The good news? IoT opens the door to new revenue lines. The challenge is to know upfront how you’ll do it. Here, we discuss 4 different ways to drive new revenues with IoT: optimising your product or service, building an entirely new business, adding new features to an existing product or changing your business model. Each one comes with inspiring examples.
1. Optimising your product or service to achieve operational excellence
Improving internal operations using IoT can save you a lot of money and requires limited investments. You can automate certain processes, make smarter decisions in personnel and supply chain management, go from performing repairs to predictive maintenance and have a better overview of your physical assets. Here are some examples:
- Trash cans saving time and money
Cities like Ghent and Antwerp have connected trash cans. The sensors attached measure the contents of the bin and send out a signal when they’re full. Now, public waste companies can optimise their timetables and itineraries, saving time and fuel.
- Track assets anywhere
Where are the wheelchairs in your hospital? By monitoring physical assets using a camera or tracking devices, you maintain overview. The logistics company Ahlers, previously used armed guards to secure goods inside trucks. Now, a little camera we developed does the trick. It doesn’t only lower the risk of theft but the upgraded security and surveillance also lowers insurance costs.
- IoT makes vertical farms grow
Infarm, the first European vertical farming unicorn uses sensors to measure just about everything to ensure the perfect climate for every crop. They collect real-time data about the slightest changes in their plants’ environment and use it to optimise their growing recipes and reduce the use of natural resources.
Most companies looking to achieve operational excellence through IoT tend to search for existing solutions. This makes it easy to make the risk return trade-off. You already know how much the IoT solution costs and you can estimate the time and effort, hence money, it will save.
2. Build an entirely new business around IoT
We’re talking about a service that owes its existence to IoT. This is one of the riskier business cases. On the other hand, it’s also the biggest risks that bring the biggest rewards. Here, IoT and in particular the software opens the door to a whole range of services and therefore recurring revenues. One of your revenue streams could also come from selling raw data or information and insights.
- June, your private energy consultant
June tracks your energy usage through smart devices on your meters to help reduce your consumption. With this data, it automatically switches you to a cheaper supplier. In the near future, June will become your private energy consultant, advising you on solar panels, heat pumps etc. to reduce your energy bills.
- Goodbye classic mailbox. Hello personal assistant.
Custo is ready to revolutionise the delivery service. They will launch a smart delivery box that acts as your personal assistant handling everything that comes through your front door. It basically just has a lock you can open remotely but the magic is in the software. You will be able to use it to return packages, manage the warranties on every gadget you order, send your laundry to the ironing service, accept food deliveries, etc. The opportunities are infinite.
- Citizen science though IoT
Telraam is a purely data-driven business. Citizens attach this device to their windows to perform intricate traffic counts through a state-of-the-art AI engine. This data is used to create insights and give advice to local governments to help improve traffic flows.
3. Adding new features
Adding new features to an existing product through IoT is a way of staying relevant and creating loyal customers. Of course, it’s unclear how much profit you stand to gain. Consumers will balance the increase in cost against added comfort. Market research can shed light on this before you start investing in development.
- Smart washing machine
A washing machine that is automatically turned on remotely when your solar panels are working overtime, can save you quite a bit of money.
- Smart lighting
We all know the amazing lighting products Philips offers. By app or voice recognition you can adapt the Hue lights to your mood. But it could also serve other, more important purposes. It could shine brightly when the smoke alarm sounds or when an intruder has been detected.
4. Come up with new business models
You might have heard about Thomas Rau, CEO and founder of Turntoo and consultant circular economy, who developed an innovative services business model for the Schiphol Airport in the Netherlands. According to him, suppliers have no incentive to create sustainable products. If the product breaks down, they just sell another one. That’s good for business. But what if we buy light instead of lamps? Then it’s in the best interest of the supplier to make a sustainable product that requires little maintenance and consumes less energy. In return, the company can charge for the results it delivers per month, week or even hour. Some examples:
- Sell safety instead of a baby car seat
Baby car seats are expensive. And second-hand seats don’t guarantee the safety of your child. Manufacturers can sell safety instead of a car seat allowing consumers to lease the car seat for a period of time and then return it. A sensor on the car seat detects any crashes and ensures only the safe car seats are reused. The manufacturer saves resources and charges a recurring fee.
Before the 1960s, airlines bought aeroplanes with an engine and paid for a separate maintenance contract. Rolls-Royce introduced a new option. Power-by-the-Hour offers a complete engine and accessory replacement service on a fixed-cost-per-flying-hour basis.
Here too, market research can offer insights into consumers’ needs and willingness to pay before breaking the bank. If the new business model fails, you can always fall back to your product based business model. But if it is a success, you have obtained recurring revenues, the holy grail. At the same time you, as a manufacturer, will be pushed towards producing better, more sustainable, more customised and less energy consuming products that are also more easily recycled. Better for your clients, better for you and better for the planet.
Think before you begin. It sounds cliché but it’s true. Don’t start connecting your product just for the sake of connecting because hardware is hard. You need a sound strategy. How will you drive new revenues with IoT? Do you want to optimise operations? Change your business model and start offering services instead of products? Be a data driven startup? Or add new features that generate real value? If you would like some help figuring this out, let us know. Give us a call or drop by our amazing office at PAkt, Antwerp.