Author: Florian Sturm
On the 6th of July 2016, Dennis Hwang changed the world, at least a little bit. That Wednesday he and his team from the US software company Niantic released the location-based smartphone game Pokémon Go. Within a very short time the app broke all records. Even though the big hype seems to be over now, the topic augmented reality became presentable overnight. To this date, the game has been downloaded over 750 million times worldwide. What began as a mere pastime for the digital generation has now become a billion-dollar market. The sales industry has also recognized the enormous potential of Augmented and virtual reality (AR, VR) in the meantime.
Martin Wild, Chief Digital Officer of MediaMarktSaturn, says that the hype surrounding Pokémon Go has actually raised awareness of the AR theme among the general public. That’s why the perfect time to pick up the topic again is now, he continues with a look at the HoloTour that started in May. In 20 selected German stores, customers have the opportunity to take a look at the “shopping experience of the future”: Equipped with a HoloLens, Microsoft’s AR glasses, customers are guided through Saturn stores by Avatar Paula and receive additional digital information on three different products (Samsung S8, Microsoft Surface Pro4, Dyson Big Ball Allergy). According to Wild, the HoloTour is initially a first test of the technology, but the feedback is so positive that similar interactive and personalized shopping solutions will soon be presented.
The Eye Goes on a Journey
Virtual and augmented reality became popular in the gaming and entertainment industry: By using specific hardware, such as VR/AR glasses, a smartphone or a tablet, the reality is either enriched with acoustic/visual elements (AR), or the user disappears completely into a virtual reality that is fully detached from the actual here and now (VR). Both these approaches offer numerous advantages for sales, says Anett Mehler-Bicher. The marketing expert conducts research at Mainz University of Applied Sciences in the fields of E-Business and augmented reality. „By using AR and VR, the so-called time-to-content can be minimized – the buyer therefore receives relevant information faster and more targeted. In addition, explanatory processes can be automated and optimized“.
Martin Kühne, Audi’s Digital Business Strategy/Customer Experience Expert, highlights another aspect. The automobile manufacturer was the first German company to take the route towards VR/AR – and thereby positioned itself in the fast lane, especially in relation to its competitors. Through its VR technology, Audi currently offers more than 50 different car models with millions of possible configuration options. „To date, no dealer has been able to demonstrate this variety to its customers [with traditional methods],”Kühne explains. In conclusion, minimal space and constant availability of the entire portfolio – including those products that are still in the development or test stage.
Instead of looking at the different models in the brochure, the customer looks through data glasses such as the HTC Vive or Oculus Rift and immediately sees himself at the wheel of his (virtual) dream car: How’s the view from the driver’s seat? Light or dark leather? Which kind of infotainment system do I want and how should the car be painted? Questions that would otherwise be hard – and not very clear – to discuss in a counselling interview, are nearly tangible thanks to the new technology.
Despite the fact that BMW, Hyundai, Toyota and Co. are now also meeting their potential customers with VR and AR, no other manufacturer has tackled the issue as thoroughly as Audi. In February 2014, the Audi City – the first fully digital flagship store in Germany – opened on Berlin’s Kurfürstendamm. Rather than dozens of presentation vehicles, there are numerous (interactive) presentation areas. Emotion and storytelling are in the foreground; the number of horsepower under the engine alone no longer counts anymore.
Seeing is believing
But why are car manufacturers playing a leading role in these sales strategies? When buying complex, high-priced goods that require explanation, one aspect is always prioritised: as little risk as possible. A law as old as the bartering trade itself. The more information I have in advance about a product, its quality, performance and the associated feeling, the lower the risk of a false purchase.
Scientists also suggest in a recent research report that AR users have a sense of physical control over a product they haven’t bought yet – and that in turn increases the intention to buy. This thesis is also supported by the American market research institute Interactions, which specializes in experimental sales marketing. In a survey, 72 percent of over 1,000 respondents stated that they had already purchased a product spontaneously because it was advertised or presented with AR tools. In addition, 40 percent of buyers are willing to pay more for a product if it can be experienced with AR.
Help me, hologram!
