Phygital – The New Marketing Frontier
Imagine bringing together the sensory and human connection of visiting a store with an ultra-personalized digital layer. A pretty powerful combination!
Phygital is just an odd-sounding word to describe a trend of elevating a physical brand experience with a digital component – or the other way around. Despite the fad-sounding name, make no mistake: phygital is here to stay.
In this blog post, we’ll sort out any confusion about what phygital marketing is and unpack some of its potential.
The Rise of Phygital Experiences
Phygital is a term coined to describe omnichannel marketing, an approach where all marketing channels work together to give shoppers a completely seamless experience. The intent behind combining the physical and digital experience is to draw from the best of both worlds, and the ultimate goal is to give customers unique, highly-personalized experiences that leave a lasting impression.
The digital world has slowly been creeping into our physical lives for a while. Think about the impact of smartphones and how we now expect to get a personalized, digital dimension that complements our physical day-to-day lives, for example via Google Maps.
Online shopping patterns lets online retailers personalize offers and suggested products. Apps with customer loyalty programs let stores such as Starbucks offer their customers personalized discounts and extra conveniences when using their rewards app.
Not only does phygital benefit the consumer experience, but it’s also a way for brands to seamlessly integrate their physical and digital marketing efforts and get more opportunities to sell their products.
The case for phygital is clear: while we’re becoming increasingly reliant on digital technology, we simultaneously crave physical experiences. Hardback books have not been made obsolete by ebooks – instead, both offer the consumer value. Connecting with consumers where they’re at is at the core of the phygital movement.
Everything Old is New Again
Retail businesses have been particularly keen to jump on the phygital bandwagon. Designing phygital experiences have been a way to breathe life into an otherwise struggling sector that is trying to regain footing against eCommerce giants such as Amazon. In order to entice shoppers to visit a physical store, the store must offer an extraordinary experience. Cue phygital.
63% of shopping begins online (Google). However, 49% of Americans still prefer shopping in physical stores (Moni Group). This data goes to show that stores have a lot to gain from offering phygital, experiential marketing. As we’ve come to learn, eCommerce has not necessarily killed brick and mortar retailers, just those that provide a poor customer experience.
With the rise of online shopping, consumers have experienced the convenience and personalization of interacting with a brand when they want, and where they want. When they bring those expectations with them to the physical store, customers have often left… disappointed.
According to research by the National Retail Federation, customers keep emphasizing that quality and price remain the most important factors when buying a product. At the same time, convenience seems to stand between them and making a purchase. A whopping 97% of consumers have not completed a purchase because it was inconvenient to do so (NRF).
Phygital marketing is boosting the experience customers receive when they venture out into a physical store. Using digital tools can provide customers with the convenient, personalized and exciting shopping experience they’re craving. In that way, businesses can actually deliver more value at a lower cost.
Omni Channel Experiences vs. Phygital Strategy
Before phygital became a thing, retailers were talking about omnichannel marketing strategies, where they were expanding the platforms where customers could buy, for example, in-store, online store, mobile, social media. In this approach, the purpose was to give as many options as possible to consumers, so they can buy products through their favourite channel.
For millennials and younger consumers, the difference between physical and digital retail platforms doesn’t exist. That’s why a phygital strategy goes a step further than the omnichannel marketing approach and completely connects and melds the online and offline worlds.
What’s a phygital strategy, then? Well, adopting a phygital retail strategy is not only a marketing strategy. It starts by changing the way you look at the customer journey. To support a non-sequential customer journey where customers bounce back and forth between online and in-store touchpoints, businesses need to incorporate both digital and physical data in their CRM systems. It needs to be as easy and effortless for the consumer to engage with the brand in the physical world as it is online –
Then, businesses need to be looking at ways they can incorporate automation, artificial intelligence, augmented reality, and other digital technologies into showrooms that connect the physical and digital realms and take the customer experience to the next level.
A brick and mortar store is no longer a place where people go to buy. If customers just wanted to buy an item, they can easily just do that online. Instead, customers go to a store to experience, play, connect, and to get entertained. In a phygital strategy, the physical store becomes an amusement park of sensory and digital experiences to showcase the brand and its products.
Let’s have a look at examples of retail businesses and other sectors that have embraced a phygital strategy.
4 Phygital Examples
It’s not just brick and mortar stores that are getting phygital, eCommerce brands are also strategically opening pop-up stores to offer a physical dimension to their digital brand.
The benefit for stores and customers is that shoppers can physically touch, get a feel for the product, and engage with staff who can provide advice on how to get the most out of the product.
If you’re still having a tough time envisioning what a phygital, omnichannel experience might look like, here are a few phygital examples.
01. Amazon Go
In a novel, phygital rethink of their shopping experience, Amazon has introduced a number of Amazon Go stores across the U.S. Armed with an app, customers can buy what they need without having to check out. With a virtual cart connected to the customer’s Amazon account, customers and products are automatically identified and charged to the account when they leave. No check-out, no lines.
