Wearables Plus IoT: Preparing Amid Paranoia

Depending on whom you ask, Disney's MagicBand is either the best thing that's happened to tourism or an "NSA-esque tracking device."

The divide over Disney's wristband that connects with RFID readers to become a park entrance ticket, credit card, hotel room key, and more is a high-profile example of the "convenient vs. creepy" debate set off by a new dynamic duo: The Internet of things (IoT) and wearable tech.

"We're in a period of experimentation with wearables," says J.P. Gownder, VP and analyst at Forrester Research. "It's still the Wild West."

[Companies are turning IoT hype into reality, but want to do more. Read Internet Of Things: What's Holding Us Back.]

Yes, there will be paranoia and rejections as stores, restaurants, and ballparks try out wearables paired with IoT to track customers at their locations and offer them discounts and services. Yet, at the same time, more and more users -- especially among the younger generation -- are flexible about privacy if you give them a great experience, Gownder says. And privacy fears tend to subside over time.

"There was an uproar over Google Street View cars invading your privacy in 2007, but that doesn't bother us anymore," he says. 

Here are three ways IT, product development, and marketing groups can design wearable systems while honoring privacy. 

1. Focus on VIP experiences and incentives
Identify your loyal customers and motivate them to participate in a rewards experience -- such as offering discounts on store products or a seat upgrade at a baseball game -- in return for opting in to a sensor-connected service.

Such services already exist using smartphone apps and Bluetooth-enabled "beacons." For example, Apple's iBeacon device (which works with iOS7 devices only) is now installed in Apple's retail stores, as well as in Duane Reade pharmacies and various Major League Baseball stadiums.

The aim with these scenarios – and with the more wearable-based MagicBand example -- is to deliver customer-specific discounts, services, information, and convenience based on who you are and where you are. Yes, they're bound to stoke fears of being tracked and will test consumers' patience for mobile alerts and ads -- but at least the ads will be location-precise and relevant. If you don't like it, you can opt out.

"With this VIP approach, you won't get all the people and data you want, but you won't have privacy problems because those who've opted in should have an understanding of how their data is being used," said Gownder in a presentation at Forrester's Forum for Technology Management Leaders last week in Orlando, Fla.

To get a sense of what incentives work, Forrester recently surveyed 5,000 US adults on what motivates them to share personal information with a company. Forty-one percent listed "cash rewards," 28% cited "loyalty program points," and 21% listed "exclusive product deals and discounts." 

However, consumers remain wary: 42% chose "Nothing would motivate me to share personal information with companies."

2. Offer convenience
Making life easier is a powerful incentive. MagicBands give users who opt in a chance to streamline their lives. The same goes for when an in-store beacon connects with you through a mobile device to offer an exclusive discount on a new suit that you couldn't get any other way.

TSA Pre-Check is another example of the lure of convenience. The service lets travelers willing to pay a fee and agree to a background check skip long lines and forego removing shoes, belts, jackets, and laptops from cases. It could be emulated in a wearables context -- it's certainly proof that consumers will disclose personal information for less hassle.

In a Forrester survey of 4,600 US adults, consumers are most interested in using a sensor device for the following purposes:

3. Sign a waiver
Make users sign a waiver detailing what data will be collected and how it will be used as they opt in to use a wearable device. This is a way to fill in the gaps in terms of data-privacy liability until laws and regulations catch up.

Any business that gives out wearable devices is likely to make you sign a waiver because it wants to track your movements and send you notifications, says Gownder. Using Google Glass usually requires a privacy waiver that has to be printed out on paper and manually signed, he adds.

"Healthcare providers make patients who are treated by doctors using Google Glass sign waivers. There aren't any detailed regulations around Glass yet, so hospitals must ask patients to opt in."

Disney's MagicBand users also need to sign a privacy waiver. 

Signing a paper waiver may seem antiquated, but it sends a clear message that your business is being upfront about privacy and gives customers a choice. You can take part in a wearables service, but only if you want to.

As for getting people to want to use wearables to interact with your products -- that's your job.

Too many companies treat digital and mobile strategies as pet projects. Here are four ideas to shake up your company. Also in the Digital Disruption issue of InformationWeek: Six enduring truths about selecting enterprise software. (Free registration required.)