Wednesday W.O.W - Web3 loyalty programs 🧾🎁
[5 min read] Every Wednesday you get bite sized treats on the things you need to know about the future of money, the internet, and society. W.O.W stands for: What - Objective - Why it's important.
Thanks to all the helpful feedback over the last 2 months, the consensus is that smaller “bite-sized” content is preferred, as most of us lead busy lives and have short attention spans. Readers prefer a short summary, with further reading/watching available if people want to dive deeper.
Therefore I present a Wednesday W.O.W, a nibble of knowledge in your inbox every Wednesday with a simple format:
What the technology is
Objective(s) - what is it trying to achieve
Why is it important to users as well as businesses & brands
What are Web3 loyalty programs?
The new generation of loyalty programs that are incorporating Web3 ingredients:
Web3 is the third evolution of the internet which focuses on the sovereign user, including ownership of their digital assets.
In this context, it means that loyalty points/digital collectables earned are actually yours to own and can be sold on the secondary market (for example OpenSea).
The technology underlying the new generation of “digital collectables” is NFTs.
Smart Contracts (recipes in code, hosted on a blockchain) mean users can “spend” points to buy collectables or benefits, or combine digital collectables to create new ones.
All of this runs on “blockchain rails”
What is the objective(s) of the technology?
The main objective is for brands to strategically build a community for their existing customers and attract new customers into the fold. By creating and nurturing an engaged ecosystem, a brand can bridge the physical and digital spaces - a headstart to success in the emerging Metaverse.
An example would be Odyssey, the Web3 loyalty program launching from Starbucks. Activities will include taking a virtual tour of a coffee farm, playing interactive games, and learning about Starbucks history. The rewards for collecting “stamps” (NFTs) include virtual espresso martini-making classes, access to merchandise, artist collaborations, and invites to exclusive events at Starbucks stores & coffee farms.
Another objective is growing new revenue streams. NFTs can be set up in a way that a royalty fee (often 5%) for secondary sales can be collected, providing new revenue streams. in the last 12 month Nike has earned as much from these secondary sales (almost $100m) as they have from selling the original NFTs!
Essentially, this is tokenising culture, and allowing a brand to tap into brand equity in new ways.
Why is it important?
For brands
Keeping customers engaged is a real challenge in today’s fast-paced world with short attention spans and an excess of options. The opportunity is to create a passionate fanbase community and continue engaging the consumer in a different way.
Web3 allows brands to generate novel revenue streams as well as connect with advocates, loyal consumers, or people who have visited a store/restaurant - and also connect these people together.
For customers
As human beings we are wired to be social, and Web3 communities built around ownership of a collectable ecosystem are already huge. It’s like facebook + baseball cards/stamp collecting/beanie babies + Air NZ dollars rolled into one. What’s key is that it becomes a community ecosystem outside of a centralised, single-point-of failure system. In fact, the company could even fail and the ecosystem may persist on - the collectables becoming rarer and more valuable.
The ability to sell rewards and collectables on the open market, as well as speculate on these, can be a rewarding economic activity.
Can I help your brand explore options for a Web3 Loyalty Program? It’s one of the consulting services I offer. Contact me at https://johnsonandhunt.com/reach-out