The phygital experience sounds like it could be about fidgeting or something studied by Masters & Johnson, but in the parlance of our times, it refers to the integration of the physical and digital worlds. A classic example of this phenomenon is last mile delivery.
On the physical end, getting that package to its final destination requires drivers and vehicles, which are very much part of the brick and mortar world. From the digital side, last mile delivery solutions employ the latest digital technologies that enable communications with drivers, route optimization, fast delivery and most important – happy customers.
Many buzz words are created to hype nascent trends, but the phygital experience describes our dystopian existence in both the physical and digital realms. On the one hand, we enter the digital world every day through any one of the computing and entertainment devices we use on a daily basis. On the other hand, we are still active in the physical world living in our homes, exercising, shopping, commuting, traveling and socializing – even though all of these have come to have a digital component as well.
As much as we have become accustomed to digital experiences, especially under lockdown during the recent pandemic, human beings still crave tactile interaction at good old brick-and-mortar stores. As we see, even a physical store can now be termed part of a phygital strategy when it is equipped with digital technology that blends the online and offline worlds.
What is the phygital experience?
The phygital experience is a combination of the physical and digital worlds, bridging the gap between the e-commerce experience and shopping at physical stores. Rather than viewing this as an Orwellian futuristic vision, we need to realize that we are already leading a phygital lifestyle.
It’s challenging to pinpoint exactly when brick-and-mortar business went phygital, but the groundwork was probably laid out in the 90s with the explosion of the Internet with information, e-commerce and social networking. Even with this momentous development, the customer experience was still disparate in the online and offline worlds, consisting of either shopping in a digital environment or going to a physical store – with little connection between them.
The next major development was the rise of the mobile phone. Now all of a sudden when a person enters a brick-and-mortar business, or one of many retail stores, they are bringing their own digital environments into a specific physical space. This is probably when marketing strategy started taking into account that the customer journey could be improved significantly using digital tools to enhance consumers’ combined physical and digital experience.
At this stage, phygital applications started becoming part of the customer experience and digital strategy, resulting in phygital marketing campaigns that use online campaigns for physical events, and digital technology in physical stores for bringing the physical and digital world together.
When physical and digital worlds collide
In the popular comedy series Seinfield, one of the main characters George Castanza, complains when his intimate life with his girlfriend suddenly comes into conflict with his social life and his goofy friends, which he bitterly refers to as worlds collide. When the physical and digital worlds come together, terminal pessimists like George may see it as a collision, but many leading companies are developing a phygital strategy to adapt themselves and take advantage of this emerging customer journey.
The integration of physical and digital is already happening whether we realize it or not. It can be in the form of a QR code on a poster advertising a concert or augmented reality on a candy bar wrapper that is bringing the online and offline worlds together.
Until now, most people viewed physical and digital experiences as having very little crossover. Today’s customers, however, would find this confusing as they seek a seamless experience throughout the entire customer journey. The eventual winners in the phygital space will be those who appreciate that the customer does not differentiate between physical and digital environments and must be allowed to move seamlessly across both worlds.
The physical world
We are all familiar with the physical experience of commuting to the office, shopping in a store or flying to our favorite travel destination. When it comes to retail stores, for example, even though sales in physical stores are declining and e-commerce is growing, there are still aspects of physical stores that consumers find reassuring and encourage them to keep shopping. They still enjoy physical store interaction, being able to see and touch products and seek advice from product experts.
Consumer psychology is central to marketing in the physical, as well as digital and phygital worlds. For example, it is known that consumers prefer to select products on the right, which is what makes right-side shelf space so valuable in retail stores. The same is true for buttons on a web page in digital environments and digital kiosks at fast food restaurants in the phygital world.
Paradoxically, consumers frequently combine brick-and-mortar shopping with digital shopping in two opposite ways:
- Reading product reviews online for making well-informed in-store purchases
- Seeing and touching a product in the store and then placing the order online
Today, customers must have their needs met across multiple channels in an integrated manner. In a digital era, an omni-channel experience is something expected by default, and consumers won’t agree to be limited to a single channel in their shopping journey.
