Capillary’s aiRA: Solving the Paradox of Consumer Personalization

Capillary’s aiRA: Solving the Paradox of Consumer Personalization

Consumer personalization has been talked about for quite some time. Jessica Liu’s article on Forrester opens on an interesting note, “This is the paradox of personalization: Consumers both want it and despise it.” And this is absolutely true. As a consumer, we’ve all been hassled by incessant emails and notifications from brands trying to sell a product. At times, these are useful and present a great deal but sometimes, it’s just annoying! 

And as a marketer, this is the thin line with which one is always toying. On the one hand, there is the pressure of increasing toplines which would push marketers to communicate aggressively, and on the other hand, there is the risk of losing customers. At Capillary, we’ve developed aiRA (Artificially Intelligent Retail Analytics) over the years to answer this conundrum. 

Headless AI platform for intelligent audience segmentation

Too much data can also become a problem. As a marketer, what one needs is clean, accurate data with insights to run targeted campaigns. This is the secret to a successful marketing program. Working with hundreds of brands, we’ve touched more than 875 million end customers across the globe, giving us a great foundation to build intelligence. Our team of data scientists has come up with various models which are the heart of aiRA that provide next-gen capabilities. 

aiRA and its applications

As an enterprise brand, you know your goals. With aiRA, we can model the requirements to achieve your goals in the best possible way. aiRA can be trained on consumer data by using a specific model and desired results can be achieved. To give an example, we’ll run through some of the models:

Crystal-gaze into when a customer would transact!

The ‘transaction prediction’ filter is like a magic filter that can predict when is a particular customer likely to transact (buy/sell). Through this filter, marketers can select the period (in the number of days) they want to consider for predicting the transaction probability of customers. For example, one can include customers predicted to shop in the next 7, 15, and 30 days.

Kill customer churn with ‘lapsation period’ prediction

It’s always great to have flags about a customer because many a time, one doesn’t know what is bothering a customer. The ‘lapsation period’ filter takes into consideration several user actions and on the basis of aiRA modeling, it can predict when a customer would lapse. This option lets you get the customers with a maximum or minimum probability of stopping transactions with the brand. The marketer can design a campaign to reduce churn and increase CLTV (customer lifetime value). 

Predict time slots when a customer likes to shop

Many times, a customer gets annoyed because of the time of communication. Although there are industry-benchmarked suggested time slots, each individual can have a different preference. And this is where aiRA’s hyper-personalization comes in handy. This filter helps you build an audience group with customers that are likely to transact during the selected day(s), hour range, or week(s) of a month. This filter also helps to achieve higher incremental sales of the brands.

Capillary aiRA insights

Which store does a consumer prefer? 

Enterprise brands have multiple stores and multiple products. In the age of omnichannel fulfillment, it is critical to have all data in sync. Has a consumer browsed for something on your website and is s/he passing by a store of his or her choice? If this is the case, how about notifying them with a real-time offer? This is what the ‘store prediction’ and ‘product prediction’ filter allows you to do. 

The store prediction filter helps you build an audience group with customers that are likely to transact at a store, zone, or concept. And the product prediction filter helps you build an audience group with customers that are likely to purchase products using product categories.

aiRA – Delivering Foresight, Not Just Insights

Capillary’s end-to-end platform is a suite of products like Loyalty+, Engage+, Insights+, and Anywhere Commerce+. Underlying all of this is the Capillary CDP (customer data platform) which is powered by aiRA (artificial intelligence framework). 

The entire platform unifies customer data from various sources like online stores, offline stores, kiosks, and other 3rd party sites. This unified data is then converted into a 360° customer view through rules & heuristic algorithms as a part of aiRA and then delivered as actionable insights or foresight to the marketer via Capillary’s suite of products.

aiRA models of different kinds

A Scale-Ready Solution

Capillary has worked with retail giants for more than a decade and this has led to an intelligent platform that is designed for scale:

  • The platform grows with your business needs
  • Intelligent fraud detection technology deployed to detect the possibility of fraud at an early stage
  • No-code, self-managed tool which is easy to use for marketers
  • Trained across verticals for specific use cases

Deliver Personalization at scale with aiRA

One of the biggest challenges a brand faces with respect to personalization is to deliver it at scale. Although standardization is required for any kind of scaling, it is artificial intelligence and machine learning which lets systems personalize at scale.

