Insights from the recently published “Future of Loyalty” report

A few insights from the recently published “Future of Loyalty” report by Reddit, Inc., Salesforce, Media.Monks and Polygon Labs (link to report here)

Traditional loyalty programs are naturally commerce-driven and seek to entice consumers into buying new products. This sort of “bribery” tends to attract the least valuable and least loyal audience: consumers who are mostly interested in claiming the rewards, rather than being invested in the brand. Statistics have shown that 71% of consumers switched brands at least once in the past year, citing better deals, product quality, and customer service among the top reasons why consumers switched (Salesforce’s State of the Connected Customer 2022 study)

Traditional loyalty systems are financially effective, but socially old-fashioned because they do not meet the emotional needs of their customers. For any company looking to gain long-lasting advocacy around their brand, the key to success (and customers’ hearts) is to focus on four tenets: membership, influence, shared experience, and needs fulfillment. This is where Web3 is playing a key role in the Future of Loyalty Programs.

A successful loyalty program maintains or increases one or all of these
metrics: lifetime value (#CLV), average order volume (#AOV), and conversion rate (#CR). Another important metric to consider is cost per acquisition (#CPA). Web3 provides tools to boost traditional KPIs.

😎 CVL. If a member derives significant value from their social experiences through a brand’s platform and community, they are more likely to stick around as a customer. They will also have a better opinion of the brand in the long term, having experienced more meaningful interactions with like-minded people and the brand itself.

💰 CPA. By tokenizing their loyalty programs, brands can even turn a profit from acquiring members who would be willing to pay upfront or regularly to remain a member. This significantly reduces CPA. If community experiences are good, members can even recommend membership to their friends and family, allowing for organic growth and organic
acquisition.

🛒 AOV. Offering package deals and discounts on larger orders can still be done through a community system. Prioritizing transparency and communication, brands can turn to their communities (which often involve higher-value customers) and gather information on which products members would like to buy. Then, brands can create custom package discounts and deals for them, which will sell better than traditional bundles.

💯 CR. It’s well-documented that loyalty members on average spend more than their nonmember counterparts. Despite this, brand communities can feature even higher conversion rates due to their social nature: brands can simply ask which new products (or old, unavailable products) they’d like to buy to gauge interest before (re)launching a product, ensuring interest (demand) before spending on supply.