Unveiling IoT Customer Behaviour: Segmentation and Insights for Enhanced IoT-CRM Strategies: A Real Case Study

Abstract

In today’s competitive landscape, achieving customer-centricity is paramount for the sustainable growth and success of organisations. This research is dedicated to understanding customer preferences in the context of the Internet of things (IoT) and employs a two-part modeling approach tailored to this digital era. In the first phase, we leverage the power of the self-organizing map (SOM) algorithm to segment IoT customers based on their connected device usage patterns. This segmentation approach reveals three distinct customer clusters, with the second cluster demonstrating the highest propensity for IoT device adoption and usage. In the second phase, we introduce a robust decision tree methodology designed to prioritize various factors influencing customer satisfaction in the IoT ecosystem. We employ the classification and regression tree (CART) technique to analyze 17 key questions that assess the significance of factors impacting IoT device purchase decisions. By aligning these factors with the identified IoT customer clusters, we gain profound insights into customer behaviour and preferences in the rapidly evolving world of connected devices. This comprehensive analysis delves into the factors contributing to customer retention in the IoT space, with a strong emphasis on crafting logical marketing strategies, enhancing customer satisfaction, and fostering customer loyalty in the digital realm. Our research methodology involves surveys and questionnaires distributed to 207 IoT users, categorizing them into three distinct IoT customer groups. Leveraging analytical statistical methods, regression analysis, and IoT-specific tools and software, this study rigorously evaluates the factors influencing IoT device purchases. Importantly, this approach not only effectively clusters the IoT customer relationship management (IoT-CRM) dataset but also provides valuable visualisations that are essential for understanding the complex dynamics of the IoT customer landscape. Our findings underscore the critical role of logical marketing strategies, customer satisfaction, and customer loyalty in enhancing customer retention in the IoT era. This research offers a significant contribution to businesses seeking to optimize their IoT-CRM strategies and capitalize on the opportunities presented by the IoT ecosystem.