We’ve made giant strides in the digital age but AI is still an evolving technology and holds immense possibilities. aiRA is our bet on personalization at scale through AI and it has already shown early signs of success. Several brands have used AI-powered filters to improve segmentation and deliver highly personalized experiences to their customers. 

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Propensity Models: Capillary’s Secret Sauce for Marketers to Predict Consumer Behavior

Propensity Models: Capillary’s Secret Sauce for Marketers to Predict Consumer Behavior

Businesses and marketers inherently try to predict customer behavior. Be it a mom&pop store intuitively gauging shopper intent or a large enterprise using data analytics, Artificial Intelligence (AI), and machine learning (ML) to predict consumer behavior and achieve business goals. In helping enterprises achieve this, Propensity Models play a large role. The statistical technique was developed by Paul Rosenbaum and Donald Rubin in 1983. Propensity Models are statistical frameworks that try to estimate the likelihood of people behaving in a certain way. When coded into a system like Capillary, these become tools in the form of filters to help loyalty marketers run better programs. 

Challenges for a Loyalty Marketer

For a marketer to run effective programs, knowing the consumer and targeting the right audience with the right message is the key. This is possible when you have a handful of customers but if we’re talking of thousands and millions of end customers across a nation or throughout the world, segmentation becomes a huge challenge. 

Challenges for a Loyalty Marketer

Audience segmentation: Certain triggers like offers and promotions would only work in a particular context. For instance, if you send a “We miss you!” email to all customers in your database, it will create confusion for active customers. The system should be intelligent enough to give you this segmentation to run effective campaigns. 

Too much data: Sometimes, data can get overwhelming. Different kinds of data (zero, first, second, third-party data) and the inability to make sense of it at scale can become a challenge for marketers. Data is useful only when there are systems that interpret the data and give actionable insights. 

Customers with multiple identities: Many times, a customer may be associated with several identifiers, and marketers have to ensure that they have the latest data. To add to the problem, customers may change their accounts or alter their preferences which add to the complexity of the problem. 

Capillary Audience Filters: A Primer

Based on Propensity Modeling, Capillary’s team of data scientists has built predictive models used as audience filters to help loyalty marketers overcome their challenges. Capillary’s audience filters provide a proven capability to target end customers based on their shopping behavior. These AI-powered filters are backed by Capillary’s artificial intelligence retail analytics (aiRA) technology which runs models on billions of transactional data points to generate accurate results. 

Types of AI-based Audience Filters and Use Cases

Capillary provides a host of filters based on many business requirements. The results of the filters can be used to create an ideal audience list that can be targeted with campaigns, promotions, communications, loyalty benefits, and more. There are use cases across verticals– from retail and fashion to CPG to F&B/QSR and more. 

Importance of Capillary's AI Powered filters

If we consider fashion as a segment, a simple instance could be about a brand using the ‘gender’ audience. If there’s a men’s range of clothing that needs to be promoted, this filter would be called into action. Another widely prevalent use case would be to reward customers based on their average shopping amount. If a consumer has shopped above a certain threshold, they could be rewarded with a discount or a further offer. These are simple examples but all audience group filters can be classified into several types:

Loyalty stage filters: The first stage of audience segmentation will divide customers into- loyal, non-loyal, or customers that haven’t yet enrolled in the company’s loyalty program. Drilling further, the audience can be segmented into customers who have active points, customers whose points have expired, whose slab has recently changed, who are registered at a particular store or a zone, and such. 

Transaction-based filters: Another key parameter on the basis of which the audience is segmented is transaction history. These filters can help you segment the audience on the basis of when they shopped, what they have shopped for, their visit count, number of transactions, total transaction amount, and several other parameters. 

Campaigns & Coupons based filters: For any marketing program, coupons and vouchers are an important element for customer engagement. To optimize the use of this tactic, there are filters that let you build groups on the basis of- customers to whom coupons were issued during a specific period, customers who redeemed their coupons, customers who have responded to a campaign, and such. 

Types of Audience Filters

User Profile-based filters: This is another major parameter on the basis of which audience lists are created. Depending on how rich and accurate your user profile is, the more effective this filter will be. Audiences can be segmented on the basis of- Subscription status (mobile number, email subscription preference), NDNC (National Do Not Disturb) status, demographic details, fraud propensity status of a customer, and many other parameters. 

