Traditional customer loyalty schemes are broken and customer expectations are changing. We look at how NFTs could be a game changer in your loyalty program.
For NFT skeptics, the 83% decline in NFT sales between January 2022 and January 2023 surely shows NFTs for what they really are: a fad.
But for NFT zealots, NFTs are here to stay: January 2022 was the peak because how people use NFTs is changing. Detractor or devotee – whichever side of the fence you camp on – both viewpoints only show a few pixels of the digital picture.
Non-fungible tokens, like any new technology, need time to mature. The first NFT collections, like Cryptopunks and Rare Pepe, were created as “monetized graphics”. People bought them for their exclusivity as potential investments – and we all know how investments can go!
These days, people are noticing NFTs for other reasons, namely their applications (aka their “utility”). And big brands have noticed.
Forrester predicts that “The next frontier for NFTs lies in customer loyalty programs.” Stating that in 2023 “smart brands” will “follow the likes of Louis Vuitton and Starbucks” both of which are using NFTs to offer customers exclusive perks and experiences.
So what exactly do NFTs mean to the future of customer loyalty schemes? Let’s take a look at why and how NFT-based loyalty programs should be part of your marketing toolkit.
1. NFTs = Community
Joining an NFT-based community is a major draw for many potential buyers. When you buy an NFT, you’ll usually unlock access to an exclusive community that meets on a social platform like Twitter, Discord, or LinkedIn. This perk has existed since the first NFT collections were launched and the demand isn’t dwindling.
Humans have an innate need for connection and belonging. A growing body of research suggests that people value belonging over other intrinsic incentives like money and fame. It’s probably little surprise then that belonging to a community where you can share thoughts and ideas with like-minded souls feels good.
According to McKinsey, “The 'big idea' in 2020's marketing is community.” By using NFTs to recognize and reward your most devoted fans, you can forge a sense of belonging and community around a shared interest.
You don’t have to look too far for ideas, NFT-led inspiration is everywhere. The brands building communities with NFTs span all industries, from motorsport and basketball to beauty and media. Some better, and lesser-known, examples include:
- Burberry is opening new spaces for its communities where players of their “Blankos Block Party” game can come together to enjoy a unique virtual experience.
- Nivea created the “Value of Touch” to NFT to start conversations around the importance of touch. The artist behind the NFT, Clarissa Baldassarri, temporarily lost her sight at the start of her career which led her to discover how valuable touch is. This NFT was completely free and required no pre-existing wallet or crypto experience.
- McLaren’s NFT ownership grants membership to the MSO LAB community and an evolving array of benefits.
- NBA Topshot is where NBA and WNBA fans can collect their favorite moments from their favorite players and teams.
- Deadfellaz is an “undead horde” that takes inspiration from zombie and horror movies that the founders were passionate about.
2. NFTs = Exclusivity
The scarcity principle is an economic theory whereby a restricted supply of goods and a high demand for those goods disrupts the market equilibrium. The result is exclusivity. And every marketer knows that high-quality exclusive goods are wanted goods.
NFTs can be used to provide perks that are exclusive to only certain members. As an example, Prada’s Timecapsule NFT gives exclusive access to online experiences, physical merchandise, and more. Being part of a VIP members club, of sorts, makes your customers feel important. Research by Deloitte found that consumers want to be recognized and rewarded as individuals, not as nameless, faceless point collectors.
The scarcity principle can be used by marketers in different ways. An NFT with a limited supply can also be used to draw attention to other products or services. Netflix, for example, commissioned 13 blockchain artists to recreate the 13 pieces of artwork that were stolen in the Isabella Stewart Gardner Museum in 1990. The result was an NFT auction that drummed up the hype for their Netflix series, This is a Robbery.
3. NFTs = Engagement
Customers are more likely to engage with you, and each other, when you give them a space to talk and they get rewarded for it. No more boring old punch cards or plastic keychains. You can give utility to your NFTs and reward NFT holders with anything, from physical merch and digital goods, to exclusive events access and redeemable reward tokens. Or you can simply give them a space where their needs are prioritized.
Peer-to-peer influence is more powerful than ever but engaging with your customers will always be important. Engaged customers are good for business. The community you create provides a hotline to your customers so you can actively get their feedback, improve, and build their trust.
4. NFTs = Value
Starbucks’ loyalty program makes up approximately half of its revenue and has around 60 million members worldwide, making it one of the most successful loyalty schemes in the world. To take its loyalty program to the next level, Starbucks launched the Starbucks’ Odyssey program with NFTs that unlock “access to new, immersive coffee experiences.” Brady Brewer, Starbucks Executive Vice President and CMO said:
“For the first time we are connecting our Starbucks Rewards loyalty program members not just to Starbucks, but to each other.”
Starbucks’ new loyalty program is showing us how NFTs work – rather than telling us. Inside the Starbucks Odyssey app, members can buy and trade limited edition NFTs aka “stamps”. It’s by design that NFTs are referred to as “stamps”. That you can buy stamps with a credit card. And you don’t need to know what a “metamask” or “minting” is to get involved. Starbucks has killed off the jargon that so often consumes the NFT space.
Each Starbucks stamp is assigned a value based on its rarity and members can trade their stamps in for regular ol’ money whenever they want. The more stamps a member accumulates, the more benefits and experiences they’ll unlock.
So not only do NFTs offer a cool and unique experience for customers, they also have the potential for long-term value appreciation and resale. Looks like your loyalty program just got a whole lot more attractive!
5. NFTs = Marketing magic
Each company, product, and service is different. That’s a given. What sets your brand apart from the competition is your ability to differentiate in a meaningful way.
As the adage goes: the devil is in the details. If you think deeply about how to improve the customer journey, you can combine the above tactics to create a compelling NFT experience – and ultimately a brand experience that customers love. Isn’t that what matters most?
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