The term "phygital" refers to the merging of the physical and digital and is commonly used to describe anything that attempts to cross the divide between the physical and digital worlds, such as the use of a QR code to obtain the menu at a restaurant. Customers who read product reviews online and then go to a brick-and-mortar store to purchase the item, or conversely, visit a storefront to touch and hold a product and then order it online, are also having a phygital, aka hybrid, shopping experience. Let's take a look at how the phygital impacts the customer experience and how brands can embrace the phygital to improve the customer journey.
John Nash, chief marketing and strategy officer at CDP company, Redpoint Global, told CMSWire that 2023 will be the year of "phygital retail," as consumers increasingly engage with brands across multiple channels — not just in the store and not just online.
QR Codes Bridge the Gap
At this point, most of us are familiar with QR codes, as we have seen them on packaging for products such as potato chips, toys, electronics, etc. and we have also seen them in restaurants, stores and even the Bureau of Motor Vehicles where they are used to obtain one’s place in the queue. Sharat Potharaju, founder of the dynamic QR code company, Beaconstac, told CMSWire that the retail industry can utilize QR codes to personalize customer experiences and improve customer engagement. Potharaju said that retail stores are able to display QR codes on aisles to provide additional product information, helping customers make more informed decisions about their purchases.
“QR codes on product packaging allow busy shoppers to purchase items online, contact customer service, discover discounts and navigate to stores where the product is available,” said Potharaju. “This personalization enables customers to have shopping experiences that fit their lifestyles and gives them options to interact with the brands they love."
Geofencing Enables Location Marketing
Potharaju explained that geofencing is a location-based marketing tool that, when integrated with an app, creates a virtual geographical boundary that uses GPS technology to send alerts to a user. “Marketers can analyze geofencing to track and gauge their audiences’ behavior around a geofenced area. The data collected can be used to promote highly personalized offers and services, increasing the overall ROI of the outlet,” said Potharaju.
Geofencing utilizes a location-aware device of a location-based service (LBS) customer that enters or leaves a geofenced area. By doing so, a trigger is triggered, which sends an alert to the device’s user along with a message that is sent to the operator of the geofence.
“Retailers can use geofencing to trigger an automatic response, like a coupon or promotional push notification, when a customer enters the area around the store,” said Potharaju, adding that along with the intuitive marketing potential, geofencing helps brick-and-mortar retailers add extra value to their retail experience by encouraging sales and making customers feel connected to a brand.
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The Phygital Is a Hybrid Experience
Consumers today are familiar with using a combination of online and in-store, aka hybrid, shopping. This may involve them reviewing reviews online, and then going to a brick-and-mortar store so they can physically handle the product before purchasing it, or viewing a product in a store, then searching online for the best price. To engage these consumers, Nash said that retailers must meet the customer where they are in real-time and engage with them on their own terms. “Brands that do this effectively are the ones that have solutions in place that allow them to better define and control experiences and individual customer journeys across the enterprise, seamlessly and consistently.”
A 2022 IBM/NRF report, Consumers Want It All, indicated that consumers no longer view online and offline shopping as distinct experiences, and they expect all of their experiences to be connected. According to the report, hybrid shopping is the primary buying method for 27% of consumers and 36% of Gen Z, which is more than any other generation. Consumers want to be able to seamlessly and consistently visit brick-and-mortar stores, shop online, and use mobile apps — and they want those experiences to be connected to one another.
Many consumers have experienced the phygital when ordering food at a fast food restaurant such as McDonald’s. Instead of an overcrowded lobby with a huge line, customers are presented with a kiosk where they can place an order using a touchscreen. Once the order is placed, customers receive a receipt with an order number. As employees place an order on the counter to be picked up, a screen above the counter displays the order number, so customers are easily able to recognize when their order is ready.
Brian David Crane, founder and CEO of Spread Great Ideas, a multimillion-dollar digital marketing fund, told CMSWire that in many ways, customers have already had a phygital experience as technology seeps through every part of the human experience, whether it is a shopping experience or not. Phygital experiences that customers may not even be aware of include the smartphone, which Crane said is the closest robot or AI companion any customer has with them 24/7. "Using big data and ML, brands can analyze shopping budgets, brand preferences and past buying history to assist consumers with offers or help avail custom coupons, whether having an in-store experience or a virtual shopping journey."
Other brands are allowing customers to experience physical products through a virtual application, such as virtual trial rooms. “Consumers can try clothes on without going anywhere — from the palm of their hand,” said Crane. “Augmented reality makes that possible by allowing customers to try out a virtual dressing room to see how they look in specific clothing they are interested in buying.”
One of the challenges faced by brands today is that as hybrid experiences continue to emerge, they are realizing they don’t have a good enough grasp on their customer data. Jonathan Moran, head of marttech marketing at SAS, an analytics, AI and data management company, told CMSWire that because of this, brands can’t easily see when and how a consumer interacts, across what channels, and what the path to purchase or ultimate conversion actually looks like. "For example, a brand may assume that a customer that purchases a consumer electronic may start on a smaller device and eventually end up in-store for the purchase," said Moran.
"However, in reality, the path purchase may begin in-store with product trialing and conversion may occur online," he said. To solve this challenge, brands must consider how they can integrate all solutions in their marketing and advertising stack so they can operate against a single customer data repository. "Without this holistic customer view, a truly omnichannel phygital customer experience is very hard to achieve," said Moran.
Consumers today expect and demand to have control over their own narrative — and to do so via their preferred channel. “Brands that can use techniques like customer journey optimization to guide consumers to an end conversion event over a variety of channels, devices and points in time — versus forcing them down a predefined marketing initiated path — will win in today’s phygital world," said Moran.
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Final Thoughts on Phygital Customer Experiences
Brands today must reach consumers where they are at any given time — and engage them seamlessly and consistently in both the physical and digital realms. By providing customers with the opportunity to engage in phygital, aka hybrid, experiences, they are allowing them to control their own journey while having an exceptional, omnichannel experience.