02. Phygital Banking
Banks have long been grappling with what to do with their branches as more customers do their banking online. Although many are happy with moving their day-to-day banking transactions online, 50% of consumers still see value in speaking with a bank representative in-person (Accenture). In response, banks have reimagined their branches as an information and community education hub where customers can interact with specialists via video conference, book meeting spaces, and some even offer co-working spaces and coffee shops.
Since the summer of 2018, Nike has been experimenting with a new type of pop-up style, neighbourhood-centric store. The Nike by Melrose store in Los Angeles is designed around local data analysis of their LA NikePlus members. Those insights have then informed what products are offered in-store, and the development of store-specific product lines. With the Nike app, members can redeem rewards in the store, book a product testing session, reserve products for pick-up, and access curbside returns by texting the store.
The Nike Live concept has proven so successful, that the sports retailer expanded with two additional stores in Long Beach and Tokyo in the fall of 2019.
04. Timberland TouchWalls
In an effort to complement the in-store experience with their eCommerce selection, Timberland has introduced TouchWalls in their Manhattan store in 2016. The digital displays presented customers with online-only inventory where shoppers could touch product photos to learn more and build personalized shopping lists.
In turn, Timberland harvested data from the interaction between store provided NFC tablets, the touchwall, and the store visit that they can analyze for better retail and remarketing experiences.
All of these examples demonstrate a way to offer experiential marketing – a strategy that invites and encourages shoppers to engage with the brand. It offers something more than digital or physical marketing could do on their own.
Disrupting the Buyer’s Journey
A primary benefit of doing business phygitally is that stores can better combine physical and digital customer data from their omnichannel marketing.
By adding digital environments to physical stores, brands can harvest key customer data on how they shop in-store, online, and their behaviour after a purchase. In order to entice customers to interact with these digital environments, they must provide value to the customer experience. Whether it’s convenience, excitement, sharing, or connecting, phygital marketing tools provide something unique to the shopping experience.
As brands learn more about their customers, they can provide even better and unique ways to engage with the customers. This development is great for businesses that are looking to identify customer pain points and map out more specific customer journeys.
In China, phygital has really taken off and customers can bounce back and forth between physical and digital worlds with unprecedented ease and flexibility. Retail stores are using a combination of AI and facial recognition to give shoppers ultra-personalized offers and pay without taking out their wallet, removing any smidge of inconvenience and redundancies for consumers. While these steps are boosting the user experience for Chinese shoppers, retailers in the western world are constrained by privacy concerns and legislation, especially those affected by GDPR. It will be interesting to see how retailers balance the desire for convenience and personalization with privacy in the years to come.
Phygital information and access, give brands the opportunity to laser-focus in on when customers need what information. For example, better customer information leads to better suggestions for related products.
Ultimately, exploring many different ways and locations to better connect with customers expands the opportunities for brands to lead potential customers towards a purchase.
How to Phygitalize
Another take on the phygital phenomenon is that the tactics are an opportunity for digital marketers to use the existing tools in their wheelhouse to expand into the physical sphere.
The tools to connect the physical and digital brand experiences have been around for decades, so now it’s just a matter of putting them to work.
If you’re not a large retailer such as Nike or Amazon, you might be wondering what phygital has in store for you?
On a micro-scale, there are lots of ways to make use of phygital marketing tactics.
Facebook, Instagram, and other social media platforms have made it easy for small vendors to add a digital storefront to their brick and mortar business. Both Facebook and Instagram offer eCommerce features where stores can sell their products.
Social media also allows stores to promote special deals, run ad campaigns, or even create customer loyalty programs. Rewarding those customers who engage with your brand on social media is one way of digitally connecting. Using social media to promote opt-in offers where customers can comment on a post offering a special deal and later pick up in-store, is yet another way of blending physical and digital marketing.
If you run an online business, creating a pop-up store is just another way of adding a physical experience to your product offering.
Think about how online vendors have stands at local markets – that is entry-level phygital marketing. Using customer data from your online business, this information could help you identify where your loyal customers are and set up a pop-up shop nearby.
To take this phygital tactic to the next level, you could find a way to bring technology to the pop-up store and let customers engage with your physical product and your online inventory at the same time. That’s a basic omni channel experience.
Google My Business
You’re probably familiar with the business listings on Google Maps. This tried-and-tested tool is yet another way to add a digital storefront to a business. Google My Business offers many ways to engage with customers and promote the business.
You can upload store images, promote special deals, and even advertise. Customers can connect by calling, messaging, or leaving reviews. Through your business listing, you can also access important data on how people interact with your listing – information that could help you improve both your physical store and your listing.
Of course, even small-scale steps to get more phygital are a marketing investment. If you’re not sure how much budget to allocate towards marketing to make a difference in your bottom-line, we have some great advice for you.
From grand concepts to smaller steps towards a more phygital experience, any business can take advantage of phygital tactics to better connect with their customers and provide a better experience.
If your business is struggling with establishing a digital presence of your brand, or you’re wondering what steps you could take to boost your company’s digital marketing, Konstruct is here to help! Our team has the knowledge, tools, and experience to help you dominate the -gital in phygital.
Updated: October 22, 2020