Digital technologies have rapidly become a key part of modern life- but the pace of change has left many consumers struggling to adapt. In a new series of articles, Bearing Point has identified five key ‘paradoxes’ to the way in which digital consumers should be handled. First, Sarah-Jayne Williams, Director at consultancy BearingPoint, looks at the online retailers need to address consumer’s wish to ‘touch products before they buy’.
Digital Channels Create Incompatible Consumer Goals
The digital world is barely 20 years old, yet it continues to dramatically transform how customers transact with, relate to and experience brands. Human psychology has remained largely unchanged during this time; customers are empowered by the digital tools but they seem to want incompatible goals: “I want to be able to touch products before I buy, but also to buy them quickly online”.
This disconnection is creating paradoxes that impact customer behaviours.
The latest research from BearingPoint has highlighted five key paradoxes that customers and companies are facing:
This article examines the first of these paradoxes and asks – How can companies can recognise and address the Physical versus Digital Paradox?
Physical versus Digital
As a percentage of total retail sales, internet sales, as recorded in economic statistics, still account for under ten per cent by value. But the internet is frequently involved in physical sales as well. Indeed, physical and virtual channels are increasingly intertwined, with product search and evaluation undertaken in one channel and purchase completed in another. It is not unusual to surf a virtual store for prices and reviews while simultaneously shopping in a real store with the intention of picking up goods immediately. Customers expect a consistent and seamless experience across these multiple touch points, and expect to resume their journey where they left off: a form of ‘conversation’ across different channels.
The strategic consequence of this integration is the blurring of previously distinct parts of the buying process. Instead of a standardised linear process, customers now enjoy physical and virtual interactions through a more individual ‘customer journey’.
Consistency can be difficult to achieve. One step is to synchronise customer contact history across channels. But many organizations depend on different legacy systems, so moving towards a cross-channel customer contact history requires significant investments and extensive organisational transformation.
The trend towards virtualisation started with the substitution of real products and services by digital ones. Then came the integration of physical and digital. Now we are entering a new phase in which exciting combinations of the real world and digital technology are being brought together in augmented reality applications. For example, software developer Zugara has developed applications to help people try on fashion items in virtual space and send pictures to their friends for approval. Because people – and companies – often want aspects of both the physical and the digital worlds, it is difficult to know which such applications will take off.
Virtualisation
Consumers are faced with the choice of what combination of physical and digital experience to go for, while companies have a bewildering choice of new configurations of real and digital and find it difficult to know where to invest and how to ensure consistency across different channels to consistently manage the customer buying experience.
How to Address the Paradox
Mainstream use of digital channels is relatively new but human psychology remains largely unchanged. The new possibilities digital channels create are sometimes at odds with current sensibilities. People are sociable, they seek friendship, they care about trust, they interact with the world both cognitively and emotionally. These truths remain, and must be re-expressed in the digital age.
Although there is a transition between broadly physical forms and broadly digital ones, customers still want aspects of the physical world and will make use of both physical and digital artefacts. So companies have to integrate the two and make judgements about what consumers will, or will not, accept in each channel. A conservative approach will not take full advantage of technology but a radical approach may fail to gain consumer acceptance.
Key steps to take to address this paradox include:
1. Map the roles of physical and digital channels in the customer journey space.
2. Research customer journeys in relation to your products and services. Understand how and why your customers use the respective channels.
3. Check that you are supporting the customer journey, integrating customer data and removing inconsistencies.
4. Identify substitution possibilities, ensuring that incentives are incorporated to promote the use of either physical or digital channels as appropriate.
5. Are there any tipping points in sight where the physical form becomes non-viable or marginalised?
6. Identify opportunities to integrate real and digital experiences.
7. Innovate. Think about opportunities to use new technologies such as augmented reality.
Physical versus Digital – Where do you stand?
Businesses have to consciously recognise the digital versus physical paradox and decide where they stand. They have to make choices about their customer management strategies, and such choices risk alienating some customers while enticing others.
By Sarah-Jayne Williams
Director
BearingPoint
www.bearingpoint.com
