What are Phy-gital Experiences?

Okay, says that we are live. This is our first live of the New Year. yeah. Yeah, for sure. So firstly, I'm proud that, you know, years are passing by and we are still continuing to do lives. One of the biggest challenges that I see a lot of organizations face is that they start a lot of initiatives, but then they are not able to consistently

sort of build on top of those. So for that I think I'm, I mean, I hope all of us are proud. And for all the people who are listening and joining us as well, I hope they are proud as well. I got the notification and we have a few viewers. So happy New Year people who joined in. your New Year resolutions are still going strong. We'll keep on checking for the next few weeks.

But thank you for joining in. so today, let me just get this up. So today what we are going to talk about is what are Phygital Experiences? And what does it mean to have or build a Phygital Experiences? Who is it? Who is it good for? And so here we go. Hello and welcome to Momentum Office Hours. My name is Yash and I'm joined by my co-founders Jay and Koushik to discuss topic of the week. What are

Phygital experiences. Our goal is to provide you with actionable insights and practical strategies that you can apply to your own businesses. Throughout the session, we encourage you to engage with us by asking questions and sharing your thoughts. This is a fantastic opportunity to learn from each other and gain new insights that can help drive your business and digital transformation initiatives forward. So let's get started. Jay, Koushik, how are we doing today? Doing great.

Good, nice. How's the new start been? Bad things, figuring out what to do for the year. How to plan for the year. that first three days went in how to plan. Got it. Jay, what about you? Same, same. I mean, it's all about planning for the year and still figuring out how to get things done. yeah, getting closer.

to this innocent part. Yeah. Yeah, absolutely. And so if you think about it, it's just another day, right? It's just another day in our lives. However, every year, whenever this happens, it's sort of like an event that gives us an opportunity to evaluate what has been up until now and any change that we may want to make in the way how things have been. And so that's sort of always helpful to have.

you know, a kick or some sort of a milestone to tell us that, hey, you know, it's time to stop, and evaluate what you've been doing and maybe change what you want to do in the future. And in spirit of that, we have the topic for the day, which is building Phygital experiences. And so excited to have this conversation. So what is Phygital experiences? sure. Awesome question.

So a Phygital experience is essentially a business building such systems and processes to interact with their customers in a way that their customers don't feel a disconnect between their interaction with a physical store that the business might have and in continuation, their interaction with the online store.

So as an example, if I walk into a, so let's say if it's a retail business, if I walk into or if it's a pharma business like, so delivery of medicines and stuff like that. If I walk into a store, what if there is a unique identifier and then all of my information that exists with that business, whether that has been done physically or that has been done.

digitally, all of that is in one single place. So there's no difference whether I walk into a store or I purchase online. And it sounds very simple. It sounds like common sense. It sounds like every business should be run that way. But the unfortunate reality is that most businesses don't run that way. And they don't realize the potential of building a digital experience, like a unified digital experience.

or the fact that there's a lot of inertia or fear of change that they never start with this initiative. So that's a digital experience. So any business that you interact with physically and digitally and you cannot tell them apart, that's the business that has successfully implemented a digital experience.

Yeah, that's a great answer. Yash, would like to understand for the companies that are already grown and having more of out either of these like either it's completely physical or either it's completely digital and now they want to you know they want to immerse physical experience since it is like kind of a holistic approach as you explained. So

it has lots of advantages for sure but then how does one approach to it especially the ones which are already physical doing great why do it and like are there any ways they can do it? one of the I mean there are a lot of advantages as you also rightly pointed out one of the biggest advantages of offering a digital experience to your customers is the fact that you now are able to accurately know

who is purchasing, how many times, and through what channels. And how are they making their purchase decisions? So to take an example, there's a company in India called Lenskart. And so if I go in into their physical store, they've got probably, I think, about 1,200 stores. Some of them are company-owned, some of them are franchise-owned. And then they have a website as well. So they're a tech-first sort of a

specs company and so if I go into Lenskart's physical store the salesperson or the person who's in the store will ask for my mobile number and then they have history of everything that I've purchased from Lenskart which does a few things which essentially helps that person understand what my typical budgets are because of my past purchases they will also know what is my taste in glasses they will also know how many

you know, accessory eyewear have I purchased, how many, you know, genuine medical device eyewear have I purchased. They would already know what is my power and so on and so forth. And so I don't have to tell the person in the store any history about myself. They already have it with themselves. And then similarly, when I go online, when I go to their website and make a purchase, all of my loyalty points that I've accrued.

through my physical purchases are also there online. And there are examples upon examples, right? So modern tech companies. So this is not a big problem for companies that started as a technology initiative and then went offline and built physical experiences after building the digital experience because they were already tech first. This ends up becoming a challenge largely for mid market enterprises that started as a digital experience first.

