The new normal: The ‘phygital’ customer engagement
One-third of consumers don’t trust internet-only businesses, while 80% prefer buying in a store.
Nitin Gupta April 21, 2022
Co-Founder and Managing Director at TezMinds
MORE IN Opinion
Selecting a product online and buying it later in the store is the new normal. Shoppers now leverage both digital and offline channels for an optimal shopping experience.
This shift in customer behavior has encouraged brands to rethink their marketing and customer engagement strategies. A few decades back, newspapers ads and billboards were the holy grail of advertising. Then came the eCommerce boom, and digital media proliferated.
However, brands have now realized that online and in-store shopping will co-exist, and an omnichannel strategy is essential. Phygital (phygital + digital) is a term emerging in modern-day marketing to describe a marketing or customer engagement strategy that integrates offline and digital channels.
So, is phygital another buzzword? Or should brands take it seriously? Here’s a deep dive into phygital and why brands need phygital solutions for customer engagement.
The rise of phygital: Where digital and physical worlds coexist
Phygital refers to the integration of digital and physical worlds to provide a unified, consistent, and immersive user experience. A phygital strategy includes, but isn’t limited to:
Offering customers a consistent experience online and in-store.
Providing a similar onboarding experience to users across all touchpoints.
Adding digital elements to physical experiences with technologies like QR codes, beacons, and in-store kiosks.
Let’s look at some examples to understand this concept better.
One of the best examples of an effective phygital strategy is Amazon Go. The eCommerce giant has opened 29 retail stores across the US. Shoppers can walk into the store and add items to a virtual cart from their Amazon app. They can pay online in the app and take the products without waiting in long lines and manually checking out.
Here, Amazon offers the best of both worlds to its customers. People who want to buy from Amazon but in-store can shop from Amazon Go. Also, notice how Amazon strategically connects its digital and physical worlds by allowing shoppers to add products to carts and check out from the app itself.
Nike is another notable brand with a robust phygital strategy. We all know that Nike lets you buy its products online from its website and other marketplaces as well as offline from thousands of physical Nike outlets. Nike took their omnichannel approach to another level with the Nike by Melrose store in LA. The team evaluated the data of LA-based NikePlus members and developed their physical store’s product line accordingly.
Why should brands deploy phygital solutions?
A question that has likely crossed your mind is: Why do I need a phygital strategy in the first place?
A quick answer to this is because that’s what customers want. Phygital is the future, and brands that want to stay relevant in the upcoming years need a phygital strategy.
Read on to discover the key benefits of phygital solutions for a business.
Offer the best of the physical and digital worlds
In this post-pandemic era, it’s clear that brick-and-mortar stores are far from dead. A research paper comparing online and offline retail sales in the US showed that non-eCommerce comprised over 85% of all sales in 2020. Though this figure plummeted from 90% in 2018, many people still shop offline.
Over 8 in 10 people still prefer shopping in a physical store.
Hence, brands can’t choose between online and offline channels to sell their products. They need to build an omnichannel presence, and that’s where a phygital strategy comes into the picture.
Improve customer engagement and experience
Suppose you want to buy a pair of sneakers. You do some research on the internet, finalize a pair of Nike, Adidas, or any other shoe brand, and go to the store to buy it. But when you enter the store, you find that the pair isn’t available or is priced more than what you checked online. Instant turn-off, right?
A phygital strategy essentially focuses on improving user experience by providing them a consistent experience across channels. Customers can check the price and availability of a product online and shop it in person. The Nike example we discussed earlier perfectly explains using phygital to boost the in-store customer experience.
Another example is OASIS, a UK-based fashion retailer that fuses its website, mobile app, and physical store experiences. When you walk inside an OASIS store, you’ll see associates equipped with iPads and kiosks to connect your in-store experience with the digital world.
Increase conversion and retention rates
Phygital brands enjoy higher conversion and customer retention rates.
A consistent experience across channels builds trust, resulting in more conversions. Therefore, omnichannel brands enjoy higher conversion rates than their single-channel counterparts.
Additionally, a phygital strategy boosts customer retention rates. Research shows that brands with a phygital strategy see a 91% higher year-on-year (YoY) customer retention than brands with no phygital strategy.
Improve brand awareness and recall
Branding and trust go hand in hand. Higher brand awareness and recall lead to increased trust among consumers. When it comes to branding, the number of channels plays a vital role. The more channels you use to promote yourself, the more effective your branding will be.
A phygital strategy opens up multiple channels for marketing and customer engagement, resulting in improved brand recognition and recall.
Sephora, a cosmetics brand, has mastered the art of phygital marketing. The brand offers an immersive online experience to its customers with its beauty blog, helpful tutorials, and intuitive user interface. Sephora replicates the same experience inside the store with humble and knowledgeable salespeople, free makeovers, and more.
Enhance the bottom line
In the end, it’s all about the bottom line. A phygital strategy increases brand awareness, conversion rates, and customer retention, which boils down to higher revenue and profits. If you want to grow your business, a phygital strategy is essential for you.
Implementing a phygital strategy: 5 steps to get started
From QR codes to beacons to in-store digital experiences, brands can choose from a wide range of phygital solutions. But first, it’s essential to devise a phygital strategy that aligns with your short-term and long-term business goals.
Follow this five-step roadmap to get your phygital strategy up and running.
Establish the need for a phygital strategy
Though phygital is the future and will reshape how people shop, it isn’t for everyone. Brands shouldn’t hop on the phygital bandwagon only because their competitors are doing it. You need to understand your challenges and how phygital can help overcome them.
For example, suppose you open a new hair salon in New York City. You have a website where people can make appointments and bookings, but the site doesn’t get any traffic. In this scenario, you can use QR codes, a phygital tool, to bring offline users to the website.
Determine the needed tech implementations
QR codes are the most cost-effective and user-friendly phygital solution.
Once you’ve established the need for a phygital strategy, you need to select your phygital technology. This step will depend on various factors, like your budget, resources, and technology capabilities.
QR codes are the most efficient phygital tools in the market. You can implement a QR-powered phygital strategy at minimal costs without making substantial changes to your business. The training curve is also negligible.
Other phygital technologies are beacons, in-store digital kiosks, actionable digital signage, etc.
Explore phygital solutions in the market
After selecting your phygital technology, the next step is to choose the right phygital solution. It’ll depend on the technology you plan to use. For example, you can implement a QR-powered phygital strategy, enabled in QR codes that can connect physical and digital solutions. Similarly, if you want to use beacons or in-store digital experiences, you can select a solution accordingly.
Devise an execution plan and implement phygital solutions
The implementation of a phygital strategy needs to be strategic, otherwise, you could face unnecessary delays, expenses, and other hiccups. You can make the process smoother by creating an effective execution plan. The plan will depend on your organization and resources, but ideally, it should be quick, easy, cost-effective, and efficient.
Evaluate the ROI and optimize your phygital strategy
The final nail in the coffin is to evaluate your phygital strategy and optimize it as needed. Implementing phygital solutions is only the first step toward a phygitally-capable business. Be sure to analyze the performance of your strategy and discover the scope for improvement. Also, as the market landscape changes rapidly, you may need to tweak your phygital strategy frequently to stay relevant and competitive.
Go phygital today
A phygital strategy is crucial for businesses that want to engage their consumers across online and offline channels. People nowadays expect brands to offer omnichannel experiences, and the best way to cater to these requirements is by implementing phygital solutions.
Businesses can choose among QR codes, beacons, in-store kiosks, and other phygital solutions as per their requirements. If you want to go phygital at an affordable cost and without a major tech disruption, QR codes are a perfect choice.