How Web3 Technology Can Enhance Web2 Loyalty Programs
Customers are diverging from their preferred brands; indeed,
71% of consumers to brand-switching pursuits for superior deals. In this competitive and saturated market, brands encounter difficulties not only in retaining but also expanding their customer base.
The future thrives on community-driven endeavors that nurture shared commitments, fostering a customer culture with common values. Integrating web3 technology into loyalty programs opens avenues for interoperability, value generation, and novel ways to support and connect with brands.
Some remarkable improvements that can be provided by web3 technology and loyalty programs constructed on blockchain comprise:
1. Seamless Interconnection: At present, loyalty points or rewards face constraints on particular platforms, curbing their versatility. Through web3, loyalty tokens can adopt standardization, facilitating effortless transferability across distinct loyalty programs. This enables users to accumulate and redeem rewards with greater ease.
In late 2022, VISA
announced a collaboration with ShopNEXT, a web3-focused loyalty program enabling Visa cardholders to earn additional rewards on their payment transactions. These rewards can be subsequently utilized for digital shopping across various verticals.
2. Tokenizing and Possession: In the realm of web3, loyalty tokens undergo tokenization, transforming them into distinct digital assets on the blockchain. This grants users genuine ownership and control over their loyalty rewards, unlocking opportunities for fractional ownership. Users can then engage in decentralized marketplaces to trade or sell their loyalty tokens.
Tiffany & Co introduced token-gated access exclusively for CryptoPunks holders, leveraging their established and robust community. In August 2022, Tiffany collaborated with Crypto Punks, enabling current CryptoPunk owners to acquire a personalized CryptoPunk Tiffany & Co pendant for 30 ETH.
3. Game Elements and Involvement: Web3 has the potential to boost user involvement by integrating game elements into loyalty programs. Utilizing smart contracts and decentralized applications (dApps), loyalty programs can craft engaging and immersive encounters, like loyalty-driven games, tasks, or contests.
In 2021, Nike introduced
NIKELAND, a complimentary sports immersion experience in the metaverse. Users have the opportunity to earn tokens convertible to digital apparel currency.
4. Community Engagement and Governance: Web3 facilitates the establishment of loyalty program communities, allowing users to actively engage in the program’s governance and decision-making procedures. Participants in this loyalty program can suggest and vote on alterations, shaping the program’s trajectory and nurturing a community-driven ownership spirit.
Several web3 initiatives have integrated decentralized autonomous organizations (DAOs) to advance project development and empower users and consumers in decision-making. For instance, Decentraland, a prominent browser-based metaverse, employs a
DAO structure as the decision-making mechanism for MANA, NAMES, and LAND holders. This DAO governs choices like prohibiting harmful or offensive names in Decentraland, curating notable locations for user promotion in the virtual realm, managing the list of community-run servers hosting the world, and more.
5. Customizable and Automated Incentives: Utilizing web3, loyalty programs can employ smart contracts to automate the distribution of rewards based on predetermined conditions and rules. For instance, loyalty tokens can be automatically issued upon a user’s completion of a specific action or achievement of a predetermined milestone. This programmable approach diminishes administrative overhead, ensuring prompt and precise reward distribution.
In September 2022, Starbucks unveiled Starbucks Odyssey, offering users the chance to earn and acquire digital collectible assets. These assets unlock access to various benefits and immersive coffee experiences, encompassing special events and the exploration of
Starbucks Reserve stores.
The evolution of web3 loyalty programs hinges on continuous advancements in web3 technologies, regulatory factors, and market dynamics. With the expanding adoption and comprehension of web3, companies are presented with the prospect to redefine loyalty programs. This not only unlocks added value for customers but also cultivates more robust brand loyalty.
Craig DeWitt serves as the co-founder and Head of Product at Supermojo, a pioneering NFT payment solution. Previously, at Ripple, he initiated the RippleNet payments business in 2015, evolving it into the world’s foremost cryptocurrency payment network for financial institutions. Craig has extensive experience in developing wallet and custody experiences, crafting enterprise payment protocols, and establishing rulesets that facilitate billions of dollars in annual volume. During his tenure at Ripple, Craig held the position of Vice Chair at the Faster Payment Council, contributing to steering faster payment initiatives and creating new payment networks distinct from ACH. Prior to Ripple, he earned an MBA from Stanford and engaged in financial technology projects at Bloomberg.
