By Rick Mullen,
Maintenance Sales News Magazine Associate Editor
The first email Carlos Hidalgo ever sent said, “This is my first email, and they are now saying this is the way we will begin communicating with each other in the future. I don’t buy it and doubt this will last.” He sent it to his then girlfriend, and now wife, while in college in 1992.
Hidalgo told the story of his first email during his presentation titled, “Thingalytics: Challenges and Opportunities of IoT, Big Data and Data Driven Marketing.” Hidalgo is the owner of VisumCx (www.visumcx.com), a customer experience consulting firm located in Colorado Springs, CO.
Hidalgo shared the email to illustrate how much things have changed since 1992, and how change continues to accelerate and impact today’s marketplace.
“I was a skeptic. I didn’t believe it,” Hidalgo said. “I sent the email from our college lab. The university had just announced it was one of the first universities to be networked.”
In making the announcement, the university pitched it to students by telling them when studying at 2 a.m. in their dorms, they would be able to electronically access the library.
“We were furious because, to pay for it, they were going to add an extra $450 per semester to our tuition,” Hidalgo said. “Apparently, we didn’t quite grab what was ahead of us.”
At the time, Hidalgo and his fellow students wondered what the benefits were of being “connected” in such a way.
“When you think about it, 1992 really wasn’t that long ago,” he said. “What we have to understand is, we live in a world of constant and rapid change. For example, we now have smart thermostats in our houses. We have an Alexa device in our home. I can just feel my table at home and say it is a little cold and then say, ‘Alexa, turn up the heat three degrees.’ We live in an interconnected world.
“My wife just bought an automatic vacuum. She was working the other day, and, all of a sudden, she gets an alert on her phone that the vacuum got caught up in a cord in another room. We are connected.
“When it comes to the internet of things (IoT), there will be 30 billion sensor-enabled objects connected to networks by 2020.”
For example, Hidalgo said, the Nestle company is using sensors in its distribution of ice cream products to convenience and grocery stores.
“Nestle used to do weekly runs to stores to deliver ice cream orders,” Hidalgo said. “Now, the company is using IoT to basically send it a signal when a store is running low on a brand. Nestle can then dispatch a truck to a store, only when needed. So, rather than running a weekly route to deliver, it now becomes a much smarter distribution network. It is better for the environment, better for Nestle and better for supermarkets and convenience stores. This is one of the things they are doing with connected devices.”
Hidalgo said, by 2020, there will be 212 billion sensor-enabled objects — 28 times the total population of the world.
“How incredible would it be if you could have a sensor tell you this product at this location with this customer needs to be replaced?” he asked the audience.
With such technology, businesses (including janitorial/sanitary distributors) would be able to streamline how they do business and deliveries, as well as enhance the customer experience, Hidalgo said.
With sensors in place, “I (a customer) don’t have to be the judge and jury of when I need a replacement,” Hidalgo said. “I now have a sensor that sends a message to the supplier that my product needs replaced.”
Hidalgo defined thingalytics, IoT and big data as follows:
■ Thingalytics: The use of real-time analytics and algorithms to guide users through the maze of fast big data: “We have large amounts of data coming into our organizations about customers, suppliers and the market. How do we analyze it quickly? People say, by the time they actually get the data and are able to analyze it, it is typically two to three weeks old. By then, it is already out of date. It doesn’t really serve a purpose,” Hidalgo said. “This is how fast we are moving in our society today, and, on the business side, how fast your customers are moving.”
■ Internet of things (IoT): The description of everyday objects and devices that are connected to the internet, most likely wirelessly, and can communicate with each other at some intelligent level: “From a household perspective, the vacuum sucks up a wire, and then sends an alert to my wife’s phone so she can come to the rescue,” Hidalgo said.
■ Big data: Large data sets that may be analyzed to reveal patterns, trends and associations, especially relating to human behavior and interactions.
“It is important to understand to whom we are going to sell and market products, as well as understanding the buyers who are going to carry the items. That all takes big data,” Hidalgo said. “So, there is this massive convergence across thingalytics, the internet of things and big data to transform our businesses and change our world.”
Hidalgo suggested two areas to think about: connected devices and connecting their business operations.
IoT = Connected Devices
A single sensor in a product can:
■ Alert when it is time to replace;
■ Communicate potential downtime;
■ Produce efficiency reporting;
■ Communicate to an inventory system; and,
■ Communicate utilization statistics to product development and engineering.
“Again, think about what it would do for a distributor, if you had a sensor that alerts the customer and the supplier that it is time for a product to be replaced,” Hidalgo said. “What would that do to your customer or supply chain? This is what businesses are doing all over the world.”
Hidalgo asked the audience the impact it would have if a product could communicate how it is being utilized and downtime.
