Building an NFT Customer Loyalty Program: What Brands Need to Know | Digital
Changing consumer behavior and the need to transform digitally are steering more brands away from traditional customer loyalty membership programs towards adopting new digitally enabled incentives, such as leveraging non-fungible tokens (NFTs).
Coffee giant Starbucks announced its Odyssey experience in September. This loyalty program will allow members to earn and purchase NFTs through activities, such as playing interactive games or taking on fun challenges related to their knowledge of coffee and Starbucks.
Starbucks members can also purchase limited edition NFTs through a built-in marketplace in the Odyssey app directly with a credit card without the need for a crypto wallet or cryptocurrency. Each collectible digital stamp is assigned a point value based on its rarity. The stamps can be bought or sold among members, with ownership secured on a blockchain.
As stamps are collected through the program, members’ points increase, providing access to perks and experiences from a virtual espresso martini hour to access to merchandise and artist collaborations. Members can also be invited to exclusive events at locations such as Starbucks Reserve Roasteries or even be rewarded with trips to the Starbucks Hacienda Alsacia coffee farm in Costa Rica.
The case for virtual incentives
According to market research company GWI, half of consumers surveyed prefer to spend their time online than in the real world, with nearly six in ten global consumers choosing to shop online over in-store, rising to seven in ten for those interested in to participate in the metaverse.
Southeast Asia also ranks among the highest globally for NFT ownership, as one in two consumers in the region is under 30 and highly tech-savvy. These consumers also see NFTs as an asset class for them to invest and earn compared to other asset classes such as real estate, stocks, bonds and watches that are out of reach for those without a bank account.
Brands need to know such “online-first” consumers and create virtual spaces to drive consumer engagement, satisfaction and loyalty, says Chase Buckle, vice president of trends at GWI.
“In the Asia-Pacific region, there is a chance that the metaverse can be a key growth market. In these markets, the appeal of space creates authenticity,” he says Campaign Asia-Pacific.
“People report their behavior online as less reserved and more able to express themselves online than in real life. The arrival of the metaverse may enable them to take this approach to a new level.”
(L-R) Avery Akkineni, Indy Khabra, Rollen Gomes, Samantha Shuttleworth, Mi Li, Chase Buckle
Samantha Shuttleworth, director of product strategy at RGA Singapore, notes that while NFTs remain a growing trend, the agency sees more brands seeking out NFT programs as a means of adding to, rather than displacing, established customer loyalty programs.
However, she points out that there is a new level of caution as well, thanks to the sharp fall in cryptocurrencies back in May that led to a drop in NFT values and buyers.
“Many brands are questioning whether the hype is worth it, and given the recent volatility, whether the time is right to launch their own NFTs. But brands that continue to trudge forward are embracing NFTs with an experimental, test-and -learn approach,” Shuttleworth tells us Campaign Asia-Pacific.
Building new connections with customers through NFTs
There are several key advantages of virtual rewards that brands can use to build new connections with their customers. The metaverse and the use of NFTs can provide more robust storytelling capabilities than other less engaging means.
NFTs also provide the potential and hope for appreciation, allowing customers to feel that the brand delivers long-term value. Brands can encourage this further by using mechanisms such as lower-level, free NFTs that can merge into higher-level NFTs using a mystery box, a method that also democratizes rewards for the user community.
“NFTs are helping brands create new strategies to engage their customers, from new monetization opportunities to products and experiences that money can’t buy or building communities of fans and collectors,” says Shuttleworth.
For example, Hong Kong-based lingerie brand 6IXTY8IGHT worked with AX Studio to launch the Bold Bunny NFT collection for its 20th anniversary. The brand wanted to increase engagement with the younger generation, especially Gen Zs. So it introduced three rabbit personalities in the form of NFTs that catered to their different types of customers.
The collection aims to meet the needs of young female teenagers entering adulthood who want to feel empowered and confident.
