9 Strategic ways AR and VR are transforming cx

Going beyond the gimmicks, we look at how augmented reality and virtual reality are driving value in today’s customer experience landscape.

Ever since Pokemon Go achieved 600 million app downloads in six months, augmented reality (AR) and virtual reality(VR) has been a real discussion point for consumers and businesses alike.

What are AR and VR?

AR and VR are technologies that either replace or enhance a physical environment with a simulated or virtual one. AR changes the live physical surrounding by adding virtual elements to it, as various smartphone cameras do today. VR on the other hand creates a completely immersive virtual experience by replacing a real-life physical environment.

Now that you know what AR and VR are, here we examine nine strategic considerations that will make a difference to how AR and virtual reality (VR) can impact your organization for the better and specifically your customers’ experience.

Read also: Customer Experience Predictions Report: 2022

1. Customer engagement strategies

Virtual reality immerses a user into a new world. Whereas, augmented reality overlays new objects or realities on the existing world. Either way, the user experiences a blurring of the edges between what is real, and what is either possible or simply fictitious. This playing with realities can be interpreted in a variety of ways by organizations.

Much VR and AR activity has been for a campaign, a game or a competition; marketing activity that potentially drives results but effectively ends up being labelled as a gimmick.

To avoid this label and use AR and VR in a way that drives engagement with consumers and has a long-term positive impact on the brand, organizations need to use the technology to solve a true business need and make a meaningful contribution to the customers’ journey.

 2. Augmented reality services that really serve the consumer

 The Nespresso brand benefits from exceptionally chic design and marketing, but they have applied AR to one of the less chic experiences of their product: the descaling process for their coffee machines. By scanning their packaging, Nespresso provide step-by-step descaling instructions, via AR. It’s not sexy but it is incredibly useful, and something that consumers were previously struggling with.

 Similarly, Hyundai have produced an AR based user manual, a digital version that replaces the bulky cumbersome paper version. By aiming a smartphone at the car dashboard, users can learn the functions of the different buttons. The digital manual also helps users to maintain and fix their vehicles, including checking their oil levels, filling windscreen fluid, and more. When examining the Hyundai app, Jonathan Gitlin, automotive reporter for Ars Technica, described it as “an extremely practical application of consumer technology that's designed to make life just that little bit easier.”

Could user-unfriendly manuals actually be a thing of the past? ISGM, a reseller of Telstra equipment in Australia, introduced an AR app to help customers with setting up their internet modem. By understanding the part of the journey that consumers find most challenging and frustrating, the company successfully provided a service that makes a positive difference to their target market. Ben Stevens, Executive General Managers - Emerging Business for ISGM said that the AR app has had a direct effect on their customer experience as it “speeds time to setup for customers and has positively impacted our NPS scores across the board.”

These three examples show extremely practical ways that AR is used to add value to the customers’ experience of a product or service. This goes beyond the fun-factor and really targets on how to impact the most negative parts of the customers’ journey, improving utility and raising the overall brand perception.

3. Virtual product testing

Providing customers with a trial-run of a product or service is a classic tactic to win the sale. Businesses can now offer an enhanced trial experience by using AR and VR.

The Ikea app launched in autumn 2017 allows users to select from more than 2000 items that can be ‘placed’ into their home. The augmented reality version of the sofa, bookcase or table is a strong indicator of how the item will fit in terms of size, style and colour. This pushes the consumer more quickly through the ‘consideration’ and ‘preference’ parts of the purchase funnel, and towards a sale. Michael Valdsgaard, the Leader of Digital Transformation at Inter IKEA Systems B.V. explains, “You see the scene as if these objects were real and you can walk around them and interact with them, even leave the room and come back. It’s really magic to experience.”

Virtual reality car viewing and test drives were launched at some Audi dealerships in 2017, a service that allows the customer to configure their chosen vehicle and then examine it in detail. “It offers our customers more information and certainty when making their purchasing decision, as well as a special excitement factor,” says Nils Wollny, Head of Digital Business Strategy/Customer Experience at AUDI AG. The advantage of the VR viewing is that the car can be experienced within different settings, including different light conditions or weather, giving the customer a much more detailed preview than just the dealership floor. This intimate, and personalized experience, weds the customer much more closely to the vehicle and creates a stronger sense of ownership.

4. Customer feedback and satisfaction

Consumers have always valued the opinion of their friends or contemporaries in their decision-making process and post-purchase satisfaction. American Apparel is now providing that all-important information using AR within their stores. Customers can scan signage and displays to see additional product information, including the essential customer reviews.

AR and VR offer the opportunity to enrich the relationship between the consumer and the product or service. The relationship is the emotional attachment that the consumer feels towards the brand and represents a huge portion of both the decision-making, but also the overall satisfaction and experience. AR and VR that adds value to the consumer and connect with them emotionally having a positive impact on the customer experience.

