Moving Beyond Transactional Loyalty in Web 3

A few months ago, Dunkin’ Donuts announced its “improved” loyalty program that was “driven and designed around member feedback.” So naturally, when learning about these changes, customers were pissed. And what do you do when you get angry? Take to social media of course.

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Leaving the Dunkin’ drama aside, this episode highlights how the foundation of many brands’ relationships with customers is focused on transactions. While brands will say they love their customers, it’s not all customers they love. Objectively, it makes sense to focus on how customers transact with you, right? However, loyalty is fickle, a constant moving target that varies wildly by customer. It’s driven by individual customer needs and is earned and re-earned over time. When these relationships are built around transactions, it makes it harder to keep customers - especially when changes to that model are needed. That’s not to say Dunkin’ Donuts and others don’t have their brand loyalists, but when the math on their points and rewards changes, so does their loyalty.

Evolve, not replace

As a collective technology, the blockchain, Web3, and NFTs, are often categorized as here to replace what exists today. That’s not necessarily the case. I don’t see points, miles and the other loyalty currencies disappearing any time soon. It’s just that the model is tired, far too transactional and usually leaves customers wanting for more - and I’m not referring to more points. 

Web3 brings inherent qualities that can evolve how brands approach customer engagement. There are many ways brands can approach Web3 (we outlined them in a series of recent posts). Often, hyperbole in communication for this revolutionary technology and how it will change the world makes it difficult to understand that practical, here and now benefits. 

Breaking it down, here are 4 distinct ways Web3 can bring more value to a brand’s customer engagement strategy:

1. A more rewarding opt-in experience
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   Traditionally, the way to join a rewards program is to opt-in with name, email address, etc. With Web3, the way someone can join your rewards program is to claim an NFT. That NFT may be experiential, may unlock benefits in the future or just may look really cool. Through art and innovation alone, there can be feeling and emotion behind that opt-in experience. The relationship begins not with asking for information, but by giving the customer something that has meaning and value (and is still low cost to the marketer’s budget).

2. Experiential vs. transactional rewards‍
   
   “Spend X and get Y” does not need to completely disappear from a marketer’s toolkit. However, distancing yourself between these transactional and impersonal promotional offers is where marketers should be thinking. NFTs can be experiential, discovering something new with each item you collect. There are lessons to be learned from the PFP projects that emerged over the last few years. One of those is that discovering rare qualities or traits in what you just collected is just plain fun. Marketers can use those traits to deliver value to the customer and your brand by unlocking special access, benefit, community and rewards.

3. Rewards and benefits without borders (aka, interoperability)‍
   
   This is probably the biggest area that is yet to be explored at great length. With NFTs, brand partnerships can be launched almost instantly without any lengthy integrations. Perhaps most important of all, there is no need to share any customer data between the two brands that are launching the partnership. Simply verify ownership of another brand’s NFT, and extend the benefit. Delivering rewards and benefits beyond your brand brings more value to your customers and is often celebrated (see the Starbucks and Delta partnership announcement). Web3 encourages these partnerships and makes launching them a more attainable possibility.

4. A more complete picture of the customer‍
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   What are loyalty programs really? They are a way for brands to know who you are, giving you a reason to identify yourself to the brand. The best loyalty strategy recognizes customer behavior and responds accordingly. The closer you can get to 1:1 marketing the better your relationship with that customer will be. Today, brands have a single view of that customer, while trying to supplement that profile with 3rd party data. On-chain data opens up a world of opportunity for brands to better know their customer, like which other NFTs  that customer owns (which may represent loyalty program memberships). 

Where to go from here

Although many programs look and sound the same, there should be no one-size-fits-all approach to a brand’s customer loyalty strategy. The same idea applies to Web3! The technology is built for creativity. The recent slowdown in the NFT market, and the broader uncertainty surrounding the crypto space in general is causing many brands to take a pause (especially compared to the rush we saw over the last two years). I welcome this. It gives time for brands to be more thoughtful, to learn and apply this technology in a smart way that delivers value back to the brand and the customer. We’re just getting started in fully unlocking what this technology can mean for brands and their customers.

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Jon Parise is the cofounder and Chief Revenue Officer at Gigantik.Through technology solutions and strategic consulting, Gigantik helps brands create meaningful web3 engagements that deliver shared value between them and their customers.

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