PHYGITAL: Why invest in transforming physical spaces?
In the early 2000’s, companies had doubts about the advantages of building websites. They were not sure returns would outweigh their investments, and creating content and maintaining updated information seemed like a major cost.
Customers, for their part, were used to seeking out personal support through phone calls or visits to physical sites, which gave them a greater sense that their requests would be honored.
The paradigm shifted over time with the spread of personal computers (Case, 2011) (Reimer, Personal Computer Market Share: 1975–2004, s.d.) (Reimer, Total share: 30 years of personal computer market share figures, 2005) (Rosoff, 2016), and websites came to be more than just a replica of the business’s services, becoming a channel for sales, customer service, and customer support.
Today, 96% of Americans have made an online purchase, and 80% made one in the last month. Millennials make 54% of their purchases online, while non-millennials make 49% of their purchases online (Hatch, 2018).
The same virtuous cycle has taken place with the mobile channel, only faster, considering that many users have multiple cell phones. Worldwide, there were 8 billion active cell phone accounts at the end of 2018 — more accounts than people (Number of mobile (cellular) subscriptions worldwide from 1993 to 2018 (in millions), 2019).
Currently, 88% of customers use their cell phone to research products before making a purchase in a physical store (webrooming), comparing prices, comparing products, or looking for more information. And 76% of customers research products in physical stores before making an online purchase (showrooming), to test the product in the store, look for a lower price, and ask salespeople questions (The Rise of Webrooming, 2014) (Hatch, 2018), with a conversion rate that already surpasses 64% (Meyer, 2017).
websites resemble physical spaces
A website is simply a location on the World Wide Web, a digital representation of the products and services offered by the business, originally in physical space. It is a customer service channel, with a conventional structure that allows customers to learn about the business’s services, check prices, make purchases, use services, seek assistance, etc.
Behind the website, sitting in silence, is marketing analytics, observing the profile of customers, measuring each access, each click, common search terms, price checks, purchases, and abandoned shopping carts. Information like this allows for more accurate segmentation of customers, correlation analyses, and opinion mining, which are used to create combos or even new products.
Advertising campaigns, ads displayed online through search engines, social media platforms, paid media or banners, are compared to organic access to calculate the Customer Acquisition Costs (CAC). And cookies, which track research and access to other websites, enable remarketing, creating ads that follow customers wherever they go.
Products that require greater emphasis are given hotsites, simplified websites with information on a single product, which facilitates conversions. This is why banks, for example, have websites specifically dedicated to opening accounts, acquiring credit cards, pricing mortgages, etc.
The objective of this set of mechanisms, with a digital marketing strategy, is to draw more customers to the website and guide them on their purchase journey.
But what do we see in physical spaces?
Large companies have countless points of sale, distributed to reach the largest possible pool of customers, with investments that match the segments they serve. This is why it is not uncommon for physical spaces to vary in several ways, from layout and product selection to the type of customer service offered.
Companies have information on how many customers were served and what services they used; those with take-a-number systems can even calculate the average wait time and number of customers that give up on waiting, as long as customers don’t trade numbers, of course. But most companies lack information on the profile of customers that visit each store, where they go, what products they failed to find, and why they chose one product over another.
To learn about customer satisfaction and the unmet needs of customers, business usually rely on totems placed at the store or registers, where they gather quantitative data. This is why some companies seek qualitative data by using in-store representatives to present products and interview customers.
Despite their current differences, physical spaces can, with the right layout, take advantage of digital marketing, just as websites do. Rethinking the customer’s journey to improve fluidity, adding markers to capture information about flow, mood, timing, and non-purchase decisions, and building spaces that are analogous to hotsites, and personalizing campaigns for the target group of each store offer a significant step forward.
Why invest in transforming physical spaces
In previous technological cycles — web and mobile — volume increased as equipment became more common. The same is true of the equipment for the internet of things, with prices falling.
However, transforming physical spaces is about more than just technology; it is also about resignifying space through design and rethinking processes through the lens of lean.
Defining the objective and a focusing on the real-world customer experience allows for precise interventions to optimize return on investment and also to create truly outstanding customer experiences. The time to begin is now!
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