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Here's how connected products are transforming businesses

From product development to customer retention, connected products are bringing new opportunities to companies.

Inflation, energy costs, and lack of supplies are just some of the challenges companies face right now. It is a complex situation, which requires them to find new solutions and walk on paths that have never been beaten. However, technological innovation is a valid ally, and connected products are already giving a competitive advantage to many brands.

What are connected products?

Connected products are physical objects that, through the Internet of Things (IoT), can connect to the internet and send or receive data about themselves and their surroundings. This way, they can also be controlled and monitored remotely.

Some examples of connected products may be :

  • a refrigerator that notifies you when you run out of milk through an app,
  • a car that can be started remotely and tells you how much fuel it has left,
  • a household cleaning robot that works according to your schedule.

Among the big brands that are already selling connected products is Philips.
The company developed a connected light bulb that, in addition to lighting the environment, can be connected to the internet and controlled by a mobile app. The user has full control of the light bulb, even when they are not at home.
But Philips didnt stop there: they also created a connected lamp that, in addition to being controlled by the user, has a sensor that detects when someone is in the room and automatically turns on the light.

However, connected products are not just for big companies; even small businesses and startups can develop and take advantage of them.

Indeed, the connected products market is growing rapidly. The number of IoT devices worldwide in 2020 was 9.7 billion and it is expected to almost triple to more than 29 billion in 2030.

Here's how connected products are transforming businesses

How are connected products transforming businesses?

As reported by Harvard Business School, connected products are "complex systems that combine hardware, sensors, data storage, microprocessors, software, and connectivity" and they "offer exponentially expanding opportunities for new functionality, far greater reliability, much higher product utilisation, and capabilities that cut across and transcend traditional product boundaries."

There are several ways in which smart products are changing the business world as we know it.

Let's take a look at some of the most interesting ones.

1) Connected products are changing data collecting

In the past, companies could only get data about their products in the moment they were sold to customers. But with connected products, companies can collect data throughout the products life cycle, in real-time. Moreover, connected products can collect data about the users: personal data, habits, preferences.

Companies have never had so much useful information for understanding how customers are using the product, improving their goods and services, and making better decisions about marketing and sales.

2) They are creating new business models

Connected products are also changing the way companies do business.

In the past, they would sell a product and then offer services to customers who needed help. Nothing more, nothing less. But now, they can earn from new forms of services:

  • subscription-based services that give customers access to data or content.
    FordPass gives connected car owners access to parking and gas station locations. While the connected toothbrush from Oral-B comes with a subscription service that gives users access to data about their brushing habits and tips on how to improve their oral health;


  • selling data collected from its connected products to other businesses.
    Philips sells data collected from connected light bulbs to city planners, while Amazon sells the data it collects from its connected devices (Echo, Dash button, etc.) to other businesses through its Amazon Web Services platform;


  • offering pay-per-use services (or similar)
    Zipcar, a car-sharing service, allows users to pay-per-hour or pay-per-day. Rolls-Royce uses data collected from its connected jet engines to provide pay-per-hour maintenance services.

These new business models do not replace the old ones. However, they are based on recurring revenue, which is more predictable and stable than one-time sales.

3) The customer relationship improves

In the past, companies would sell a product and then forget about the customer. But with connected products, they can build customer relationships that last long after the sale. This is due to two elements:

  • greater customer satisfaction.
    Since smart products can be used and monitored remotely, customers have a lot of control over them. This means they can better meet their needs.
    An example is again Philips’ connected light bulb, which comes with a mobile app that allows users to control the light bulb and receive tips on how to use it;


  • better interaction with customers.
    Companies do not need mass marketing to reach as many people as possible anymore. With connected products, they can target their marketing messages to specific groups of customers. For example, Ford use data from connected cars to target marketing messages to customers who live in urban areas and are interested in car-sharing services. But companies can even "talk" to a specific customer. In other words, they can offer a personalised customer experience.

A better customer experience helps build loyalty and customer retention.

4) Companies can have a better customer service

Traditional customer service is based on call centres and face-to-face interactions. Moreover, it works only when the customer calls because they have a problem. In short, it is a reactive system that sometimes proves to be late, inefficient, and even wasteful for the customer. 

Now, connected products can send diagnostic information to the manufacturer, who can then contact the customer and schedule a time to fix the problem. Customer service has become proactive. In some way, it is even able to fix issues before they become problems. For example, Tesla uses data from its cars to fix software issues before they affect the customer. This way, Tesla can provide a better customer experience and avoid costly recalls.

Furthermore, connected products can also provide self-service options that allow customers to resolve issues on their own. An example is Fords connected car platform, which includes a helpfeature that allows users to find answers to common questions.

This is not only more convenient for customers, but it's also more efficient for companies. For example, products that include a chatbot for customer support have the potential to reduce customer service costs by up to 30%.

5) Product development is changing too

Before connected products, companies would develop a product and then wait for customer feedback. The process of uncovering defects was therefore a long one. But now, companies can get feedback from customers during the development process itself.

This is possible because these cloud base products are connected to the internet. This means that companies can remotely update the software or add new features and check real-time what happens. They can also collect data from customers and use it to improve the product. Again, Philips’ connected light bulbs were developed with input from customers, while Tesla uses data collected from its cars to improve the Autopilot feature.

The development process is therefore shorter, and the products are more likely to meet customer needs.

The best is yet to come

These are just some of the many examples of how connected products are changing businesses. There's no doubt that we'll see even more changes in the years to come as connected products become more sophisticated and widespread. 

24 Oct 2022

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