Purchase pattern filters: These are the most potent set of filters a loyalty marketer is most interested in. These filters include the ability to segment the audience according to a customer’s- average transaction value, most recent purchase, preferred day/time of shopping, the probability to be incentivized by discounts, average spend per unit item, and many more. 

Artificially intelligent filters: aiRA (artificial intelligence retail analytics) powered filters are designed to target customers with a specific prediction. When you combine aiRA-powered filters with the above standard filters, the chances are much higher to achieve a better hit rate, incremental sales, and avenues to offer relevant products to customers at the right time. Some of these filters include capabilities through which one can predict when a customer would transact or when a customer will lapse.

Perfect Your Customer Outreach, Redefined with Propensity Modelling

Capillary’s advanced filters along with the aiRA-based filters give a loyalty marketer the superpower to execute precise marketing programs and deliver business results. In this age of competition and excess of everything, it is important for brands to have meaningful data and actionable insights to make sense of it. This is what Capillary’s filters do and help loyalty marketers perfect customer outreach and deliver a great end-customer experience.

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How Capillary’s Nudge Framework can be a Gamechanger for Loyalty Marketers

How Capillary’s Nudge Framework can be a Gamechanger for Loyalty Marketers

A concept in behavioral sciences, the Nudge Theory was named and popularized by the 2008 book “Nudge: Improving Decisions About Health, Wealth, and Happiness”, written by American academics Richard H Thaler and Cass R Sunstein. The theory is mainly concerned with the design of the environment in which people make choices. The framework is about understanding how people think, behave and make decisions.

At Capillary, we’ve been building on the Nudge theory in the context of a Loyalty Marketer. Pioneering the use of the Nudge Framework in the context of loyalty marketing, using the platform gives you an upper hand against the competition when looking to improve customer engagement and deliver a great experience.

How the Nudge Framework helps a Loyalty Marketer

Nudge Framework - Type of NudgesWorking with 250+ brands and touching 800 million+ end customers globally, Capillary’s system is extremely rich in data which helps the Nudge engine to come up with some really incisive insights. We’ve devised a product-led way to help loyalty marketers, CXOs, and practitioners improve the performance of their marketing programs with the least friction. One of the layers across the Capillary suite of products, the nudges can be broadly categorized into three kinds: 

Type 1 (Data-led Nudges): Know how your program is doing, and potential disruptions to watch out for
Type 2 (Platform best practices): Low-hanging fruits to leverage product features
Type 3 (Proactive Nudges): New initiatives that can boost program performance to the next level

Nudge Framework - Capillary Platform

Now, let’s dive deeper into these three kinds of nudges and the benefits they can reap for a brand. 

Type 1 Nudges from Data Trends (Data-led Nudges)

It can be a tedious affair to keep track of tens of metrics on a regular basis and particularly without context from the industry. The aim of this category is to proactively serve key insights on what’s working and what can be made better and how you are doing compared to peers in the industry. For instance, if the system detects the following:

  • % customers redeemed points is low: The recommended suggestion could be to set up reminders- Points Redemption push or to initiate a points top-up campaign.
  • % expiry is high: If there are a lot of customers with a points balance below the 25th percentile of average redemption, the nudge would be to improve generosity.
  • Churn rate is high: The nudge would suggest measures like setting up a recurring campaign using the “about to lapse AI filter” and winning back repeat customers through strong offers. 
  • % repeat customers are low: The system nudge would be to set up welcome or registration bonus, “We miss you” campaigns for one-timers who are on the verge of lapsing, and other such recommendations. 

Nudge Framework - Type 1

Type 2 Nudges to use the product to its full capability (Platform best practices)

Over the years, we’ve built an extremely comprehensive platform with loads of intelligence inbuilt. Sometimes, it can become overwhelming and you may miss out on some of the features that a loyalty marketer can leverage. To ensure this doesn’t happen, here are some of the nudges:

  • Upgrade Communication not setup: This nudge means that the user hasn’t set up any upgrade communication for the ‘Default Program’. Upgrade communication can be quite useful for talking about the benefits of the new tier that the end customer has now earned.
  • In case of Points Expiry Reminder is not set up: Points Expiry Reminders tend to increase customers who redeem points by x% and your redeemers contribute y% more to the brand – leverage this impact through simple reminders.
  • Demographic data is not captured/low: The nudge would be to set up a “Welcome bonus on filling in details”. This would incentivize end users to provide their data with consent, and your demographic data would now be richer. 

