The Role Of Phygital In The DTC Economy


Sharat Potharaju is cofounder and CEO of Mobstac, a QR code and mobile marketing company.

The past 18 months changed everything about how you market your products and services. You even run your business with a different mindset, whether your focus is B2B or B2C, as digital payment processing, contactless experiences and direct-to-consumer (DTC) shopping has reshaped the retail landscape.

Today, nearly 60% of customers go out of their way to buy directly from brands they trust, which has produced a fascinating new imperative, especially for CPG companies, to increase DTC marketing efforts and grow digital presence to meet consumer demands.

One of the ways I’ve seen this happen is through phygital, an emerging channel for which my company provides tech. Phygital tools help brands bridge the online-offline divide to deliver a personalized experience, wherever customers encounter your brand. CPG companies, in particular, have been quick to adopt this approach strategy to better connect with their customers and increase their brand equity in a competitive marketplace.

Phygital gives businesses of all sizes the opportunity to connect with customers in new ways to gain brand equity. Here are some things to keep in mind as you incorporate phygital experiences into your marketing strategy. 

Boost customer loyalty with experiences that bridge the physical-digital divide.

In today’s marketplace, creating loyal customers can be difficult. However, delivering consistent interactions digitally and in person can help establish brand trust. Phygital tech like QR codes, NFC tags and beacons can prompt your customers to visit your website or social media, nudging customers to further engage with your brand. These are rich opportunities to access first-party data that will help your brand get to know your customers even better and deliver experiences that demonstrate you’re paying attention.

CPGs provide an excellent use case in this because they typically sell directly to retailers who don’t provide much feedback or customer data in return. So, CPGs can use phygital to drive customers to their website, app or social profiles, where they can capture first-party data that they don’t typically receive from retailers. This can help brands better cater to customer needs.

And, there are many ways to do this using phygital tech:

• Add QR codes to packaging to offer stories behind your products or insight into your brand identity. 

• Use Near Field Communications (NFC) tags and stickers on advertisements or products to promote marketing campaigns. 

• Create geofencing advertisements to prompt customers with a coupon or promotion in their mobile app when they walk past your store.

• Send location-specific notifications to customers through your mobile app using beacons.

However you choose to shape your phygital interactions, your brand has the opportunity to drive brand equity by delivering a memorable and exceptional experience that customers will tie directly to your products through phygital channels.

Empower your marketing team with first-party data from phygital experiences.

Consumers are more aware of the value of the data they share with brands, and they care more about their privacy than ever before. In light of this, customers are looking for brands they trust, and delivering a personalized experience is the new baseline for demonstrating that your brand has the right tech to recognize the difference between a returning customer and a first-time buyer.

It follows that 91% of customers are more likely to shop with brands that offer relevant promotions and recommendations. So, staying connected to customers and serving up relevant content through phygital interactions can help your bottom line.

The key ingredient to make this work is accurate customer data. As Google begins to restrict third-party cookies, it will be increasingly important for companies to collect their own customer data. Brands will be able to connect with customers directly to better understand what they want using first-party data collected often through DTC phygital interactions.

DTC marketing has increasingly focused on phygital channels as CPG competition heats up because this approach creates room for increased margins. Because retailers significantly mark up the prices of goods, CPG brands can put much of this margin back into their bottom line by making the transaction directly with customers. But, of course, this isn’t just true for CPG brands. Any company can benefit from cutting out the middleman.

Put security at the core of your phygital interactions.

While you may be eager to implement phygital opportunities to build brand equity, note that interactions that cross the physical-digital divide may come with additional security risks. Given that one of the main reasons to go phygital is to build customer relationships and trust in your brand, this can’t be ignored.

When exploring potential technology partners, creating safe and secure integrations should be at the foundation of your phygital program.

• Make sure your tech partner provides a Secure Socket Layer to their QR codes to protect users from phishing schemes or mobile malware.

• Your tech partner should implement multi-factor authentication sign-on.

• Ensure your tech partner’s annual security and data audits are up to date.

Especially as phygital experiences grow from being a retail trend to a widespread marketing tactic, you may be tempted to find a partner that provides free or perhaps just the most affordable solution that meets your project brief. But there’s value in paying to secure that first-party customer data you’re looking for and it will pay dividends later as brand equity. So, be selective about any third-party marketing platforms you choose to work with.

Phygital experiences can help your brand meet growing customer expectations.

Phygital is helping crack open the DTC economy, and not just for CPG companies whose customers have picked up permanent online shopping habits. With a personalized, interactive approach, you can deliver a memorable customer experience and get the data you need to better serve your customers in the long term.

The e-commerce boom has no end in sight and with shoppers missing the pre-pandemic normalcy of in-person shopping, their expectations for what each in-store visit will look and feel like are based on the digital experiences they’ve come to associate with your brand. In this climate, phygital is the way forward.


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