Consumers should be able to access any service channel, whether physical or digital. This option makes the customer experience more agile and effective. In this sense, offering services via multiple channels, including brick-and-mortar physical stores, needs to be part of every brand’s retail marketing strategy.
The digital world
If the digital world refers to all our interactions with smartphones, smart homes, smart TVs, smart speakers, laptops and tablets, then we can safely say that the digital experience has become part and parcel of our everyday lives.
From a brand perspective, this experience would suggest that most customer interactions these days are initiated, and sometimes completed, through a mobile phone, computer or other connected devices.
The main need that digital answers is the craving for what you want, when you want it. Consumers operate in a world where instant gratification and immediate service have become standard expectations. According to Salesforce.com 45% of customers are ready to switch brands if they don’t anticipate their present and future needs.
As customers are becoming more demanding, digital technology is providing building blocks to help meet their demands including:
Going digital means that the user is now directly connected to the brand and expects 24×7 availability. To nurture the relationship, all interactions should feel like a two-way conversation. Customers need to be connected and feel like brands are empathizing with their needs.
Reliable next day delivery
As mentioned, there is clearly a major physical component to package delivery, but it is digital technologies that created the demand, and are meeting the challenge of physical delivery of goods purchased online. Ecommerce and the expectation of next day delivery are driving online retailers to find solutions that include, not only international shipping, but the critical last mile of home delivery that is so important for a successful customer journey.
Secure financial transactions
At the height of the pandemic, people started buying more of their groceries, home goods, and apparel online. The digital economy is driven by consumer confidence in the security and privacy of their transactions. Likewise, in the banking sector, almost 40% of baby boomers say they are using a mobile banking app rather than visiting their brick-and-mortar branch.
New modes of interaction
In Stanley Kubrick’s classic film, 2001 A Space Odyssey, there is an amazing scene where Dave the astronaut has a conversation with HAL, the computer that seals his fate and seemed so futuristic at the time. Fast forward to the 2020s and Amazon’s Alexa cloud-based voice service has made it into, 1 out of every 4 American homes. Providing the opportunity for people to adopt new modes of interaction is an important part of the digital world.
Self service portals
With the endless amounts of online websites to shop from, consumers get to be fully independent by interfacing with a screen rather than a human being.
The physical-digital / phygital world
As we have demonstrated, the integration of the physical and digital worlds – now termed the phygital world – is all around us. The question then becomes how can a brand embrace this phygital phenomenon and turn it into a world-class customer experience. Doing that starts with a phygital strategy.
What is a phygital strategy?
A phygital strategy must be based on the current customer experience. It is important to assess the pros and cons of both the digital experience, as well as the brick-and-mortar in-store experience. The goal is to take the best of both worlds and mold them into a single cohesive strategy.
Phygital takes the best from the digital and physical shopping journey to deliver a unified experience for consumers, alongside new growth engines for retailers.
Putting in place the right phygital marketing plan can be a lifeline to save struggling brick-and-mortar stores, while increasing overall online and offline revenues.
What is a phygital reality?
One might say we are actually living in a phygital reality and as we use our mobile phone to order tickets to the game or the show, we might have to agree.
From a brand perspective, there are many ways to enhance and better coordinate the phygital touch points customers are already experiencing. If until now, the physical store and online marketing plans were disparate entities, today they must have a common thread based on a combined physical – digital customer journey.
Let’s have a look at some real-life phygital examples and how they are enhancing the customer experience:
Last mile delivery
If anything represents the best of phygital developments, it has to be last mile delivery, where digital technology enables the movement of goods based on the communications and logistics provided by digital technology.
Since the spread of COVID-19, there has been rapid acceleration in ecommerce and last mile delivery. Online retailers were well aware of this trend, but still had to work fast and furiously during the pandemic to rapidly scale their last mile delivery capabilities, including adoption of smart logistics platforms for better management and optimization.
Starting as a brick-and-mortar business, retail outlets from food to apparel have been losing market share to online businesses; or those who were better at utilizing digital tools to create a satisfying phygital customer experience. This might include checking out prices online to make an in-store purchase or placing a self-service kiosk inside a retail store.