“If I had something that told me the utilization of my product, how much better would that be than trying to get a group of customers together and asking, ‘How are you using my product?’” Hidalgo said.
With sensor technology, the business could receive such data in real time. Data could be gathered indicating when a product needed to be replaced, sending a report to an inventory system, Hidalgo said.
“So, rather than having somebody to manually manage inventory, a sensor could be sending out information in real time,” he said.
As an example of a company incorporating IoT into an inventory management system, Hidalgo offered a possible encounter at a Target retail store between a customer and an associate. In this scenario, the customer sees that a product he/she is wanting to purchase is not on the shelf. The customer finds a Target employee and asks if there is more of the product in the back of the store. The Target associate pulls out a device that is connected to the company’s inventory management system that will indicate if there is more of the product in the back of the store, and, if not, the device can check other stores in the area.
“They have everything connected so they know what is on their shelves. They know what is in the back, and they also know what is in other stores,” Hidalgo said. “Furthermore, if nobody else has it, they can tell you when it is going to be delivered.”
Hidalgo reiterated that data on product usage and the ability to enhance customer experience could maximize what companies are accomplishing.
“If we make it as easy as possible for customers to use our products, the likelihood of them buying from us again increases substantially, even if we are the more expensive vendor,” Hidalgo said. “According to 86 percent of customers who were surveyed, in 2020, customer experience will overtake price and products in importance.”
“Connected” operations can enhance customer experience by putting data into the hands of companies beyond just the “one-to-one” customer relationship developed when a sale is made.
“What if,” Hidalgo asked, “when a customer calls with a product issue, a company’s representative could say, ‘We already know who you are and the problem you are experiencing, and we have a fix at the ready?’
“In addition, by analyzing the data that comes from IoT, we can say the customer’s next order should be placed on such and such a date based on utilization. Also, this information can be passed to suppliers to allow a company to better manage inventory, which results in huge cost savings.”
One of Hidalgo’s first jobs out of college was working in a packaging factory that, for many years, had neglected to properly keep track of its inventory.
“I was given a clipboard and a yellow pad of paper and was told, ‘The fourth and fifth floors are all yours — go count all the plastic rolls, cardboard, etc.,’” he said. “It took weeks and weeks to finish. We can now do this through the internet of things and big data. We now can connect devices and do things we never thought about before.”
Hidalgo cautioned the audience that incorporating thingalytics, IoT and big data into their business models is a “business transformation” that will take time and effort.
“I’m not saying you should just put sensors in everything,” Hidalgo said. “It will require hard decisions to change the way you traditionally do business, which isn’t always easy. I would encourage you to ask, as an organization, ‘How can we start?’ There are a lot of great consultancies that can help you walk through the transformation.”
THE SHEER AMOUNT OF DATA
Hidalgo offered some pertinent facts about the proliferation of data, both now and in the future:
■ More data has been created in the past two years than in the previous history of the human race;
■ The average person checks his/her phone 52 times a day, generating more and more data;
■ By 2020, the digital universe of data will grow from 4.4 zettabytes today to around 44 trillion gigabytes;
(And this from www.engadget.com/2011/06/29/visualized-a-zettabyte/: “Think of a zettabyte as the equivalent of 250 billion DVDs, 36 million years of HD video, or the volume of the Great Wall of China if you allow an 11 oz. cup of coffee to represent a gigabyte of data.”)
■ Data production will be 44 times greater in 2020 than it was in 2009;
■ By 2020, about 1.7 megabytes of new information will be created every second for every human being on the planet; and,
■ Within five years, there will be more than 50 billion smart connected devices in the world, all developed to collect, analyze and share data.
“We have a huge opportunity. All this data and how to incorporate it can seem overwhelming, but this is where your world, as well as your suppliers’ and your customers,’ are moving,” Hidalgo said. “If you don’t adapt in business, you die. You may not die tomorrow, but it is a slow, painful death, nonetheless.
“For example, I don’t know that 20 years ago anybody believed we would be talking about Blockbuster essentially as a thing of the past. I recently had a discussion with a former Blockbuster employee, who was rather high up in the company, who said they missed it — they just missed it. They never believed for a moment that Netflix would take off. Who on earth would want to exchange DVDs by mail? Then, this little thing called streaming came along, and by the time Blockbuster recognized what was going on, it was far too late.”
According to a www.businessinsider.com report, posted April 2, 2018, “Blockbuster isn’t extinct quite yet — but it is getting closer. While roughly a dozen Blockbusters remained open across the U.S. in 2017, at least four have already closed this year (2018).”
Hidalgo warned that data without context is just data.
“We have to wrap context around our influx of data,” he said.
