The race to make everything smart

The shift towards smart touchpoints is sparking a race to make everything smart: toasters, clothing, cars, swimming pools, vending machines, restaurants, traffic lights, elevators, faucets, and even your vegetable garden.

Following my post earlier this week about smart touchpoints, readers asked for a fuller explanation of "touchpoints" and how they impact customer experience. Here goes...

Any place a company touches its customers is a touchpoint: products, services, packaging, training, pricing, promotion, installation, billing, supplies, and - of course - personal contacts.

With a list this long, things can get pretty complicated. One way to reduce the complexity of understanding touchpoints is to realize that there are only three kinds of touchpoints: human, dumb, and smart.

The first category includes not only all your company's employees, but also those of your distributors and partners. I'm not going to explore this category further in this post, because people aren't changing nearly as fast as technology, which directly impacts the other two categories.

Dumb touchpoints are static. They don't gather data. They tend to send information one way, usually from the company to the customer. Think about a cardboard box, a printed newspaper ad, or a bookcase made by the company. Until recently, most products themselves were dumb touchpoints.

Smart touchpoints are interactive. They have the capability to sense something happening in the physical world, and they enable two-way interactions between the customer and either the company or its products and services.

Kinect for Xbox 360 is an example of a smart touchpoint reinvention of video games. The game consule includes both sensors that track the players as well as an operating system with speech recognition. When one of three players leaves the room, Kinect knows who left. When you want Kinect to do something, you often can just talk to it.

In their most robust incarnation, smart touchpoints include three elements:

Sensor (sense): The touchpoint includes, or can access, one or more sensors that enable it to better understand the customer's actions and/or events of interest to the customer.

System (decide): Data from the sensor enters a computer system - it could be a phone, tablet, PC, or company network - which then decides what to do next. For example, if the customer has a question about assembling the bookcase, the system might decide to start the "step 3" video demonstration. The system is where companies incorporate the intelligence that elevates customer experience.

Products and Services (respond): The system should trigger a response through the company's products and/or services. The key here is to respond intelligently. The more intelligent the response, the more likely it is not only to encourage the customer to share additional feedback but also to value and embrace the company's offerings. 

You'd be wise to interpret "services" as broadly as possible. Sometimes the smartest thing a company can do for a customer is to send them elsewhere, or to connect them with other customers. Plus, smart touchpoints open up nearly limitless possibilities to generate revenues through new smart services.

This sense/decide/respond cycle produces intelligent behaviors. It is a giant step forward from the product-driven "sell, sell, sell" approach many companies have traditionally used. (If at first you don't succeed, sell harder.)

Michael Hinshaw and I wrote about this in Smart Customers, Stupid Companies. We believe companies that fail to aggressively compete in this race will end up either dead or forced to compete on the basis of price. That's an ugly place to live, because you are always at the mercy of your dumbest competitor, the one willing to reduce prices below the breakeven point.

Far better to get smart, asap.

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