A great example of this is Mcdonald’s, which according to Forbes, will be deploying self-serve kiosks to replace servers at all US locations. Other chains, including fast-casual brands like Panera and casual-dining brands like Chili’s, are also embracing this trend.
Brands have realized that their online presence and physical store presence should be connected not only by colors and logos, but also through successful phygital campaigns.
Continuity cannot be lost when a potential customer goes to your store after having an engaging experience on your website. As a matter of fact, a whopping 63% of all in-store purchases start online. So it is super important for retailers to make that connection between their online presence and in-store presence, being able to identify that person who just visited their website and has now come to the store to make that purchase.
Imagine entering a restaurant, and then leaving to a different store, where you are welcomed and receive shopping recommendations that match your personality. This kind of engagement streamlines the kiosk experience, making it super customer-centric, while enabling the best possible customer experience and increasing brand loyalty.
Whether it’s delivering packages to their final destination or getting a ride to the airport, mobility apps have simplified the process of getting people and goods from here to there. It is another great example of a phygital application, where digital technologies are used for enabling communications between drivers and their customers, and optimizing pick-up routes for the sake of physically bringing people and goods to their destination.
Here too, COVID-19 accounted for the explosive growth in curbside pickup, which combines ordering by an app on your phone while picking up the goods at the store. This is also commonly known as BOPIS meaning Buy Online Pickup In-Store.
Take, for example, the introduction of QR codes at restaurants, where instead of a printed menu, the customer scans a QR code on the table to view and order their favorite food and drinks. These technologies continue to proliferate even after social distancing subsides, thanks to the convenience and safety that it offers. Likewise, QR codes are also being used on promotional materials such as posters for an upcoming concert, where scanning the QR code plays a video of the band’s latest hits.
C&A is a large retailer in Brazil, where they worked with DDB Brasil to address the challenge that most shoppers face of insecurity at the point of sale.
Using a phygital approach, they ran Facebook campaigns encouraging users to like the latest fashions in their collection. The results were communicated to digital hangers, which displayed the number of likes for a particular item of clothing in real-time.
The campaign was wildly successful, resulting in:
- 1000 new fans per hour
- In-store sales of the entire collection in a single day
- Over 1700 references on blogs and websites
These are only a few of the phygital applications that we experience on a regular basis. As consumers take advantage of the latest digital technologies and brands take more of a holistic approach to the phygital customer journey, we can look forward to more new and innovative combined digital and physical brand-to-customer experiences.
Phygital unites the physical and digital realms. The objective is to bring the best parts of both worlds into the customer experience. This is probably true for most baby boomers, and it has an even stronger appeal amongst the always-on always-connected Millennial and Generation Z consumers.
Successful phygital deployments must use an omnichannel approach integrating customers across all channels with the single objective of keeping prospective customers engaged.
Regardless of which channel is used to make the purchase, the main objectives of a phygital integrated marketing campaign should be:
- Promote customer engagement
- Deepen the customer-brand relationship
- Identify upsell opportunities
- Generate new leads
- Increase peer-to-peer recommendations
Achieving these objectives requires campaigns that catch the audience’s attention and increase ROI for phygital marketing activities.
One of the key trends in the coming years is the demand for unforgettable experiences. Experience marketing wants to engage consumers in surprising places leveraging combined physical and digital channels.
Consumers no longer simply buy products, they are looking for sensational, unforgettable experiences. Brands that understand this trend and can deliver superior integrated phygital experiences for their customers will thrive and stand out from their competitors.
Your buyers expect a seamless customer experience using faster, more convenient delivery and fulfillment methods than ever before. It is imperative to meet this growing demand and heightened customer expectations by rapidly scaling up delivery and fulfillment operations.
Bringg’s delivery management platform contributes to the greater phygital experience. Using the latest digital technologies we are able to optimize last mile delivery, delighting retailers and their customers. We make delivery and fulfillment accessible to all. Find out more about our phygital last-mile delivery solutions by contacting us at your convenience.