While businesses gear up for the next wave of innovation—the Internet of Things, or objects ranging from your fridge to your dishwasher communicating with the Internet to better serve and alert consumers and businesses—they should also be ready for some customer hesitation, new research finds. 

87% of consumers have never heard the term “Internet of Things,” according to 2014 survey of 2,000 U.S. consumers by e-commerce and digital marketing consultancy firm Acquity Group.

While this lack of familiarity may come as a surprise for most mobile professionals, business research and advisory firm Altimeter Group says that number is somewhat misleading. The Internet of Things is an industry term, writes Jessica Groopman, an analyst at Altimeter Group, in the June 2015 report “Consumer Perceptions of Privacy in the Internet of Things.” In fact, consumers are familiar with Internet of Things-connected devices, but just in a specific context. For example, of the 2,062 surveyed U.S. consumers in the Altimeter Group study: 28% owned a smart gaming system, 23% smart TV, 7% wearable, 4% connected car, 4% connected appliance and 3% home automation hub. All of those fit within the definition of the Internet of Things, or IoT, as it’s often called for short.

Besides consumers understanding what the Internet of Things is, another barrier to the field taking off is consumer trust in companies about how they will use consumer data.

Consumers will be paying attention to how companies use the data collected through connected devices, as 47% of responded say they are very or extremely interested. Trust, however, is low, as 45% of consumers say they have very low or no trust at all that companies are using their connected device data securely and in ways that protect their privacy.

45% of all respondents said they were very or extremely uncomfortable with companies using their data, and 60% of respondents said they were very or extremely uncomfortable with companies sharing and selling their data.

The more exposure to the Internet of Things consumers have, however, the more likely those consumers understand and trust how companies use their data, the survey finds. 48% of consumers with four or more connected devices responded they had a high or complete level of understanding to the question, “How much of an understanding do you feel you have today about how companies are using your data from these connected things,” compared to 21% of consumers with three or fewer connected devices. 42% of consumers with four or more devices trust companies are using the data from their connected devices securely, compared to 17% of consumers with three or fewer devices.

“Consumers with greater exposure to technology are indeed more ripe for engagement around the use of their data,” Groopman says. “Not only are they already more familiar with technology, and more trusting of companies, they are in fact raising their hands for more information and education.”

Still, increased exposure to the technology will not automatically make consumers more comfortable. Businesses must be transparent and articulate the value consumers will gain if they share their data, Groopman writes. For example, 57% of consumers said they would feel compelled to share data with companies in exchange for a promotion, coupon, discount or product suggestion. Groopman warns, however, that coupons may not be enough to drive trust over a long term.

“Value creation is key because that is the currency,” Groopman says. “If the value is not there, consumers will not share their information with companies. Where the greatest opportunities lie for companies today is in improving the value of the connected products and services they offer consumers.”

Consumers also would like explicit messaging that their data will be collected and used to offer real-time services and discounts. For example, 54% of consumers said it is important or extremely important for companies to notify them when collecting data from their body, 59% from the home, 56% from public marketplaces, such as retail shops, and 50% from private transportation.

Groopman also suggests businesses use opt-in and opt-out controls of sharing data piece-by-piece, so consumers understand what they are sharing and are in control of what they feel comfortable releasing. For example, a consumer can choose to share her data and for the company to use, but not to store it for longer than six months.

“Gradient control could help foster trust and increase the change of greater investment later—in the form of dollar, data or loyalty,” Groopman writes.

 

Follow mobile business journalist April Dahlquist, associate editor, mobile, at Mobile Strategies 360, @Mobile360April

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