Type 3 Nudges to take up the program engagement a notch higher (Proactive Nudges)

Apart from the above two types of nudges, these are nudges that look at doubling down on the engagement and loyalty game. These are add-ons that help loyalty marketers further refine their engagement program. 

  • Low DVS (Dynamic Vouchering System) issues: Capillary’s DVS enables a marketer to send personalized vouchers to its customers in real-time. Through the data, if it is found that the issues are low, the nudge would be to set up bounce-back campaigns to create aha moments for your customer. Such experiences help maximize in-store spending at that moment or encourage the next visit.
  • No/Low amount of promotion points issued: Using data, we can gauge this metric and the nudge would be to set up a loyalty-based promotion to create “surprise and delight” moments for your customers. 
  • In case the Birthday Campaign is not set up: The nudge would be to issue bonus points 15-30 days prior to the birthday valid till 5-7 days after their birthday. This will increase the chances of a shopper buying from you around their birthday. 

Get Seamless Suggestions – The Capillary Advantage

Nudge Framework - Capillary Advantage

Many times nudges are ignored by a loyalty marketer or a user in general because the workflow isn’t optimal. A system may be giving the right nudges but at the wrong times! This results in subpar effectiveness. To avoid this, Capillary’s Nudge Framework undergoes continuous feedback cycles and AI learning to ensure the nudges are smoothly integrated into the workflow for a loyalty marketer. 

Data Analytics plays a huge role in helping us deliver the right nudges to help you achieve your business goals. As we strengthen our position as a leader when it comes to innovation in the field of Nudge for Loyalty Marketers, we see tremendous benefits for our clients in delivering value and a great customer experience. 

Talk to a loyalty and engagement expert to learn more about the Nudge framework and see how it can help improve your program performance. 

NFTs and Their Relevance for a Loyalty Marketer

NFTs and Their Relevance for a Loyalty Marketer

Collin’s dictionary had an interesting term as the ‘Word of the Year for 2021’. Any guesses? It was NFTs! Non-fungible tokens (NFT) as a term saw an increase in use by a whopping 11,000%! The excitement has petered down over the last few months but there was massive hype owing to the rise of sellable digital art on the blockchain and the possibilities it could open up. The entire space has become more realistic now and brands are entering the domain with some amount of research. 

What is NFT?

To put it in very simple words- NFT is a digital commodity like art, music, or any other file that can be traded. Every piece of art is unique and it becomes an NFT after the artwork or file is minted on the blockchain. It sounds pretty complex but minting is primarily publishing a digital asset on the blockchain. 

Why is NFT Important for a Loyalty Marketer?

A marketer’s job is to identify places or networks where the brands’ customers or potential customers hang out and take the brand there. And by this definition, NFTs are pretty big now- their market size in 2021 stood at $4.36 billion

Some progressive brands jumped onto the NFT bandwagon early on but Starbucks took its time and entered with a bang by launching Starbucks Odyssey– an NFT Web3 extension to its already successful rewards & loyalty program. Brady Brewer, Starbucks executive vice president, and chief marketing officer said, “Leveraging Web3 technology will allow our members to access experiences and ownership that was not possible before. Starbucks Odyssey will transcend the foundational benefits that our Starbucks Rewards members have come to love, and unlock digital, physical, and experiential benefits that are uniquely Starbucks.”

Apart from Starbucks, “Nike sold an NFT Sneaker for $134,000!” reads an NYTimes headline, and they very pertinently ask, “Why would anyone spend that much for a virtual shoe?” For a non-gamer and a web3 world noob, all this reads rather outlandish but the buyer of this virtual sneaker, Mr. Chui, has something to say about his motivation, “The thing that gets me most excited is going through this renaissance. We’re experiencing this intersection of the physical, the virtual, the gaming world, and the investing world in real-time.”

It may seem a little far-fetched, but the reality is closer than it seems. For instance, Starbucks’ Odyssey is a lot more realistic, where the end customer does not need to have cryptocurrency or any other account but can still reap the benefits of the NFT-based program. Odyssey will allow consumers to collect digital stamps (not akin to loyalty cards that have existed for decades) and these stamps will allow them to unlock special experiences like a virtual coffee-making workshop from the best Barista to a real tour of the Starbucks estates in Costa Rica. 