started franchises, started opening stores, started doing all of those things and then built a digital experience in silo and that's where the challenge happens. So that's the first benefit. There are other benefits also. The analytics are significantly better and then so on and so forth but coming to how to actually go ahead and start working on thinking about digital experiences is

is the first piece of the puzzle that you want to solve for are the customers, right? So making sure that you have one single list of customers with their orders and with their purchases and with their interactions with your brand, whether it is physical or actually, no, I'll change my answer. The first step is to get the buy-in of the key stakeholders within the organization, right? So it is

It is actually for the decision maker or the founder or the owner of the business to go around and convince the leadership team and get them on board with the idea of doing this because actually implementing this is extremely painful. It's very difficult to do, it's very painful thing to do and so getting that buy-in is extremely important upfront and then there are other steps that we can talk. Yeah, as we have discussed in our last discussions as well,

The explaining about the ROI part is very good especially for the businesses which are you know physical and now digital. I think as a follow up to that I think so let's say if I'm a business owner let's do this right so let's say if I'm a business owner yeah how do I know which aspect of my business should be physical and which aspect of my business should be digital like how do I go about deciding that yes this

this aspect of my business or this flow should be physical or they should be digital? How do I make that decision? So I'd say that as a business owner, it's natural that you may have this question. But the question in and of itself, I would argue is, is a little flawed. There's in the world of, in the world that we are evolving into, and I wouldn't say that this is a brand new concept, right? It's been around for at least half a decade, if not more. So in the world that we are living in,

more and more customers are already expecting to have a digital experience. And so the question cannot be which parts are digital and which parts are physical in the future. Everything has to be a mixture. So the orders placed on digital platforms are delivered physically to their homes. And on the other side, the discovery of a physical store happens digitally when they search on Google or something like

store locator or whatever the case may be. So all experiences have to be digital in nature. The only thing that you've got to make sure is that when the customer is interacting with any of the frontline staff or team that you have, which could be your support, which could be your delivery people, which could be your sales people.

which could be any one of those, right? Any one of our functional experts, whatever the case may be, whatever business that you are running and this applies to a grocery business, this applies to a pharma chain, this applies to a retail chain, this applies to a lot of those, right? And so, whatever your customer-facing people are and assets are, all of them have to be physical in nature, right? And the question like what physical and what digital does not exist, everything has to be physical.

So, but the end goal that you're looking for is that the customer has the exact same experience digitally versus physically. So, if you solve for how can my physical and digital experiences that my customer is having with my brand or with my product, how can both of them merge and become one? If that is a question that you're solving for, that's a good direction to start.

It is interesting. So, could you give more examples, Yash, with respect to physical experiences? We were given a great example, Linskart, but then to understand it deeper and especially on how, you know, how like physical businesses especially can come into digital transformation to give a physical experience. Yeah. Yeah, no, for sure. So another example of that is

is most of the so there's another group of companies called Tata's in India and so most of the physical stores that they have whether it is for jewelry or whether it is for eyewear or is it for watches and shout out that's a Tata watch but most of the physical experiences that they have they have converted all of them into physical

experiences. So your interaction, so you sign up to an app called Tata New, which is N.E.U. and then you essentially become part of their 40 odd businesses database. So they like, they sell everything, they sell from coffee to cars and from technology services to watches and things like that. So they sell everything from start

And so once you download the app, you essentially become part of all of them. And then they have gone one step ahead, which is where they've implemented a loyalty program across group companies. So they are not just saying that I want Jai to experience the same within my Tanishk, which is their jewelry brand. So within my Tanishk showroom versus buying it online, when Jai buys online, they are not just saying that.

They are saying that if Jai buys jewelry from Panish, whether it is online or offline, he gets loyalty or he gets all of those things when he makes a second purchase from their fast track watches. Or if they make a purchase from their Titan Eyewear Plus, which is again a specs company that they have and so on and so forth. So all of the 40 brands.

almost all, so Tata consultancy services is not relevant for consumers, so there's nothing fidgetal about it. But most of their 40 brands are fidgetal and then they've gone one step ahead with the Tata new app. Another example, another really good example is pharma companies like Apollo or Netmeds. So Apollo and Netmeds are those companies, right? Where Netmeds went from

building a digital experience first. So just the mobile app and the delivery piece and then getting into the physical experiences. So it was extremely easy for them to build a digital experience. And Apollo on the other side went the other way around, which is they built a physical network of medicines first, Apollo Pharmacy. They built a physical network first and then they built a digital version and then sort of brought both of them.

Another interesting example from our own city is this company called Havemore. So it's very public and I encourage you to search about it. Havemore is an ice cream brand that's been around for I think more than 50 years and I think about five or six years ago, it got acquired by a Korean company called Lotte, which is Quality Walls. So one of their brands is Quality Walls.