“NFTs can be perceived as a special passport to gain exclusive access to benefits and benefits from a particular brand. It is a new way to interact with a younger generation of consumers, with 57% of Gen Z feeling the need to express more even. open in the metaverse than in real life,” says Mi Li, head of AX Studio Campaign Asia-Pacific.
“Renewal value is fundamental to a sustainable NFT program. The NFT-based membership can unlock benefits for traditional brands, including discounts, special product releases, limited editions, exclusive events and giveaways.”
She shares another example of Iugia, a Singapore-based home and living brand that recently launched the JellyVerse NFT collection. The jellyfish design represents the brand’s message of price transparency, quality and harmony around the home with their target group of young homeowners and homemakers.
Customers who purchase a certain amount of goods qualify for a tier-one NFT. After receiving three of these, they will receive a tier-two NFT that unlocks discounts, giveaways and other member loyalty benefits.
Li claims that Iuiga saw orders increase almost threefold and furniture sales by 130%, extending the promotion to 11.11 Singles Day.
Avery Akkineni, president of Vayner3, explains that any branding action should be true to brand identity and purpose, noting how successful brands have hit the sweet spot of leveraging web3 through authentic entries tied to brand moments or existing passion point alignment.
She points to Nike’s purchase of RTFKT and Budweiser’s purchase of Beer.Eth and Tiffany’s Tiffany’s exclusive Punks pendant as examples.
“Savvy brands are always looking for the next exciting way to engage their consumers, and as the performance of traditional email marketing campaigns declines year by year, new models are emerging,” says Akkineni Campaign Asia-Pacific.
“Just as old-fashioned coupons gave way to digital membership programs, we’re seeing loyalty reinvented and leveraging Web3 technology. However, it’s important to note that from my perspective, this new technology is more of an evolution than a revolution of a proven consumer touchpoint.”
Design an NFT strategy
Verticals known for existing rewards programs such as travel, hospitality, retail and live entertainment are returning from post-pandemic engagement. However, ensuring the sustainability of this recovery requires a clear line from consumer to brand, definition of value exchange and what an NFT strategy can deliver to consumers.
Indy Khabra, co-founder and CEO of Livewire, says there has never been more emphasis on consumer insights as brands continue to focus on efficiency of investment and measurement.
“Research is a great starting point to gain this insight into consumer behavior, likes and dislikes. Authenticity is a strong brand identity that stays true when adopting an NFT strategy,” he explains to Campaign Asia-Pacific.
It is also important to identify a clear business objective for launching NFTs, says Shuttleworth. For example, marketers should identify which outcome or specific benefits are relevant to the brand and its customers. For example, does the brand want to make money from products or experiences or simply create a reward for its customers or employees? Quantifiable metrics support this business objective. How will the brand measure and evaluate success?
“Marketers need to identify which customers to target. Is it to acquire new customers or reward existing ones? Do these customers understand blockchain and digital wallets, or will a level of education and onboarding be required? Does the NFT offer benefits these customers value or Can’t find other ways?” asks Shuttleworth.
6IXTY8IGHT’s Bold Bunny NFT Collection
Brands also need the ability to recognize and respond to NFTs in a user’s wallet to fully utilize this tool.
Rolen Gomes, director of technology at RGA Singapore, says brands can use a protocol like unlocking to give users with NFTs access to exclusive areas and wallet content.
“What the content is is up to the marketer; some suggestions could be access to specific areas in a metaverse or even e-stores,” he adds.
Li explains customer education is critical because NFTs are web3 technologies, which means brands need to teach their consumers about things like how to use a crypto wallet, how to sync their wallet to the NFT safelist, and about understanding the minting process.
“Another key example is offline exposure: for example, with 6IXTY8IGHT, the channel with the highest engagement was in-store, where many customers scanned QR codes to sign up for the safe list,” says Li.
“Security is another key priority for brands, so they need to think about how they can ensure they are not exposing their customers’ wallets to bad actors, as well as detecting fraudulent or fake websites.”