Rise and Fall of NFTs

2021 was the year for NFTs. 2022 beginning was steady but there has been a sharp fall after the first few months. In September 2022, the daily trading value on OpenSea was down 99% from its May 1 peak of $405 million! At the time of writing this on October 11, the daily trading volume was a meager $8.9 million.  

NFT - OpenSea

The gaming industry and digital art collection industries were the two main industries that drove NFT adoption. In gaming, a new wave of blockchain-based play-to-earn games has emerged where people can play and win digital assets, which can then be exchanged for physical rewards or used to trade with other digital goods on OpenSea. 

Although the overall adoption has tapered owing to the global economic downturn, reports claim that the NFT market size will rise to $200 billion in 2030. Only time will tell whether this becomes a reality but NFTs are unlikely to disappear entirely. NFTs are a doorway for brands to enter the metaverse as the lines between physical and digital are surely blurring. Steadily, more and more experiments by brands will pave the way for the future of NFTs. 

Exclusivity and Community- A Loyalty Marketers’ Lure

The kind of possibilities that the metaverse offers are amazing. Imagine, two coffee lovers from different parts of the world meeting because of a special experience they unlocked through NFTs! Brands can play on the two biggest cards- providing exclusivity to members and the community angle where people don’t just connect with the brand but with other people too.  

NFT Exclusivity

By exclusivity, we mean a campaign where a particular pair of sneakers are only available on the metaverse. Or if a user enrolls for the NFT program (without having any prior knowledge about NFTs or cryptocurrencies), he/she becomes eligible for a set of unique experiences that the brand is providing. 

The feeling of belonging that a community brings in is always special. People often indulge in experiences or do things not for that thing but for the company with who they’re experiencing it. The metaverse opens up the world in that way because geography isn’t a constraint. A community can engage from any part of the world and bond over things they feel connected to. 

Conclusion- Start Small, Start Now!

NFTs, metaverse, and the entire Web3 technology ecosystem has several opportunities for loyalty marketers to leverage and extend their customer engagement programs. It opens up an entirely new arena for referral programs and rewards & benefits programs to take customer experience to another level. The younger demographic across the world is already digital-first and for brands to stay relevant to the new incoming consumer base, a solid strategy for NFTs and metaverse is a must. Here’s another deep dive into the changing face of CX in the metaverse but the crux of the solution is to understand the space thoroughly, assign a small team and start with a pilot program to test out the waters. 

Importance of Data Privacy for Loyalty Marketers

Importance of Data Privacy for Loyalty Marketers

One in four Americans won’t do business with data-breached companies, reads the headline of this ZDNet report. And this is getting increasingly true across the globe. Cyber security and customer data privacy has become increasingly important for loyalty marketers and brands in general. At Capillary, we take customer privacy extremely seriously and as a loyalty marketer, you’re the gatekeeper of the end customer’s data. 

Regulations like GDPR and CCPA mean more stringent regulations (which are actually good for business). And as a loyalty marketer, one needs to have a clear framework for safeguarding customer data and using it in the best way to benefit both the customer and the business. Some of the points to be kept in mind are:

  1. Defining Personal Data: As a brand, how do you define personal data, what are the fields included in this? 
  2. Subscription Transparency: The way a customer signs up for communication and the way you ask for consent to send marketing information should also follow a framework. 
  3. Right communication: Both of the above should be clearly communicated upfront to the customer and the communication channel should always be open. 
  4. Customers own the data: The end customer needs to have control over their data and needs to have the right to access, edit and erase their personal data. 

Data is Everything and the Importance of Customer Privacy

Data-Privacy-Questions-to-enquire-brandsOver the last couple of years, there has been a massive upsurge in digitization and alongside, a proportional increase in data. But the amount of data doesn’t mean anything if it is not collected in a meaningful manner. A BCG-Capillary report said:

  • Only 29% of consumers agree that handing over their data resulted in better products or services
  • 64% of customers blame companies over anyone else, including a hacker, if a company loses personal information/data
  • 75% of customers now limit the amount of personal information they share online

In such a scenario, it becomes critical to have customer interest at the center of all marketing activity. And this is easier said than done. A McKinsey survey reported that some CMOs have retreated to using mass marketing instead of data-driven marketing and this is a sure-shot way to get loyalty marketing all wrong! 

