How Smart Products Create Connected Customers
MIT Sloan Management Review|Fall 2022
The data streams generated by customers using smart, connected products can lead to new products and services.
MOHAN SUBRAMANIAM
How Smart Products Create Connected Customers

AS LEADERS OF LEGACY product and service companies anchored in traditional value chains seek ways to prosper in the digital economy, one of the most important questions they can ask is, “How can we turn our existing customers into digital customers?” Digital customers don’t simply buy products and services: Their interactions with those products and services generate data that companies leverage to provide them with greater value over time. Those data insights also help companies attract new customers, create fresh revenue streams, and expand the scope of their businesses. This customer-generated data, which is often combined with other data streams, has fueled the growth engines of companies built on digital platforms, like Amazon and Google.

Legacy companies typically collect episodic data from discrete events — the sale of a product or the shipment of a component, for instance. Amazon and Google capture a continuous stream of data at every customer touch point on their platforms that is used to generate a new class of insights that play a more expansive role in their businesses. All of their customers are digital customers. Now, thanks to technologies such as sensors, the internet of things (IoT), and artificial intelligence, legacy firms, too, can transform their customers into digital customers who generate streams of data via their interactions with connected products.

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