AR, VR, AI, and XR - Insights
AR, VR, AI and XR technologies have the potential to meaningfully change the customer engagement process for businesses before, during, after and outside of the purchase process. Not only are consumers interested in using such extended reality tools while shopping, but evidence suggests that they are positively influenced by these experiences when making purchase decisions.
Types of Customer Engagement Impacts
- According to a 2019 analysis by IBM, AR, VR, AI and XR technologies (also referred to as extended reality technologies) are enhancing customer engagement processes for businesses in four core areas: (1) product pre-experiences, (2) post-purchase relationships, (3) in-store experiences and (4) brand expression and perception.
- IMB asserts that one of the more ubiquitous ways in which extended reality technology is changing the customer engagement process is by evolving the customer browsing experience and other pre-purchase processes.
- Primarily impacting customers through online channels, this change involves the deployment of AR tools that enable customers to "configure, personalize, try on" or otherwise test business products in a virtual manner.
- Existing examples of such pre-experience tools include Sherwin Williams' ColorSnap Visualizer, Sally Beauty's ColorView and Nike Fit.
- Notably, the current prevalence of extended reality technologies in the pre-purchase process is driving the continued business adoption of such tools, by creating a new customer expectation for organizations to provide quality pre-purchase extended reality experiences in industries ranging from appliances and apparel to homes.
- In parallel, such extended reality tools are beginning to appear in customer engagement processes that follow product purchases, with examples including AI-enhanced user manuals and digital apps that allow users to interact with their physical product purchases.
- Not only are these post-purchase process changes enabling businesses to capture new customer and product use information, but extended reality tools are also expected to create new revenue streams from ancillary products and other related services that extend beyond the normal purchase lifecycle.
- Meanwhile, IBM also reports that extended reality technologies are likely to meaningfully transform the customer engagement process in stores as well as with brands.
- Examples of these customer engagement changes include the use of AI-powered AR to enable sales associates to function as personal shoppers, XR-enabled group shopping experiences and the deployment of XR brand avatars that provide "AI-driven personalization" through an XR experience.
Evidence of Engagement Impacts
- A variety of industry experts (e.g., IBM, Accenture, SYZYGY AR) report that customers are both interested and responsive to extended reality technology when interacting with brands and their products.
- For example, the IBM Institute for Business Value (IBV) found in a survey of 19,000 consumers globally that almost half have either tried (7%) or are interested (35%) in shopping experiences that are AR-assisted.
- Moreover, younger generations (e.g., Generation X, Millennials, Generation Z) are even more likely to have either tried (between 14%-21%) or expressed interest in trying (45%-47%) such extended reality purchase experiences.
- A separate SYZYGY XR corroborated these findings, by reporting that 71% of shoppers are interested in extended reality experiences when purchasing products/services.
- In particular, consumers were particularly interested in extended reality experiences to try on or visualize retail products (47%) or explore hotel rooms and travel destinations before making a purchase (43%).
- Meanwhile, SYZYGY XR also found that extended reality experiences were likely to increase customer responsiveness to brands and their products, given over half (53%) of surveyed consumers believed they would be more likely to purchase a product if the shopping process included an extended reality experience.
- An analysis by Houzz validated this finding, by reporting that customers using AR are eleven times more likely to make a purchase, and generally spend almost three times as long using shopping apps that incorporate extended reality experiences.
- Moreover, Accenture found that extended reality experiences such as VR and AR advertisements have a "positive impact on purchase intent," as highlighted in the following charts.
Current State of Adoption
- Industry experts including IBM, Gartner and SYZYGY AR report that extended reality technologies have already been adopted by a substantial cohort of consumers and businesses.
- For example, Gartner forecasts that 100 million consumers will be shopping using extended reality technologies both online and in-store by the end of this year.
- IBM adds that approximately one-third of consumers are already using extended reality apps, while SYZYGY AR found that 36% of consumers under 34 have participated in an extended reality experience when buying a product.
- According to IBM, one of the primary reasons that extended reality technologies are becoming commonplace in commerce is the fact that most consumers carry smartphones and other technologies with XR capabilities.
- Considering that 3.4 billion phones will be enabled with "advanced AR capabilities" by the end of this year, billions of consumers already have the ability to engage with extended reality technologies as part of their buying process.
Evolution in Next 3-5 Years
- Moreover, companies that are actively deploying extended reality technologies (e.g., Isobar, SYZYGY AR) as well as industry researchers (e.g., IDC) forecast that the adoption of extended reality will significantly increase in the next three to five years.
- According to Dave Meeker, the Chief Innovation Officer of Isobar, the extended reality marketplace is going to grow and "change drastically" in the next 36 months.
- Similarly, Bartek Rozbicki, the Group XR Director at SYZYGY AR, adds that commerce is "changing at an ever-increasing rate" due to the "crucial role" of extended reality.
- From a quantitative perspective, IDC estimates that global spending on extended reality tools such as AR and VR will reach $160 billion in 2023, up from $16.8 billion in 2019.
- Overall, IDC forecasts a five-year CAGR for these extended reality technologies of 78.3%, primarily due to investments from the commercial and public sectors.
- Meanwhile, consumers themselves believe that extended reality will increasingly become a part of their regular routines, with 81% of consumers under 34 commenting that extended reality will "soon be used in our daily lives."