Understanding Contextual Integrity in the light of Data Privacy

Helen Nissenbaum, professor of information at Cornell Tech wrote an industry-defining book: Privacy In Context: Technology, Policy, and the Integrity of Social Life – where she introduced the concept of ‘Contextual Integrity’. 

The definition of privacy is very subjective and ‘Contextual Integrity’ basically tries to define it better by looking at information flows and how can we arrive at a more holistic version of privacy laws in this modern digital age. Contextual Integrity can be understood as “The right to privacy is neither a right to secrecy nor a right to control but a right to appropriate flow of personal information” (research paper).

And for a loyalty marketer, it is important to be in tune with these developments because along with certain restrictions, it also brings in new opportunities-
1) Privacy Innovation: Properly designed regulations can trigger new innovations which are capable of offsetting the costs of compliance. 

2) Data Privacy as a Competitive Advantage: While complying with policies requires investment in different forms, being ahead in the game gives you a competitive edge while pitching to new clients. Businesses and consumers care for privacy and there are opportunities where people are willing to pay a premium for better security. 

Data Privacy, Done Right

While here’s a post on all you need to know about data privacy, at Capillary, we’ve helped 250+ brands touch more than 900 million end customers in the best manner possible. 

As a loyalty marketer, while the brand collects information about the end customer, pre-defined rules help you store and safeguard the data. The end customer can set preferences for how and how often would they like to be communicated, in what ways, and a two-way communication channel through which they can voice their feedback. 

Chapter 3 of GDPR (General Data Protection Regulation) gives several rights of the data subject:

  1. Transparent information, communication, and modalities for the exercise of the rights of the data subject
  2. Right to information and access to personal data
  3. Rights for rectification, erasure, restriction of processing, and right to data portability
  4. Right to object and automated individual decision making

At Capillary, data privacy and security is a top priority and there’s a dedicated team headed by the Chief Information Security Offers. We are certified by the ISO, PCI, compliant with SOC2, and GDPR compliant. All data at rest is encrypted with state-of-the-art 128-256 bit keys and all production infrastructure is architected to sit within isolated Virtual Private Clouds (separate for computing, and storage). There is a four-step process we follow: 

  1. Continuous Auditing: We have a stringent audit plan of action where our Information Security Management Forum (ISMF) conducts regular audits to investigate operations across the board. 
  2. Client Assessment: Transparency is one of our core pillars of values and we’re transparent regarding everything security with our clients- the positive and the negative. We engage in several bug bounty programs like SafeHats to collaborate with security researchers and be proactive in plugging any holes. 
  3. Best Practices for the Best Security: Capillary platforms are well-secured and follow the best practices- secure data processing & transfers, role-based access controls, password-encrypted reports, and more. 
  4. 2FA at all access points: Access to development, pre-production, and production environment using VPN tunnels, and all access points have two-factor authentication for people. 


Conclusion – End Customer at the Center

It’s important for loyalty marketers to look at these regulations as steps forward in making life better for the end customer. Leaps in technology have enabled brands to do a lot more with customer data and with that, also comes enormous responsibility in the form is consumer trust. It is in the best business interest, to stay ahead of the curve when it comes to data privacy. This can be done by using some of the best consumer experience platforms like Capillary and delivering a superior end-customer experience. 

The Changing Face of Customer Experience in the Metaverse

The Changing Face of Customer Experience in the Metaverse

Metaverse as a term gained mainstream popularity when Facebook changed its name to Meta in 2021 but the term has a rather long history. In fact, it dates back to 1838 when Sir Charles Wheatstone outlined the concept of ‘binocular vision’! For our context, we’ll stick to the 21st century where ‘the metaverse’ is being discussed across tech and enterprise boardrooms. 

In layman’s terms, the metaverse is an immersive internet or a digital twin to the real world where people can have ‘real experiences’ in the virtual world. Consider Nikeland as an example. A virtual simulation where a person can experience all of Nike’s experiences and more in an immersive way.

