Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of crypto.news editorial.
Consumer retail spending is on the rise, with shoppers spending nearly $10 billion in online Black Friday sales this year. Clearly, despite inflation, the demand for great products has not waned, so competition for consumers’ attention is increasing. The tug-of-war between brands for consumers’ money has an unexpected beneficiary. It is web3. By 2024, we expect to see more and more brands and companies leveraging web3 to strengthen the bond between brands and customers.
web3’s latest developments provide consumer brands with powerful tools to enhance their membership and loyalty programs. In return for their loyalty, customers can now: own As an NFT, interacting with a brand provides a powerful incentive for customers to engage with the brands they care about.
When a company creates a brand incentive program and fulfills elements such as the customer reaching a spending limit or interacting on social media, the customer can now take ownership of the rewards earned thanks to web3 technology. Points and status hierarchies are created using non-fungible tokens (NFTs) recorded on a public blockchain. assets that can be ownedAs an incentive mechanism it is much more attractive.
Customer rewards can be owned and transferred like any other real-world asset. Ownership of a reward provides the owner with a wide range of potential benefits (discounts, experiences, etc.). This next-generation loyalty mechanism is similar to a punch card with a hole hidden in your wallet. Buy 9 cups of coffee and get 10 free. However, these digital assets NFTs are harder to lose, easier to value, and much easier to transfer.
Most existing loyalty program rewards are either non-transferable or difficult to value and sell. But what if customers could give their top-tier airline status to friends, lease it, or even sell it outright on the open market? Enabling ownership and transferability to consumer-business interactions can unlock a whole new dynamic. Consumers now have more incentive to receive these rewards, benefiting both consumers and brands.
Brands can easily enable this use case with NFTs on public blockchains, allowing them to easily transfer digital assets from wallet to wallet or through marketplaces. Customers can bring their own web3 wallet, or brands can provide a membership app or wallet that is integrated with their account. Moreover, brands do not have to cede all control by enabling this ownership model. Using smart contract technology to power these NFTs, brands can choose the level of exclusivity or transferability of these assets, maintain control over redemption value with earned fees, and track when assets change hands. Brands can also choose to hide their use of NFTs or blockchains entirely, allowing them to deliver a familiar yet more powerful experience “under the hood” of web3. Web3 offers a best-of-both-worlds scenario that increases consumer incentives while also enabling an ownership aspect that allows brands to manage the experience and collect additional data.
Brands that don’t sell directly to customers can face additional challenges when communicating and understanding buyers. However, web3 technology allows companies (e.g. clothing companies) to close the loop and gain insight into who is buying their products. Perhaps it involves the customer downloading an app via a web3 wallet or scanning a QR code. The company can then provide buyers with proof of purchase, incentivizing them to earn NFTs and receive additional rewards. Businesses can provide better access to their customers and entice consumers to sign up for membership accounts using the built-in web3 wallet by offering satisfying web3-based incentives.
Or, if consumers already have their own wallets, web3 technology gives brands the ability to market to new, qualified customers. Wallet contents are publicly visible (albeit pseudonymous), allowing large home improvement stores to identify wallets containing loyalty rewards from major competitors. Big-box stores can then target wallet owners with promotions and encourage customers to shop on their behalf.
As a bonus, web3 technology can also facilitate brand partnerships by programming interactions between web3-based loyalty programs. A coffee business may want to partner with a brand with a similar customer base (e.g. a clothing business). Using smart contracts to manage interactions, coffee chain customers can easily exchange their rewards for discounts at the clothing chain. By jointly engaging with customers, the two brands can double consumer benefits. It also helps businesses expand their audience and understand their customers’ profiles and interests more completely. With the advent of new cross-chain protocols that provide easy interoperability, two brands can even use different blockchains.
Web3-based membership and loyalty programs allow consumers to take ownership of the time and money they invest, creating additional incentives to participate. Meanwhile, forward-thinking companies can connect with customers in creative new ways, easily form new partnerships, and ultimately increase profits through a customer base that literally invests in their brand. Adopting web3 is a challenge for any company, but the rewards are enormous.
Fortune favors the brave. Fortune favors the bold.