimize for value within the context of an IoT connected product deployment.
Quantifying value is a critical part of building any IoT generation of business case. The goal is to take the value statements and create derivative quantitative statements that can be validated, perhaps theoretically at first, but empirically over time.
Brand loyalty – the degree to which customers give good reviews of a product and/or purchase additional products from the same brand – is influenced by a multitude of psychological factors like how frequently the customer interacts with the product. Generally speaking, customers that have repetitive encounters with a product experience systematically biased habitual responses that lead to an increased likelihood of a repeat purchase. IoT connected products offer more opportunities for users to connect with the product and, therefore, improve brand loyalty. This might be quantified as: Customers are X% more likely to repeat purchase connected products, leading to an average of $Y additional total customer value (TCV).
Building these quantitative value statements that are applied across the life of the product at a certain rate (e.g., constant, linear, logarithmic, polynomial), and estimated offset from the beginning of the product lifecycle, and a confidence interval will begin to build the business case for a connected product opportunity.
A full treatment of value quantification is beyond the scope of this blog, but the Exosite Professional Services team is well versed in helping customers navigate these tricky IoT business model problems. Additionally, Exosite offers an IoT strategy workshop to assist with business model opportunities and decisions. Contact Exosite for additional details and download the Monetization Strategies for Connected Products white paper.