Eli Rodrigues | Digital Experience Manager | everis

Phygital: A new dimension in customer experience

| relationships are built, where products can be tested and where memorable experiences, (Moravcikova & Kliestikova, 2017) that only physical interaction can provide, are enjoyed.

Generalization of mobile technologies have been influencing not only people’s behavior, but also their expectations regarding interactivity. Being continuously connected in a customized way, wherever they are, (Delorme, 2015) people start to expect similar capabilities from physical environments.

Figure 1 — The complete Omni-Channel Retail Report: What Brands Need to Know About Modern Consumer Shopping Habits in 2018 (Wallace, 2017)

Other subtler aspects should be noted. Ubiquity reshapes the buying process by enabling customers

to compare product features and prices on a global scale; the possibility to check reviews and opinions increases social conformity, considering one person’s decision and the decisions of a group that is much larger than its network of contacts (Hassin, Uleman, & Bargh, 2004); and the customization offered by mobile applications standardizes the expectation that physical environments and processes can also be customizable, culminating in the need to change segmentations and fixed service processes to contextual models.

For millennials, the threshold between physical and digital does not exist, 82% want to access products both on the Internet and in-store (Pastezeur, 2017). This requires the best of both worlds to create unified experiences so that everything happening in the digital scenario influences the physical one and vice-versa. For this reason, we have a trend towards finding experiences that merge digital technologies with physical experiences, a challenge Phygital is ready to respond to.

Market overview

The market has been using a wide range of combined technologies to build distinguished experiences and to improve customer engagement and loyalty.

Engaging experiences in retail include screens, panels, virtual testers, geo-localized offers and augmented reality to search, review, and compare products and sell them online. To encourage customer loyalty, there is a trend towards offering gamified experiences (Haehnsen, 2018) as Starbucks Rewards, which replaced their loyalty card with a mobile app to offer convenience when buying and receiving discounts (McEachern, 2017).

The banking sector witnesses a large discussion on the future of branches (Luzuriaga, 2018). Considering that 64% of customers like to visit physical branches and 63% consider having people working in branches important (Boardbent, 2017), more pro-active environments are being studied where the customer visits the branch not only to solve their problems, but also to gain knowledge, learn, acquire, connect and of course, transact (Rocha, Rodrigues, Araújo, Coimbra, & Méheux, 2018).

Concept branches have been created with co-working settings, coffee shops, robots providing services, consultants available through video-conference, self-service kiosks, digital tables, and gesture-controlled panels (Maraus, 2015), in addition to artificial intelligence identifying unique visits, classifying customers, understanding branch flow, and measuring feelings to infer customer satisfaction and level of interest. Other conceptions, with greater focus on young audiences, include games, 3D printers, virtual reality, distribution of digital bracelets, and co- creation environments (‘Phygital’ attracts young consumers, 2014).

The educational sector has been focusing on building more significant and effective interactions among students, instructors, data, and environments. Experiences range from smart white boards, integrated with tablets, to conventional tangible elements, such as musical instruments and sports equipment, to put learning into context (Quigley, Vate-U-Lan, & Masouras, 2016).

Other sectors, such as insurance and industry, have concentrated their efforts into back office. Insurance has been using telemetry, drones, remote inspections, and artificial intelligence to review damages and detect frauds. The industry has been using artificial intelligence to build autonomous robots and cars, manage inventory, calculate routes, monitor machinery and anticipate flaws.

Phygital has also enabled new business models, such as Tesco iconic store, where customers can buy products in places like subway stations (Meurville, Pham, & Trine, 2015), and Amazon Go, where customers can simply grab what they want and leave; customers and products are identified and subsequently charged online (Polaco & Kayla Backes, 2017).


The ambitious goal of Phygital, a combination between physical space and digital technologies, is to transform stores, offices and industries into more intuitive, smarter and more customized places.

In general, environments are built to meet specific objectives, such as customer attraction (e.g. more modern façades, video-walls, holograms, etc.), product experimentation (e.g. virtual testers, digital tables, augmented reality, games, etc.), sharing (e.g. lounges, co-working spaces, coffee shops, co-creation areas, lectures, etc.) and transaction (e.g. self-service kiosks, remote experts, virtual rooms for product acquisition, etc.).

However, differently from what it may seem, Phygital is not about distributing equipment in a physical space, but reshaping a customer’s journey, adapting the environment and operating processes to support a customized experience.

This work starts by integrating physical and digital metrics into customer relationship management (CRM) systems, extracting information from these systems that facilitates customization (e.g. flow, visits, engagement, conversion rate, cost of acquisition, etc.). By crossing such information, occasionally including external bases, it is possible to recommend products and services (Ciocca, 2017) in real time, in stores, apps, social media and partners’ channels, increasing the range of customer-brand interaction (Yvelin, 2017).

To build more intuitive journeys, a merger of sensors should be taken into consideration so that users can interact with several sensors simultaneously (e.g. using gestures and voice at the same time) or redundantly (e.g. authentication through NFC and facial recognition), observing security and infrastructure (e.g. cameras with adequate light intensity, graphic processing units, and connectivity).

Figure 2 — Examples of sensors and actuators

Operating processes are reviewed to handle non-sequential journeys, interactions coming from other channels and with no human intervention, besides automatic actuators using artificial intelligence to organize lines, manage inventory, recommend offers and control the environment.

This new customer experience dimension requires us to rethink how companies will be operating in the near future. With intelligent journeys and autonomous environments, possibilities are countless. Our challenge is to offer memorable experiences connected to strategic objectives and only then phygital transformation will be a sustainable and consistent one.

Exponential intelligence for exponential companies