guest article by Tim Hilken, Dominik Mahr, Jonas Heller, Mathew Chylinski, and Ko de Ruyter.
Yes, Augmented Reality is Enhancing the Service Experience
An emerging class of technologies, referred to as Augmented Reality (AR), is enhancing online and offline service experiences. AR is the science and art of using digital technology to overlay virtual content (e.g., text, graphics, or audio visuals) into a person’s perception of the physical world (e.g., the products in a brick and mortar retail store). The real-time and interactive blend of virtual and physical information  results in a compelling experience of presence, where virtual objects become part of the physical world. Mobile and wearable AR applications such as smart phones, smart glasses and contact lenses are the means through which AR is generated and, for instance, to allow the consumer to embed a yet-to-be-purchased sofa into their living room. On a desktop virtual mirror, consumers can also try on next season’s clothing and sunglasses collections, without leaving the comfort of their homes. To find the next supermarket, consumers simply follow navigation instructions that are projected on their car’s windscreen. When browsing the electronics store, merely pointing the smartphone at a product automatically triggers the displaying of online prices and user reviews.
Across a variety of contexts, companies such as IKEA, L’Oreal, and BMW have added these AR applications to their frontline service delivery. Combined AR and Virtual Reality expenditures of $1.1bn in the first quarter of 2016 , a recent half a billion dollar investment by Google in the AR startup Magic Leap , and Apple’s 2015 acquisition of leading AR solutions provider Metaio , further illustrate that companies increasingly recognize the disruptive potential of AR technology. However, inflated functionality expectations , platform launch failures (e.g., Google Glass) , and growing privacy concerns amongst consumers  are indicative of companies’ struggle to understand the value-adding role of AR in service experiences. As a result, there is a pertinent need to gain more insight into this role and the mechanisms that underlie it.
Current research, however, offers little guidance. It has primarily focused on technical aspects of AR, and how companies can develop AR technology to gain user acceptance. Virtually no research has recognized that AR also has the opportunity to reverse long entrenched dynamics by empowering consumers to actively shape their own service experience, and make choices that are more consistent with personal goals. To address this issue, we formed the Augmented Research initiative (www.augmented-research.wix.com/info), consisting of a global team of researchers from The Netherlands (Maastricht University), Australia (UNSW Business School and University of Technology Sydney), New Zealand (Auckland University) and the United Kingdom (Cass Business School). The initial results of our research tell a compelling story of consumer engagement, empowerment and enablement through augmented service experiences. This is driving the development of an AR service research agenda.
Enhancing the online B2C service experience
In a series of studies, we find that current AR applications can compensate consumers for the absence of actual product trial in online shopping. Allowing consumers to virtually fit, for instance, a pair of sunglasses to their face in a virtual mirror and subsequently control this presentation with head movements substantially raises their value perceptions of the online service experience. This is the case, as AR provides a similar degree of sensory input as actual product experience, thereby engaging in the experience of a self-paced assessment of what it the best product for them.
Enhancing the offline B2C service experience
Our laboratory experiments in a “simulated” supermarket show that AR applications can aid consumers in making healthier food choices. In particular, we developed a mobile AR application that guides consumers by providing advice about the product they are facing on a supermarket shelf. Just as AR can add virtual information to a physical environment, it can also remove information from the perception of that environment. For instance, by de-saturating the colour of ‘unhealthy’ product options in a supermarket setting, our AR application creates a digital mark-up with profound implications for consumer decision making and marketing practice. The ability to filter out distracting information improves the consistency of consumers’ decisions. However, it also reduces the influence of packaging design and shelf positioning; two important tools relied on by managers to drive retail sales. As AR empowers consumers to make choices that are consistent with their diet and lifestyle goals, it has the potential to disrupt existing marketing practice. Embracing such consumer empowerment, firms can gain the opportunity to enhance the service experience and enable personalization in traditional brick and mortar retail settings. The growth in popularity of AR shopping experiences will also drive new possibilities to deliver product interactions, the sharing of information with peers, and complementary product suggestions at the point-of-sale.
Enhancing the back-office B2B service experience
A look beyond B2C services reveals the potential of AR to contribute to personal well-being in other domains. Together with industrial AR solutions provider Evolar , we put AR smart glasses for warehouse order-picking support to the test. Through their smart glasses, participants received picking instructions directly in their field of vision, resulting in reduced task completion times, error-rates and perceived work stress. As a result of higher levels of enablement, participants consistently reported that they felt empowered, rather than controlled, by the AR system.
The road ahead
Future research can benefit from the recognition that the implications of AR for consumers extend beyond improved service delivery. The seamless integration of virtual content into the perception of the physical reality fundamentally alters consumers’ interaction with that reality by enriching it with added sensory information, making it malleable to consumer tastes and changing decision-making. As the possibilities for AR-enabled service experiences abound, we consider service research as uniquely situated to leverage its long-standing customer focus to drive the AR business case and research agenda.
Tim Hilken and Dominik Mahr
Jonas Heller and Mathew Chylinski
UNSW Business School
Ko de Ruyter
Cass Business School
Find out more about Augmented Research:
 Azuma, R. (1997). A survey of augmented reality. Presence, 6(4), 355–385.
 Digi-Capital (2016, March 16). AR/VR investment hits $1.1 billion already in 2016. Retrieved from: http://www.digi-capital.com/news/2016/03/arvr-investment-hits-1-1-billion-already-in-2016/#.VukKf_krK70
 Metz, R. (2015). Magic Leap. MIT Technology Review. Retrieved from: https://www.technologyreview.com/s/534971/magic-leap/
 Miller, R. & Constine, J. (2015, May 28). Apple Acquires Augmented Reality Company Metaio. Retrieved from: http://techcrunch.com/2015/05/28/apple-metaio/
 Gartner (2015, August 18). Gartner’s 2015 Hype Cycle for Emerging Technologies Identifies the Computing Innovations That Organizations Should Monitor. Retrieved from: http://www.gartner.com/newsroom/id/3114217
 Reynolds, S. (2015, February 5). Why Google Glass Failed: A Marketing Lesson. Retrieved from: http://www.forbes.com/sites/siimonreynolds/2015/02/05/why-google-glass-failed/#2501ccd92131
 Nielsen, M.L. (2015, July 10). Augmented Reality and its Impact on the Internet, Security, and Privacy. Retrieved from: http://standardsinsight.com/ieee_company_detail/augmented-reality-and-its-impact-on-the-internet-security-and-privacy