Unlocking Data, Revenue and Loyalty: Why Phygitals are the Future of Consumer Lifestyle Brands
The line between the physical and digital worlds has been blurring for a while, and we finally have a name for it: phygitals. While phygital isn’t the most graceful-sounding portmanteau ever created, it does combine the words physical and — you guessed it — digital.
Read ‘phygital,' and you might cringe, thinking it's too “techy” to apply to your business. But in reality, most people are already used to a phygital experience. We tap-to-pay when shopping, our phone is our boarding pass when flying, and QR codes replaced menus to order food at restaurants years ago.
Phygitals merge the tangible world's benefits with the digital space's boundless possibilities to create an engaging, unified experience.
How are Brands Using Phygitals?
Okay, so clearly, physical + digital = phygital. Now what? Gartner estimated that 70% of customer interactions involved emerging technologies in 2022. And with nearly a quarter of all global retail sales expected to fall into the e-commerce category by 2026, phygitals are less of a trend and more of a strategy. Some of the world's most prominent brands are already using phygitals to build meaningful customer connections.
Ralph Lauren was an early adopter of digitally interactive window displays, including motion-sensing infrared cameras to replicate passersby’s movements on the screen and options for consumers to customize and purchase the products on display without ever entering the store. Brands like Nike, KFC, Disney, Kate Spade and BMW have all experimented with interactive window displays.
Frictionless Shopping: This experience eliminates friction points in the customer journey, leading to smoother sales conversions. Things like QR codes can link physical products to instant online checkouts. At the same time, interactive displays seamlessly guide customers toward desired items or personalized recommendations. Streamlined experiences significantly improve conversion rates and boost revenue.
Neiman Marcus uses interactive mirrors in dressing rooms that allow shoppers to request other sizes, see different colors and suggest complementary outfits based on what the customer is trying on. Shoppers can also use touchscreen cameras to record their makeup session and remember the products they tried on.
Unique Consumer Engagement: Interactive Augmented Reality (AR) try-on experiences provide a more engaging and convenient shopping experience, leading to higher purchase confidence and reduced checkout traffic. It also provides retailers new data and insights into consumer behavior and preferences based on in-store try-ons.
Starbucks has frequently used gamification in its loyalty programs – serving up coffee as a reward for customers who engage with digital challenges and games in the Starbucks for Life program.
Driving Consumer Loyalty: Gamified loyalty programs promote repeat business, drive engagement across channels, and provide valuable data on customer preferences. Loyalty programs gamified with real-world rewards further incentivize engagement, fostering a community atmosphere that builds brand advocacy.
Nike experimented with NFTs as a ‘backstage pass,’ giving customers who purchased the digital product exclusive access to physical sneaker sales available only to NFT-holders. More recently, Nike has begun embedding NFTs within some sneakers, so the physical purchase includes the digital asset.
Unique Consumer Products: This approach offers collectors both a tangible product and a unique digital asset, which deepens fan engagement, rewards brand loyalty, and opens doors for future virtual experiences tied to digital ownership. Nike and RTFKT have generated almost $1.4 billion since 2021, experimenting with various NFT interactions.
How Brands are Leveraging NFTs to Bring Phygitals to Life
Following Nike's footsteps, many top brands include non-fungible tokens (NFTs) as part of their phygital strategies. NFTs are unique digital identifiers that cannot be copied or substituted. Because they’re recorded in a blockchain, NFTs offer consumers a digital asset they can own with certified authenticity. NFTs foster more robust community engagement and brand loyalty by allowing consumers to own a piece of your brand, whether a unique digital asset, experience or exclusive access.
NFTs are used for artwork, music, gaming, fashion and real-world events and experiences. Two examples include:
- Apparel brands create digital versions of their clothing lines that can be used in the metaverse and video games. Like Nike, many are also tying these digital versions to physical products.
- Musicians and athletes are using NFTs in their phygital strategies. For example, Grammy-nominated EDM duo Disclosure uses Aventus-powered Beatport.io to sell 1,000 unique NFT remixes of "Simply Won't Do." Read more in our newsroom.
Top Benefits We See From a Phygital Strategy
Brand strategies that include phygitals drive a wide range of overlapping benefits when engaging consumers, building consumer loyalty, and driving additional revenue and data streams.
Three areas where phygitals are making the most impact for businesses include:
1. Enhanced consumer data & insights for targeted marketing & improved sales conversion
- Phygitals are powerful data collection tools that extend your data collection well beyond traditional physical in-store purchases. Customers interacting with your touchpoints leave valuable breadcrumbs like QR code scans, in-store browsing patterns (e.g., interactive displays), and online behavior. This data allows you to identify and validate your ideal customer profiles, delivering highly targeted marketing campaigns based on individual preferences and purchase journey stages.
- Brands can leverage these insights to more effectively personalize recommendations, improving sales conversion and customer brand loyalty… and consumers stick with brands that ‘get them.’
2. Increased engagement, customer experience, and brand loyalty:
- Companies seeking exceptional customer engagement and experience are looking to phygitals through interactive elements like AR-powered product displays. Businesses can use phygitals to encourage consumers to go beyond passive browsing, actively involving customers in their brand journey.
- NFTs go a step further, offering customers digital ownership that becomes a part of the customer’s identity, encouraging them to more actively engage with the brand, creating a brand loyalty flywheel effect.
3. Improved Operational Efficiency and ROI:
- The key to improving ROI with phygitals is to use the data! Use the data to streamline your business processes, generate data-driven insights, and unlock new revenue streams through engaging experiences.
- The data generated from phygital interactions, like in-store beacons that track customers' browsing habits, translates into actionable insights that optimize operations.
Building Brand Champions Through Phygitals
Leading brands are rapidly adopting phygitals as a core component of their brand strategy. Thanks to phygitals, brands are tapping into new consumer data, revenue, and improved brand loyalty. As a result, their consumers enjoy more engaging and personalized experiences and product offerings that keep them returning for more.
Aventus is the trusted partner for industry leaders looking to leverage Web3 technology to accelerate their growth. Founded in 2020, Aventus has partnered with some of the largest brands across music, gaming, sports, supply chain and logistics, energy, telecom and more, delivering asset-tokenization solutions that engage communities. Aventus drives innovation and streamlines operations by offering a best-in-class, reliable, scalable blockchain-as-a-service (BaaS) platform – unlocking new opportunities for growth for commercial and consumer companies.
If you're ready to explore immersive digital experiences that help your brand thrive, let's connect at https://www.aventus.io/contact
