Phygital: A Transformative Bridge Between Worlds

September 30, 2020

Banks are under pressure to digitally transform. How can Phygital help to marry the physical and the digital to remain relevant in a hyper-accessible and always-on world?

Phygital: A Bridge Between Retail Worlds
The coronavirus pandemic has undoubtedly accelerated demand for ecommerce. Business leaders have been forced to start investing in the online world to maintain their revenue, and customers have scoured for alternatives to traditional commerce that involve buying items from the comfort of their own homes. This is something confirmed by the Statista report on the impact of the coronavirus pandemic on ecommerce web traffic globally, with visits increasing from 16.07 billion in January 2020 to almost 22 billion visits in June 2020.

It’s safe to say that digital has taken on new meaning for both brands and users. However, this acceleration has been, in many cases, reactive to the pandemic and thus relied on short-term strategies to move products and services online. Such initiatives are unlikely to succeed in the long-term for lack of structure and their dependency on physical establishments.

We now know that customers are gradually returning to physical stores. Yet part of the market, which now has greater awareness of this new reality, will continue using digital channels not only to buy, but to search, see product details, and ask for support. It is, therefore, the ideal time for brands – especially those that have invested more strongly in ecommerce – to put together a strategy which considers Phygital: a combination of online and offline customer experiences.

In the simplest terms possible, Phygital is the blending of online and offline experiences, usually in the context of commerce. It brings together online elements, from product demos to payments, with physical experiences, like going into a store and searching for a product in real life. 

But what more can we learn about the potential of Phygital? Why is this neat mix of the online and offline worlds becoming the most popular form of commerce amongst Generation Z? And how can businesses use Phygital to adapt their customer offering, especially in the context of the pandemic?

How Phygital Works

Phygital is naturally a broad topic within the world of ecommerce. The marrying of the physical and the digital can be used to achieve a number of business goals and can be employed in various contexts. Whether the objective is to improve customer attraction, encourage product experimentation, or enhance transactions, Phygital has demonstrated its effectiveness in bringing new flavour to stale and uninspiring business processes.  

There are several ways of combining the physical and the digital. Let’s consider a real-world example. A luxury dress shop wishes to adopt Phygital elements to the experience they offer their customers. This could be achieved through the introduction of QR codes next to the products in order to collect customer comments and opinion in real-time. QR codes are nothing new, but they remain an easily accessible port of entry into the digital world. 

But this is only the tip of the iceberg when considering the potential of Phygital. These QR codes can be used not only to improve customer experience, but also to enhance areas such as business analytics. For instance, sensors can be installed next to products which can be used to determine the frequency with which they spark an interest. From this data, our luxury dress shop could gain insights regarding the popularity of a particular item and – by digging even deeper – could determine if certain products sell better depending on where they’re displayed in the shop. 

Phygital also brings greater personalisation to customer journeys, part of a growing trend where customers demand unique and emotive experiences. Phygital positively encourages customer engagement with the store, its products and its services. Going back to our luxury dress shop, the use of Phygital could allow its customers to choose the items they want to try on the website so that, once they arrive at the store, they have everything prepared, meaning a more comfortable, fast, and personalised experience is offered. 

Why Go Phygital? 

At the core of Phygital is the desire to collect information, either online or in stores, to get to know customers better. The individual elements of Phygital, like QR codes and customer assistant chatbots, thus form essential tactics within this strategy, opening portals through which companies can better analyse their customers’ wants and needs.

Collecting information will enable the release of advanced analytics, key to any organisation wanting to be data-driven. Advanced analysis tools translate and transform raw (or untreated) data into relevant information, provide learnings from previous experiences, extract useful insights from consumer behaviours, and drive the development of decision support models. The tools therefore answer the perennial questions faced by any commerce business, online or offline: what was the transaction? Why did it take place? What should we as a business learn from this transaction? How can we keep the customer coming back for more?

Lessons Learned from Phygital

Phygital demonstrates the symbiotic nature of the relationship between the physical and the digital. These should not be seen as two competing forces, but rather as complementary elements which contribute towards the goal of improving customer experience and understanding. 

For brands that want to be one step ahead of their competitors and to match industry pioneers, physical and digital must go hand in hand and operate in complete synchronisation. Only this will make it possible to provide a unique experience and retain the most modern target audience, through making decisions that best meet their wishes.

Phygital brings with it better customer experiences yet is nothing without effective and safe technology powering every part of your customer’s journey. Check out how Critical can help to breathe life into your Phygital projects through the button below.  

By Rui Gonçalves, Business Development Manager at Critical Software