Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.
Retail consumer spending is increasing, and shoppers spent nearly $10 billion in Black Friday online sales this year. It is evident that the demand for great products has not decreased despite inflation, so competition for consumers' attention is increasing. There's an unexpected beneficiary of this tug-of-war between brands over consumers' money: web3. In 2024, we are likely to see an increasing number of brands and businesses leveraging web3 to strengthen the bond between their brand and their customers.
The latest developments in web3 give consumer brands a powerful tool to improve their membership and loyalty programs. In exchange for their loyalty, customers can now own their interaction with brands as an nft, creating powerful incentives for customers to interact with the brands they value.
When a company creates a branded incentive program and customers meet elements of it (such as meeting a spending threshold or engaging on social media), customers can now be given ownership of the rewards they earned thanks to web technology3. By using non-fungible tokens (NFTs) registered on a public blockchain, points and status levels become possessable assetsmaking them much more convincing as incentive mechanisms.
Customer rewards can be owned and transferred like any other real-world asset. Rewards ownership confers a wide range of potential benefits (discounts, experiences, etc.) to the owner. This new generation of loyalty mechanism is similar to the dog-eared punch card hiding in your wallet (buy nine coffees, get the 10th free), but these digital asset NFTs are harder to lose, easier to value and much easier to transfer.
Most rewards from existing loyalty programs are non-transferable or difficult to value and sell. But what if a customer could give up their premium airline status to a friend, lease it, or even sell it directly on the open market? Allowing ownership and transferability of a consumer's interaction with a company brings a whole new dynamic. Now, the consumer has more incentive to earn those rewards, which benefits both the consumer and the brand.
Brands can easily enable this use case through NFTs found on public blockchains, making it easy to transfer digital assets from wallet to wallet or across marketplaces. Customers can bring their own web3 wallet, or brands can provide one integrated with the app or membership account. Additionally, brands do not need to give up all control by allowing this ownership model. By using smart contract technology to power these NFTs, brands can choose the level of exclusivity or transferability of these assets, maintain control over their redemption value as fees earned, and track when these assets change hands. Brands can also choose to completely hide the use of nft or blockchain, allowing for a familiar but more powerful web3-powered experience “under the hood.” Web3 offers a best-of-both-worlds scenario, enabling ownership aspects that increase incentives for consumers while allowing brands to curate the experience and collect additional data.
Brands that do not sell directly to their customers may face additional challenges when interacting with and understanding their buyers. However, with web3 technology, a company (say an apparel company) can close the loop and gain insight into who buys its products. Perhaps it involves the customer downloading an app or scanning a QR code through their web3 wallet; The company can then incentivize buyers to provide proof of purchase to win an nft for additional rewards. Businesses can better reach their customers and, by offering satisfying web3-based incentives, encourage consumers to sign up for a membership account with an integrated web3 wallet.
Alternatively, if a consumer already has their own wallet, web3 technology offers brands the ability to market to new, qualified customers. Since the wallet's contents are publicly viewable (albeit pseudonymous), a large home improvement store can identify wallets containing a loyalty reward from a major competitor. The big box store could then target wallet owners with promotional offers and incentivize customers to shop with them.
As an added benefit, web3 technology can also facilitate brand partnerships by scheduling interactions between web3-powered loyalty programs. A coffee company could partner with a brand (for example, an apparel company) with a similar customer demographic. Using a smart contract to control the interaction, a customer of the coffee chain could easily exchange their rewards for discounts at the clothing chain. The two brands can interact jointly with customers, doubling the benefits for consumers; This also expands companies' audiences and helps them better understand their customers' profiles and interests. With the advent of new cross-chain protocols that provide easy interoperability, the two brands could even use different blockchains.
Membership and loyalty programs powered by Web3 allow consumers to take ownership of their investment of time and money, creating additional incentives for them to participate. Meanwhile, forward-thinking companies can connect with their customers in creative new ways, easily form new partnerships, and ultimately increase profits through a customer base that literally invests in the brand. Adopting web3 can be daunting for any business, but the rewards are immense.
Fortune favors the brave. Fortune favors the bold.