In other words, before a company invests in IoT, it must decide how it is going to use the massive amounts of data available in the areas of sales, marketing and customer experience.
“We must answer such questions as, what do we want to do with data? How do we want to use it to market and sell better? How do we want to connect our supply chain and our operations in a better and more formal fashion?” Hidalgo said.
Hidalgo shared five data categories as defined by the Winterberry Group (an advertising, marketing, media, information and technology consulting firm):
■ Omnichannel: Personal information and behavioral information;
■ Transactional: Customer purchase history;
■ Digital: Online behaviors of prospects and customers;
■ Specialty: Tracking across new channels — IoT, wearables such as smartwatches, fitness trackers, VR (virtual reality) headsets, etc.; and,
■ Identity: Reconciliation of prospects and customer data across multiple touch points.
Hidalgo also gave some examples of how a company can use data in the social media sphere of influence.
■ Elevate and promote brand:
“Make sure, before spending a lot of money in the social media sphere, that your customers are actually using it. If they are, understand what platforms they are using,” Hidalgo said. “When we work with a client, we often hear, ‘I only use this,’ or ‘I only use that.’ Some people prefer Instagram over Facebook. Some people use LinkedIn over Facebook and Instagram. Furthermore, there are a host of other social media platforms.”
■ Better engage with customers:
“When we are talking about big data, and responding to our customers, social media is one of the ways customers are now trying to get the attention of vendors,” Hidalgo said. “I use a handful of social media properties. Twitter is one of the ways I try to engage with brands, because it is the world in which I live. I’m very keen on the brands that respond to me quickly, and use social media as a way to address my needs and my issues as a customer.”
■ Improve demand generation (demand generation is the focus of targeted marketing programs to drive awareness and interest in a company’s products and/or services.):
“We can get better insights into our customers. We can provide better support,” Hidalgo said. “When we see a tweet or a comment on LinkedIn or a comment on a social property that says, ‘I bought from this company and it’s really not that great.’ We should be able to respond.”
■ We can improve communications with partners and suppliers: “We don’t have to start with multi-million dollar investments. It is just about being smart as to how we harness the data that we have at our fingertips. If you have a website, you have data,” Hidalgo said. “If you don’t have a data analytics platform, Google has a free analytics platform. You can hook it up to your website and start to monitor and monetize some of the data you are receiving.”
Maintaining up-to-date data is a serious issue that can hamper what a company is trying to accomplish. In a study, 83 percent of respondents reported their data was old and outdated.
“We also see that one-third of U.S. organizations’ customer and prospect data is believed to be inaccurate,” Hidalgo said. “Another study said poor data quality is the silent killer for many B2B marketing campaigns. Data silos and incomplete data are the culprits, with data silos as the No. 1 issue.”
According to www.yourdictionary.com, a data silo is a separate database or set of data files that are not part of an organization’s enterprise-wide data administration. In other words, a data silo is isolated in one department, away from the rest of the organization, much like grain in a farm silo is closed off from outside elements.
“What we need to think about is connecting data with our systems of engagement — web, mobile, chat, social, IoT — and then connecting them with our systems of record — CRM (customer relationship management), supply chain and IT service management,” Hidalgo said. “We do this through a system of intelligence that is placed in-between the system of engagement and system of record.
“What we are seeing is the rise of customer data platforms to help collect data from connected devices, forming better responses and hypothesis for real-time analytics that gives clarity of sight, so we don’t have to silo our data anymore.”
Hidalgo said companies with advanced data strategies are twice as likely to report more than 30 percent revenue growth. He gave a couple of examples of companies that were customers of his former firm, ANNUITAS, as proof points:
■ Produces saws, saw blades, utility knives, snips, and other cutting tools;
■ Took a data driven (qualitative and quantitative) approach to connect with buyers and customers;
“They started using data to understand who their customers are, how they are buying,” Hidalgo said. “We actually identified several different customer types that they weren’t going after."
■ Used this information to develop a “resource center” for metal cutting operations; and,
■ Results: 10 percent-plus of sales pipeline generated by marketing and 11.2 percent of all leads convert to qualified sales leads.
“They increased their sales pipeline by 10 percent-plus, just by marketing differently, which aligned better to their customers because they had the data. They also started to work from a digital perspective to better engage their customers.”
■ A global specialist in energy management and automation with operations in more than 100 countries, offering integrated energy solutions across multiple market segments;
■ Implemented a data driven, customer centric approach to data management;
■ Used data to build a profile of their ideal customers;
■ Built a process to manage data through their systems of engagement; and,
■ Results: 174 percent ($500 million) increase in sales pipeline and double-digit increase in sales conversion.
“If we are going to change our world, it has to start with us, as business owners and executives in our organizations, to make sure we are changing our companies first,” Hidalgo said.