Metaverse - Nikeland - Nike

For some, this may seem too outlandish but the future is closer than it seems. Gartner predicts that 25% of people will spend at least one hour per day in the Metaverse by 2026. “Vendors are already building ways for users to replicate their lives in digital worlds,” said Marty Resnick, VP of Research at Gartner. “From attending virtual classrooms to buying digital land and constructing virtual homes, these activities are currently being conducted in separate environments. Eventually, they will take place in a single environment – the metaverse – with multiple destinations across technologies and experiences.”

Use Cases for the Changing Face of Customer Experience in the Metaverse

There are infinite possibilities in the virtual world. Just like the Nikeland example above, there are several ways in which a brand can engage with customers in a digital landscape:

  1. Imagine a furniture store giving a completely virtual 3d experience to the degree of simulation as to how it’d feel when a customer sits on a particular kind of chair!
  2. Apparel & Fashion is the biggest segment where brands can design various kinds of experiences. A Wipro study says that “If consumers could experience products in AR, 71% would return less often and 40% would pay more.”
  3. Hyper Real Virtual Events: After the pandemic, events have become hybrid and in the metaverse, events can take an entirely new avatar where authenticated digital identities are interacting with brands and real transactions are happening.
  4. Reaching New Audiences: There are more people on the metaverse than one might imagine. Consider the South Korean platform Zepeto which launched in 2018 and already sold 2 billion pieces on its metaverse where fashion giant Zara hosts some of its specialized products (more on this). While in India, there have been weddings happening in the Metaverse! (imagine the entire marriage commerce industry in the virtual world.)

Metaverse - Gucci

5. The metaverse is another major channel for customer support. Like social media, people are bound to share their feedback about a brand in the metaverse, and in effect, it becomes a touch point for a brand to provide customer support. 

Rise of Gamification, Avatars, and Challenges

A key element of the entire metaverse is ‘gamification’. Creating a digital twin to the real world and embedding various dimensions to make it as real as possible. Like Nikeland, Hyundai’s Mobility Adventure is another game on Roblox (watch video) which is Hyundai’s first virtual experience developed by a global automotive brand to showcase future mobility lifestyles in the metaverse. The campaign aims to attract young people familiar with Hyundai Motor products, technologies, brands, and future solutions. 

But the Metaverse is much more than building a game! There are innumerable challenges on the way:

  1. High cost of investment: Hosting experiences, investing in technology, hiring technology talent, and maintaining online security is a massive investment. 
  2. Securing identities: With each person having an avatar and financial transactions happening, handling user data and ensuring authentication is an absolutely critical part of the strategy.
  3. Different geographies, different rules: The metaverse is a single playground with people from all over the world but the physical world is not as fluid. Rules of commerce have been defined for the physical world but it is still very much in progress in the metaverse. 
  4. Rethinking org structures: The Metaverse will be an entirely new setup for retail brands dealing in physical stores and eCommerce. What is the job of a salesperson in the Metaverse? What kind of skill sets are required? Where do you hire these people? All these are relevant questions that’ll come up as a brand enters the Metaverse. 

What does it mean for a Brand?

As a brand, standing by the sideline is never an option if one wants to grow. The kind of activity around the metaverse and the interest from young people are humungous! This is where the future is and as a brand, it is absolutely critical to have a plan of action in place. From our conversations with several top brands across the world, here are some suggestions from Capillary to plan your entry:

  1. Study the market, watch competition: Some progressive brands have made heavy investments already and for someone watching from the sidelines, it’d be critical to hire an expert just for a market study and get a sense of the returns or results of the early pilots (contact us).
  2. Zero in on your target audience: There is a very specific but diverse set of customers on the Metaverse. It is important to get a pulse of this audience and see whether this is your target market. What are your products that would be appealing to the young uber tech savvy Metaverse audience? What are their values? What are they looking for? 
  3. Have a plan of action: The Metaverse is here to stay. The world is going digital at an unimaginable speed and it is of utmost importance to have a plan of action. After the research, see if you can carve out a small budget for the Metaverse and start out with a pilot. Dedicate a small team or a few hours from everyone within a team responsible for initiatives in the metaverse. 
  4. Start small, start right: It’s okay to start small and start late but it’d be worth it if the first three points are in place. Decide a platform you want to experiment on, run some simulations, and kick off with your pilot! 

The Metaverse provides ample space for delivering a great customer experience and for a brand, at the end of the day, this is what it is all about.