I suppose but Lotte is name of the company, L-O-T-T-E. So Lotte came in and acquired them. One of the primary reasons why they acquired Havemore was because they were digitally transformed and they had built digital experiences. would give, like Havemore would give different amount of discounts and different amount of cashbacks. This is five years ago. I'm not sure whether they continue to do it today or

But they would give different amount of cashbacks and discounts to people who would purchase from have more stores versus people who would purchase from other retail outlets, which are third party retail outlets versus just ordering through phone or through a third party app like Zomato or Swiggy or whatever. But then all of that was still unified. And very famously, had written a check of 15 crores to Accenture.

to actually build this digital experiences for them, for people who might not know what is 15 crores. So that's a little less than $2 million. So they essentially shelled out $2 million to Accenture, which is one of the very large service companies over here in India, to come in and then completely digitally transform and build a digital experiences for an ice cream cup. That led to them, you know, using less amount of milk, less amount of...

cream, lesser wastage, improved logistics, improved demand prediction, improved delivery times, reduced turnaround times and so on and so forth. And that sort of made them a good target for Lotte and Quality Worlds to come in and acquire. So yeah, so these are three sort of very different examples coming from a 40-brand group company, billions of dollars to a pharma

It's like two set of companies where going from digital to physical and then physical to digital and then like an ice cream company where you wouldn't expect that they will actually go out and do it. And these are industry leaders, right? their own industry. So it is evident that like there's no option for companies to not have digital experience. Oh, yeah, for sure. For sure. This comes like this brings me to another question with respect to like

I know again it's a very dynamic answer to this but what could be that like around expected time for any company which has only physical stores but now they want to have digital experiences altogether. How much time does this transformation take on Apple? That is a great question and there's no

clear or right answer to that question. so let me think about a good way to dodge that if I can. one of the ways that, we just spoiler alert, we offer implementing digital experiences at momentum 91. And we are that company who will help you do that if that's what you're trying to do. We'll come in, we'll explain to you what are the benefits.

what is the timeline and so on and so forth. Largely, what we do is we engage with a brand, we understand the status quo, right? How things are as on date. figure out as to what are the, along with that, we also understand how ready are they and their leadership team for the change. So just because we can do it quickly doesn't mean that it will be accepted. So it has to, it is a change across organization, across the complete organization.

And one thing that I understood and turned my hair gray doing that is that people tend not to change quickly, including myself. So these things we evaluate and then we give a realistic timeline as to this is how we'll go about it and this is how much time it would take. But in doing so, for all the projects that we've essentially taken up and we've implemented,

One of the things that we've seen is that a first version, is where having a central customer database, being able to run loyalty programs, being able to offer coupon codes that are not misused, being able to do all of those things, and also being able to have control over your supply chain, being able to make sure that all of the vendors are receiving their payments on time.

All of the absolute basic functionality, like the digital transformation 1.0, takes anywhere between six to eight months. This is for a decent sized company that does anywhere between 5 million to 50 million in annual run rate. So that roughly translates to somewhere around 40 crores to like 400 crores in annual run rate. We've seen that our first version, like the very first thing, can happen between six to eight months.

And then it just depends on how ambitious you are. Are you in an extremely competitive industry where offering one additional small set of value add to your customers is going to change the game for you? Or are you in an industry where there's like, what's your priority? Is it to improve your bottom line and focus on profitability, which most traditional businesses have? Or is it to improve and grow your top line and focus on the

the growth of the year on year revenue, it may not be optimal, it may not be efficient, but it exists. And so what's most valuable for you, depending on what stage are we with the business. And so all of those factors sort of come in and play a role. But the first version is about six to eight months and then we take it forward.

So, Yash, so what business line do you think, let's say things should start kicking themselves now and start thinking seriously about this. Like there are different industries. So which industry do you think the need for, I understand that all the industries which are trying to scale would need this, but who should take this as immediately as possible seriously and start making decisions or having discussions with the leadership team?

So you, I'd say three industries in that order and with that priority. If you are a retail chain with focus on growth, that's the first, you should, like it should have happened yesterday. So that's for sure. Second is if you are a distribution firm that is focused on improving efficiency and improving the bottom lines.

And then the third would be manufacturing firms that are focused on fixing their supply side of things. So making sure that they are procuring just enough, making sure that they are able to predict the demand, which sort of informs how much should they procure, how much should they process and make or manufacture. So these three in that order, retail chains focused on growth, distribution firms,

focused on efficiency and bottom line and manufacturing firms wanting to have clarity into their supply chain and running their vendor programs and purchase decisions more, I mean, better. That's how I would go about it, yeah, for sure. There are other sectors also, like healthcare and services and so on and so forth, but the maximum amount of impact is here.

