Phygital Marketing: 3 Things Retailers Should Know About the Newest Marketing Channel

"Phygital" is a hybrid marketing channel that captures customer data to deliver a personalized experience.

As the number of online shoppers drives stiffer retail competition, consumers’ loyalty to their established shopping practices appears to be dwindling. Seventy-five percent of consumers reported trying a new shopping behavior since the beginning of the pandemic, and many have the intent to continue with this new behavior, whether that’s shopping online or buying from an entirely new brand.

In such a competitive market, retailers must meet the expectations of their offline and online shoppers to retain their customer bases, and phygital marketing may be a solution. Here are three things retailers should know about phygital before integrating it into their marketing strategy:

1. Retailers Can Enhance In-Store Convenience Through Phygital Marketing

While it would be easy to assume that the rise of online shopping spells the end of in-store shopping, this is inaccurate. In fact, 46 percent of consumers still prefer to shop in person, although 63 percent of shopping journeys start online.

This tells us two things:

1. Consumers still like to physically interact with products. There's value in being able to experience products firsthand and seek assistance from on-site employees.
2. Retailers need digital infrastructure to support their physical stores in a way that connects the online and in-store experience for customers.

The convenience that may drive consumers to shop online is being sought out in stores as well. Eighty-seven percent of shoppers say they would prefer to shop in stores with touchless or robust self-checkout options. This desire for faster, streamlined transactions is being acted upon by the nearly 75 percent of shoppers who use self-checkout to pay for groceries.

Retailers and stores like Amazon Go are already building off the convenience of self-checkout by enabling fast, digital transactions through QR code technology.

2. Not All Phygital Solutions Maintain the Same Security Standards

When choosing a phygital solution, prioritize data security. Consumers are trusting retailers and the companies that provide their marketing platforms with first-party data every time they use a QR code. It's important to secure this data to maintain their trust.

Data breaches are dangerous not just because they compromise data, but because they can take months to track without the proper security. Adhering to standards like SOC2 compliance helps mitigate these risks. This is true specifically in the case of SOC2 because, in order to fulfill this compliance, a platform must set up alerts for the exposure or modification of data, controls and configurations.

By verifying that your chosen phygital solution implements a rigorous security standard, you can prevent or lessen the impact of a data leak which — when made public — can erode trust in your brand.

One additional way to evaluate the security of your phygital solution is through the integration of safe QR code use, which should include ensuring any links contain your site’s root domain and marketing QR codes consistently with your brand’s logo and colors. These security measures can go a long way in developing consumer trust in your brand.

3. Phygital Marketing Drives Customer Engagement With Proximity-Based Tactics

One popular application of phygital marketing is geofencing, which creates digital campaigns within a defined physical radius. Geofencing can be used to provide promo codes to MQLs as they pass by or even to direct a customer who has placed a pickup order where to go once they’ve entered the immediate area around your storefront.

However, 77 percent of consumers reported feeling frustrated when they receive push notifications for promotions unrelated to their interests. This frustration could stem from poorly executed phygital marketing.

Your geofencing strategy should capture the frequency of customer foot traffic and push out relevant notifications for past customers and potential customers. This is also why capturing and securing enough data is crucial for geofencing. Having up-to-date data about your customers enables you to deliver impactful push notifications that move customers to act.

Successful execution of phygital marketing can result in providing information to patrons, giving timely notifications to passing diners, and even rewarding pre-purchase behavior, like trying on clothes, to drive a future sale.

Phygital marketing gives retailers the ability to make real-time pitches to customers through their phones. These examples of proximity-based marketing can succeed because nearly half of all U.S. e-commerce transactions are estimated to have taken place on a mobile device.

Phygital Delivers Improved Retail Experiences by Integrating Digital Frameworks

The opportunity to improve customer engagement and retention through phygital marketing is real and growing. Online shoppers spent 32.4 percent more with U.S. retailers in 2020 than in 2019. This may be driven by the 98 percent of consumers who value ease and convenience more now than before the pandemic.

To succeed, brands must have the tools they need to leverage what they know about their customers from digital interactions to create a more seamless, personalized in-store experience.

Ravi Pratap Maddimsetty is the chief technology officer of MobStac, a physical-to-digital experience management solution.