As it becomes more competitive and expensive to acquire new customers brands often refer to customer engagement programs to increase retention of the existing client base. Such programs create additional incentives for customers to more actively purchase the product or service.
One of the most successful examples with over 20 million members is MyMcDonald’s Rewards where customers can earn points while spending at the fast-food chain, which they can then exchange for Big Macs. Mc'Donalds is a brand that has a huge loyal customer base and even a small increase in its consumption pattern can strongly impact the company's financial results.
"We're already seeing increased customer satisfaction and higher frequency among digital customers, compared to non-digital." CEO Chris Kempczinski said on an investor call in October 2022
While the benefits of such program are evident both for consumers and brands, there's still large room for improvement. Regardless of how loyal your are and how many Big Macs you've eaten so far the maximum recognition of your loyalty would be the greatest level in the redemption matrix.
The most innovative engagement programs, however, allow customers to capitalise their membership and give options to transfer or sell it to another person. It recently became possible to realise such programs with the use of the blockchain technologies.
Originally invented by Web3 games like Axie Infinity and StepN, the concept of blockchain-powered play-to-earn (P2E) engagement programs has recently started to be implemented by well known brands like Starbucks, Budweiser and VISA. Here are our thoughts on why Starbucks decided to upgrade its rewards program with a Web3 / NFT touch.
Explaining the Web3 customer engagement / loyalty concept
A Web3 engagement / loyalty concept assumes that customers receive branded tokens and NFTs representing their membership after interactions with the brand's offering (purchases, referrals, surveys, etc.). The NFTs give them access to unique perks and experiences that are not possible to obtain without having the NFT (special discounts, products and services [token-gated commerce], exclusive private sales events). The tier of membership levels up after additional interaction with the brand that unlocks access to a new set of unique rewards.
While the mechanics reminds of MyMcDonald’s Rewards program, the blockchain technology opens new possibilities that is not possible to realise otherwise:
1. NFT membership is a liquid asset
Imagine that you are Delta's customers and you previously had many business trips and travelled a lot. Then you change your job and don't need to travel that often. Because you travelled so much you managed to become Delta's diamond member that has the greatest set of perks. This membership should have some value because it still can save a lot of money for future trips, but you can neither transfer nor sell it to anyone - so the practical value is zero.
However, if it was an NFT membership you would have options to sell it. An NFT membership is a digital token that is registered on the blockchain and has information on the token owner and its tier. As with any other NFT, it can be sold on a marketplace (external or internal) to another user at a specific price which is determined by the membership level and an overall demand / supply factors.
While these transactions can seem beneficial for the old and new customers, brands can also make additional revenue in the form of royalties receiving a specific percentage from the transaction amount. For instance, Nike's made over $92m in royalty revenue from secondary sales of its NFTs.
This liquidity characteristic creates a new economic incentive for customers to stay loyal. All else equal, this factor would make your brand much more preferable over the competition out there.
2. NFTs as an official proof of membership status
People like to demonstrate their love for specific brands - we see logos everywhere: on cars, clothes and merchandise. Some people would like to be associated with a higher class putting on display their luxury items; some people have certain brands directly associated with their identity - it can be a football club, music band or mobile phone producer.
With an NFT membership customers can now express themselves in social media by showcasing the collectibles and demonstrating their status officially recognised by the brand.

Source: Meta
Such recognition brings even stronger brand affiliation as it's not possible to fake an NFT compared to a Gucci bag origination of which can always be questionable. Each NFT is easily traceable and everyone can see who issued it and whether it has a direct connection to the brand or not.
How to implement a Web3 engagement program?
It's important to notice that the customers are not supposed to be "crypto native" - with the Indigo technology you'll be able to issue NFTs to your customers who don't have a wallet and never interacted with crypto.
If you are a brand looking to expand and better retain your younger customer base, this is the time to act. By using a tokenized loyalty platform, you can offer your users a unique and desired experience that almost nobody in the market is offering.
Indigo NFT offers a flexible toolset and services to launch and manage a Web3 /NFT-powered customer engagement platform for brands across different industries. Feel free to book a call with us to learn more about how we can take your loyalty program to the next level and help you to stand out of the crowd.
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