Great and since the world is about AI and we have been talking a lot about it, I would like to ask what could be the impact of AI in physical experience?

So there are two pieces, three pieces actually that largely again, it depends on the business, it depends on the size of the business, it depends on the way that they interact with the customers, what's the average ticket size, what is the potential of upselling, what is the potential of cross selling, how many other things that are complimentary that they have and so on and so forth. like it depends, actually it depends is my default answer to all the questions that you have asked.

in the conversation room. It always depends. But here's a general trend that we've observed in terms of implementing AI initiatives as a part of building digital experiences. So the first and the biggest impact is what? I guess there is some background noise. Kaushik, you also feeling the same? Yeah, I could hear it slightly. OK.

Okay, I muted. Was it still there or? It is gone actually. is. now it's gone? Yeah. Yeah. Perfect. Awesome. It's great. I don't know what happened. I just muted and unmuted and it started working. So some buttons just work and they do more than what they are designed to do. But that's a good thing for sure. No, so there are broadly three categories of

of AI-led implementations for building digital experiences and so on and so forth. So the first thing where AI sort of comes in is that it helps in improving productivity of the existing people that you have. So it sort of is a tool set. So you have a person versus you have a person plus AI. And if that AI is contextualized on your own data, then it helps them perform their duties that much

So as an example, following up with, you know, large-ish B2B clients for payments, or things like sending out statement of accounts to your customers as well as your vendors whenever they are requested. All of these things, having a person plus AI just improves the efficiency of people. It helps in reconciliation. It helps improve productivity in sales as well.

So doing some amount of research before you reach out to a prospect and so on and so forth. So the first way of thinking about AI implementations is as a tool along with a person in your company where the tool, which is the AI, has been contextualized on your own data set. The second thing are agents. So agents is essentially where they can take action on behalf

of a person, right? So they don't need a person to be there. There are certain, so we identify the workflows that exist in your business. And if those workflows are going to work the exact same way every time, or have some amount of, you know, back and forth that can happen, basis constraints, then implementing agents, right? So, so when you can give it some amount of constraints and some amount of first principles, and then it behaves and it can make decisions as if it's a person.

So as an example, it can call a customer. And the customer asks for a credit line. It can actually negotiate as if it is a person with that customer. Similarly, you can have constraints. And when a vendor can call AI, and the AI can ask for a credit line from the vendor and have that conversation within the constraints, and then negotiate on your behalf, and then agree on a payment plan.

So this is where the AI agent sort of, it doesn't get tired. It always works 100 % efficiency. It doesn't get sick. And every mistake that it makes, it just becomes better, very quantifiably better than what it was yesterday. To do this, it needs some amount of training set. But then if you have that, then you can actually deploy agents as well. And then the third piece is where AI can be used to

to drive business decisions. As an example, which geography should I open my next store in? What are the SKUs or what are the right SKUs to carry in those stores? What happens if I change the location of my store A from where it is today to another location? What could be the impact? It also, like it answers,

It has all the answers. It just depends on how good of a question do you ask. So it sits on top of your database. then the quality of the insight that you can get depends on the quality of the question that you ask because it knows everything. It knows everything that's happening in your business. So what coupon codes to run at what time for what cohort of people.

what cohort of people will purchase a particular product for what pricing? All of these can be answered through AI, like a business intelligence platform that has AI implemented as a part of it. And this can happen in Power BI, this can happen in Tableau, this can happen in Looker Studio, are the three largest sort of BI platforms that exist out there. But yeah, so these are the three.

sort of AI plays that you can have again, it depends on what your business is, where you are today, what are your priorities, how hungry are you, how ambitious are you, how content are you but yeah, think that sort of brings us to the that's about 30 minutes that we survived today's life and so that makes me happy that brings us to the end of the conversation for today and

Jay seems like you want to say something. No, no, no. I was just getting to that point that so when we're talking about AI in like digital transformation or to make it digital, it's all be it improving experience, be it controlling your processes or be it having some intelligence on top of your business. AI is helpful in all the aspects. I was just adding.

Sure, absolutely and it's sort of again very similar to that. It's not a question of whether, it's a question of when. So it's not whether AI is useful or not, it's when will you understand that AI is going to transform your business. Is it going to be before your competition or when? But it's a when question and not an if question if I may add. Having said that,

Thank you for all the people who joined in. Hope our conversation today around building digital experiences for your business has been meaningful and helpful for you. We will see you in our next stream. Stay tuned to Momentum Office Hours, Momentum 91 Office Hours. The way to stay tuned is to subscribe, is to share it with people who you know, who might find this valuable and useful.

If you subscribe, I promise that I will get a tripod for our next stream. And so thank you for subscribing, I guess. But thank you either way for joining in. Until next time.

Okay.