Philipp Rauschnabel, Marketing Professor at the American University of Michigan-Dearborn, also points out another sales argument which is often overlooked in addition to the branding and positive image a company builds up: the aspect of after-sales support. For example, in the case of more complex products, AR can be used to display a service technician in the field of vision to help with maintenance or repair.
Oliver Wöhler, Sales Manager of the HTC Vive data glasses, sees great VR potential in the tourism sector with the possibility of transporting people to a place that was previously not possible, regardless of time and space. Travel agencies in particular could benefit from having their customers take a first look at their cruise cabin or holiday destination in Crete, the Maldives or New York using data glasses.
In January 2015, Thomas Cook was the first tourism company to consciously rely on VR technology in order to make tourists want to go on holiday with the most realistic, 360-degree displays possible. Today 880 travel agencies in Germany, Great Britain and Belgium are equipped with data glasses. According to Carsten Seeliger, Managing Director of Sales, eCommerce, Marketing and Service at Thomas Cook, these are “additional tools for our employees to provide the customer with realistic and authentic insights into a hotel, a destination or an excursion and form a digital supplement to the catalogue.
The increasing distribution of AR and VR glasses – The Statista survey institute expects global sales of AR glasses to increase from 100,000 units (2016) to 27.3 million units by 2021 – will also help sales divisions to address a problem that is still acute at the moment: lack of user acceptance. “So far many users, especially for VR glasses, have been reluctant to use the technology readily.” explains Mehler-Bicher. Philipp Rauschnabel also shares this impression. AR and VR are both technically as well as in terms of acceptance – at the company level and with the user (sales representative and customer) – currently about where mobile devices were in the 1990s. “Data privacy and data security are also risk, because unlike most other technologies, we do not only interfere with the privacy of the user, but also of those people who happen to be in the tracking area of cameras and sensors, “says Rauschnabel.
What I see, I buy
Another reason why many companies are sceptical about the use of VR and AR is the difficult measurability of success. Are there actually more cars or cruises sold than before thanks to virtual or augmented reality? It is currently not possible to prove sales figures have risen as a result of implementing the technology. Nevertheless, according to Audi’s Kühne, customers would spend an average of 500 euros more on equipment if they were able to experience it for themselves in advance with VR or AR technology. And those interested in a cruise often book the more expensive outside cabin after entering it themselves using VR glasses.
At the beginning of June at the Augmented World Expo (AWE) in California, the world’s largest trade fair for AR and VR, the importance of digitally enriched reality in sales and distribution was demonstrated. The Austrian AR software developer team Wikitude, was also on site and received an award for its instant tracking app, which will be the foundation for an even faster, smoother and more lifelike AR experience – for example in augmented product catalogues at Ikea, SayDuck or Roomle. When technology giants such as Google, Apple and Facebook invest in AR, the market will change significantly, says Paula Monteiro, Wikitude Marketing Director: “We expect sales to become the most important industry for AR and VR applications in the long term. A billion dollars will be invested in this sector by 2020 to enable solutions in sales and e-Commerce”.
Dirk Schart was also a guest at the AWE. “It was clearly noticeable that the announcements of the major technology companies were driving the industry forward,” says the marketing director of the Munich-based company Reflekt, which specializes in the creation of AR, VR and mixed reality content and has already developed solutions for BMW, Audi and Hyundai/BASF. Internationally, Schart sees German companies very well positioned in this space.
AR & VR soon to be the standard
With the exception of US technology guru Robert Scoble, all the experts we have spoken to agree: virtual and augmented reality are already of great importance in numerous industries and – like the website and smartphone – will become a natural sales channel in the next few years – although for different product areas. While it works better when selling cars or traveling, to immerse the customer in their own VR world, you want to see the new sofa or kitchen in the middle of the real environment.
However: President of Interactions, Bharat Rupani, predicts that the sales process will not function without flesh and blood. The human interaction is simply too important. And this is an element that will not disappear as quickly as the hype about the most successful AR game of all time.
New Realities – AR/VR for Marketing and Sales conference – 26th April 2018, will provide you with a comprehensive introduction to augmented, mixed and virtual reality and explore how the technology can help your business. Click the button below to reserve your space.