Brands consistently strive to communicate and engage with consumers, to demonstrate their brand values, all with the intention of gaining loyalty and brand preference. Brands respect and lean on the importance of emotions in the purchase process. AR and VR offer the chance to connect emotionally with consumers with an intensity that has not been experienced before.

Read also: Capture the mindset of your customer

5. Process excellence

An organization might have exceptionally efficient or effective systems, but the only thing the consumer cares about is the end result – their experience. It might seem disappointing to hide the excitement of AR and VR behind the scenes, but there is potential for huge impact in this space.

Citibank worked with a mixed reality technology company to develop a mixed reality-trading desk. The combined 2D and 3D working environment increase the trader’s ability to extrapolate insights from data, increasing their efficiency and making better trades. Traders work with hundreds of financial instruments, and with the mixed reality workstation, they can quickly identify market hotspots that they should be focusing on. While this doesn’t directly touch Citi’s consumers, the consequences – better trades – are a definite positive impact.

6. Employee engagement

Another excellent example of non-consumer facing application of VR is in staff training, particularly in retail. Staff can work through the training program in VR, saving the time and expense of a real-life trainer, and the VR training can give a full immersion to products and shop floor scenarios.

Likewise, VR can be used for the on-boarding process of new staff, fast tracking them through the awkward team integration period and to a point where they can become productive.

The customer experience of a brand can be impacted significantly even if they do not experience the latest technology first-hand. By focusing on solving the customers’ problems organizations can more easily embrace the behind-the-scenes application of AR and VR where it can make a big difference to reduce points of friction and improve the level of convenience the customer feels.  

Also read: Customer experience metrics checklist

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7. Digital experience is the key

Technology can’t save an organization on its own. It is simply the enabler of a well-planned strategy. So organizations must deploy digital approaches that don’t just focus on one technology (mobile, CRM, IoT etc), but consider how technology, product and marketing work holistically together.

Sephora is a brand that demonstrates excellent understanding and excellent returns from following this strategy. “Digital and innovation have always been part of our DNA at Sephora” said Mary Beth Laughton, Sephora’s executive president of omni retail.

In 1999 there were just over three million websites globally, compared to over 1.7 billion today. Those 3 million were in fact the pioneers and risk takers. The Sephora website was launched in 1999, evidence enough that digital is integral to their strategy, and they positioned mobile as a purchasing channel from early on. Now Sephora consumers can benefit from artificial intelligence to help find their exact foundation colour, instore touch screens that provide fragrance samples, and their latest addition – personalized shopping using an AR app.

The Sephora app allows users to ‘try on’ thousands of different lipstick and eye shadow shades, plus false eyelashes, and other make up products. In a mobile environment where 75% of downloaded apps are never opened more than once, Sephora customers are breaking the trend by repeatedly engaging with the brand’s app. Laughton outlines how digital simply is the company’s strategy: “Every digital product or tool or experience that we introduce is done to make shopping for our consumer more fun and more efficient – to help her engage her, educate her, and entertain her.”

Read also: Decisioning Director at Sky talks the practicalities of digital customer experience

AR and VR can add huge value to the customer journey and experience, but that value is optimal when the technology is not stand alone, and is instead part of a cohesive digital strategy.

8. AR and VR to the next level

In a spiral of continuous improvement, AR and VR can not only deliver improved customer experience and ROI for the business, but also gain insights and intel to drive further developments. Essentially, with greater, more high sensory integration into the consumer’s behavior it is possible to obtain deeper understanding of their decision-making criteria. By channeling the data from VR and AR activities back into the business the whole customer journey can be continuously refined.

Commenting on the approach taken by Sephora, Gianni Giacomelli, senior vice president and business leader for digital solutions at Genpact (a consulting company) emphasizes the importance of ‘data points’ and the valuable information that they can provide to the business which he describes as ‘key for digital transformation’.

SLDNXT (a financial services customer experience company) take this a step further with the hypothesis that data gathered from AR and VR can be routed into the product design stage. Their website describes how they can “have a typical consumer experience, a virtual version of the design and then aggregate the neurological data from the experience.” This is an invaluable insight – to gain direct, virtually hands-on feedback from consumers prior to committing to fully producing and releasing the product. With intelligence as valuable as this, organisations will be well placed to provide consumers with the exact product or service that they desire, making for very happy customers.

9. Making AR and VR work for your customers

The possibilities presented by AR and VR are extensive and exciting. However, to drive real value for the organization and for customers’ expectations and experiences, AR and VR need to be implemented with a strategic, integral, long-term view. Focusing on applying AR and VR to actually solve customers’ problems, rather than provide a new gimmick, is crucial.

Without a full and complete digital transformation strategy, AR and VR will remain a piecemeal tactic with limited impact on the organization. In this long-term strategy, businesses should maximize the contribution AR and VR can make, wringing all potential value, including driving data and insights back into the organization.