Can Web3 and NFTs save your customer loyalty program?

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In the fast-changing world of marketing, loyal customers are the holy grail of any thriving business.  

As such, nearly all B2C companies have developed their own loyalty program, designed to reward return customers and collect data on their behaviour for marketing and personalisation decisions.  

A well-planned, dynamic and genuinely rewarding loyalty program can transform one-time customers into devoted advocates and deliver more meaningful insights than simply the number of purchases made.

Loyalty is evolving, and Web3 is opening up a new realm of opportunities and overcoming some of the challenges of traditional loyalty programs. 

Whilst traditional loyalty programs have served a purpose so far for businesses and marketers alike, they aren’t without their challenges.  

Web3 beckons a new type of loyalty experience – one that gives genuine ownership of rewards to customers. They can truly benefit from owning them by choosing what to do with them – even transferring them to fellow shoppers to generate new business, helping marketing teams build richer customer profiles in the process. 

Key challenges for marketers and businesses 

From limited data, lack of real-time insights, and data privacy concerns, to basic predictive analytics – challenges with traditional loyalty programs are becoming more of a strain. 

For starters, customers don’t really ‘own’ their points; they often have several pools sitting with different brands that don’t actually motivate return visits, and points are usually only awarded for transactions, not high-value customer activity like making referrals.  

These points can also expire and be difficult to keep track of, nor can the users share or trade what’s theirs. Businesses often find themselves in the dark, not able to use accurate, advanced predictions when implementing audience targeting.  

A centralised, Web2-based loyalty system simply doesn’t tell them everything they want to know about their customer behaviour online. 

One of the most straightforward challenges that marketers face is that their various channels are not well linked. A customer may interact with a brand on social media, make a purchase on their webstore, visit their bricks-and-mortar store, or check out a sale on social shopping channels.  

It is tricky to stay aligned across so many touch points on which customers interact with your business, where they do so, and how many of them there really are.  

Marketers are dreaming of an omnichannel platform where they can reward customers for more than simply finishing a purchase. 

Marketers are dreaming of an omnichannel platform where they can reward customers for more than simply finishing a purchase, create better engagement around their products, and gain valuable insights into customer behaviour. 

Developing a comprehensive understanding of customer behaviour is vital for marketers. And, while legacy loyalty programs can offer good insights into individual customer preferences, they make it difficult to track how customers find your products in the first place. 

With the advent of emerging technologies, marketers are now increasingly looking into next-generation data analytics and innovative customer relationship management systems.  

The idea of seamless, platform-agnostic user experiences probably sounds familiar: it’s the basis of the metaverse and Web3. To create the loyalty experience customers are after, this is exactly where marketers should look. 

If data is the new oil, Web3 is the refinery 

Web3 technology is revolutionary. For marketers, Web3 promises to create new use cases for loyalty schemes. Implementing blockchain technology allows for new methods to reward loyal consumers, increased transparency for sponsors and partners while protecting customer privacy 

Moreover, it can also provide a platform for creative activations that generate buzz around product launches, sales events, or competitions. 

The use of blockchain technology also allows for loyalty benefits to be tokenized, resulting in a seamless, uniform, and transparent loyalty program.  

This tokenized system is not only secure but also user-friendly. Instead of dealing with traditional reward points – which are not fully owned by the customer, can expire at any point, and are usually non-transferable – Web3 can facilitate different loyalty tokens, which are fungible, wholly owned by the customer, and can be easily exchanged.  

Additionally, they can earn exclusive NFTs (Non-Fungible Tokens) as a recognition of special feats of loyalty, such as making a purchase from every product category, hitting lifetime spend totals, or referring new customers to the brand.  

These tokens can be transferable and used across platforms, bought and sold by owners to encourage new customers and referrals, and create an ecosystem within your customer base that delivers real value, not just cost savings to your most devoted customers. 

NFTs can create an ecosystem within your customer base that delivers real value. 

Such NFTs could confer on their owner a specific discount, early access to new products, or a means to show off their top-shopper status.  

They could be transferred from influential customers to their friends, allowing customers to easily and seamlessly cash in on their referral bonus any time they next interact online, rather than relying on traditional cookie-tracking methods or complex referral codes. The blockchain entry for this would help a brand accurately track referral and customer growth.  

NFTs also can’t be duplicated or counterfeited, so their use can be limited to only one genuine owner at a time. They can be used across different platforms, so they can complete purchases through social shopping, directly from a business online, or anywhere else in the Web3 world and still use their loyalty benefits – incentivising sales across a greater number of outlets and reducing friction in the sales journey. 

For marketers, the awarding and trading of tokens also offer more nuanced insights into how fans of your brand behave. 

Who interacts with whom? Are there any micro-influencers with a small follower count but a high level of referral? Which platforms do your customers use the most to gain points? What games are they playing and trading assets in? What do they want to use their loyalty rewards for?  

These insights point to the potential for partnerships, better customer targeting, and creating a genuine loyalty experience rather than a quid-pro-quo program. 

Better brand partnerships and straightforward sponsorship data 

In the existing marketing environment, there are significant challenges accurately collecting data to share with sponsors or potential partners. Data can be inflated by double-counting the same customer on different platforms, or aggregated to a point of offering limited valuable insights to distinct customer profiles and habits. 

Thanks to Web3’s basis in blockchain – which is immutable, transparent, and decentralised – businesses can more easily pull real-time insights into loyalty token transactions, validate that all transactions are real, and verify claims of the size of a customer loyalty base when forging partnerships with other businesses.  

Web3’s blockchain technology allows businesses to more easily pull real-time insights into loyalty token transactions. 

Regardless of the network on which these tokens are acquired, they can be linked to the user’s private cryptocurrency wallet’s unique address, allowing greater omnichannel tracking and flexibility for the customer and different insights for sponsors or potential brand collaborators. 

Web3 technology can also unlock solutions for gathering valuable and verifiable insights into customer behaviour. Thanks to the blockchain’s transparent, traceable, yet anonymous characteristics, marketers can respect user privacy and still collect authentic data regarding the popularity of various engagement activities among users to inform brand partnerships, activation platforms, and selling to would-be sponsors.  

This data would be invaluable in making informed strategic decisions when it comes to growing a brand with collaborations. 

New horizons: Dynamic relationships 

A whole new world of customer engagement and increased loyalty are made possible by committing to your brands of choice through engaging with Web3 loyalty programs.  

These programs offer increased levels of ownership/transferability and usability. Rather than having to deal with outdated loyalty point systems, businesses benefit from insight into new audiences, more personalised and dynamic reward options, and greater brand collaboration opportunities.  

In order to stay ahead of the competition and follow the customers’ changing habits and preferences, businesses must prioritise Web3-driven customer loyalty strategies. 

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