Augmented Reality -Effect on brand loyalty and revenue
By: Adeolu Mayungbe
Tags: Revenue, Brand Loyalty, AR, Profit

AUGMENTED REALITY -EFFECT ON BRAND LOYALTY AND REVENUE

What is brand loyalty? Brand loyalty is the tendency of consumers to continuously purchase one brand’s products over another. Consumer behavior patterns demonstrate that consumers will continue to buy products from a company that has fostered a trusting relationship which in turn leads to a ton of revenue being generated by the company. Hold that thought.

Augmented reality is an interactive 3D experience that combines a view of the real world with computer-generated elements. What this means is that AR can figure in a number of ways how to manipulate the world in front of the viewer, either through AR goggles that combine a view of the immediate surroundings with computer graphics, or on a smartphone display that does the same thing using the phone’s camera.

So how does brands incorporating use of AR in their marketing increaase brand loyalty and revenue. As I stated in my opening paragraph, brand loyalty and increase in revenue are mutually exclusive, loyal customers are retained customers — not only are the happy to repeat purchases but they happily spread the word about a brand and acquire new customers for the brand (incresed revenue for the business).

ASOS plc is a British online fashion and cosmetic retailer. The company was founded in 2000 in London, primarily aimed at young adults. Looking at their target audience, innovation is an important currency when dealing with this particular audience as that is the only way to retain them.

If your offering is always better, you don’t have loyal customers, you have smart ones. Don’t brag about how loyal your customers are when you’re the cheapest or you have clearly dominated some key element of what the market demands. That’s not loyalty. That’s something else. Loyal customers understand that there’s almost alwayssomething better out there, but they’re not so interested in looking. — Seth Godin

Asos struggles with exessive return rates which cuts into their profit, not that the company would necessarily classify it as such (offering a generous returns policy boosts customer satisfaction, after all) but handling reverse logistics and unwanted product is an expensive proposition for any business, and online return rates for clothing and accessories can be as high as 40 percent. In 2019 ASOS got on board with AR by launching an experimental AR feature called Virtual Catwalk, which is designed to help app users visualise 100 Asos Design products. This in itselt does not assuage the brand of reduced rate of returns, but what it does is bring the item to life in a way that is far more effective than a photograph or online video. By bringing the model (and product) into the space of the user, the online shopping experience becomes much more immersive and engaging.

How has this helped increase brand loyalty for Asos when it does not redcues returns of merchandise by customers? Seth Godin believes that brands does not have to be bigger and better to gain customer’s loyalty, sometimes all they have to do is reinforce the good feeling people get when they’re being loyal. Asos incorporating the cat walking startegy in their marketing startegy shows they are adapting to modern technology that sends a signal of innovation to their target market and also shows that they are looking to resolve the issue of high returns for customers — this tells customers that they are being thought of by the brand and that in itself builds trust.

Between 2019 that the AR feature was launched and July 2020 ASOS reported a strong growth, with sales up 10% to more that £1 billion. It has also seen its customer base rise by 16% to 23 million.

Rewarding loyalty for loyalty’s sake–not by paying people for sticking it out so the offering ends up being more attractive–is not an obvious path, but it’s a worthwhile one. Tell a story that appeals to loyalists. Treat different customers differently, and reserve your highest level of respect for those that stand by you -Seth Godin.