Engagement is the New Loyalty
Do loyalty programs today excite you?
Probably not. Loyalty programs today are static, transactional, and pretty standard across the board. The idea of having to enter tons of information for yet another low-value loyalty program is a nuisance. Simply to reap rewards from additional spend? No, thank you.
“96% of millennials say companies should find new ways to reward loyal customers.” (KPMG)
In our ever-expanding digital world and attention economy, I agree with the 96%.
So, what if there was a way to make loyalty programs more interactive and multi-dimensional? What if you could be rewarded for engaging with the brand outside the purely transactional elements of loyalty programs today? What if you could own your loyalty with a brand and/or a group of brands?
I believe this is where web3 and tokenization can play an enabling role.
Let’s imagine a new loyalty program — one that looks at the wholistic customer experience with the brand. In the diagram below:
- Left Side focuses on a non-exhaustive list of engagement channels where a user’s interactions with the brand could be rewarded with loyalty tokens (or other forms of tokens). For the non-web3 audience, a loyalty token is equivalent to an airline mile or a hotel stay (i.e., loyalty points).
- Right Side focuses on a non-exhaustive list of how a user can utilize their loyalty tokens. From token-gating access for special products, experiences, or commerce to allowing the user to sell/trade their loyalty points/status (should they choose) to using tokens in third party marketplaces, games, and cross-brand partnerships, brands can build deeper relationships with customers and create stronger individual agency with the brand.
At a time when customer acquisition costs are skyrocketing and customer retention is key, brands must look at new models to enhance their users’ experience with the brand. As we potentially move to a web3 world, brands should evaluate if token-based offerings can enable them to meet their business objectives and goals, whether that’s an enhancer to their existing program or a complete transformation.
Why? Because this isn’t hype anymore.
Incumbent brands are pioneering the future of loyalty programs. Some illustrative examples below:
- Starbucks: launching a web3 extension to its existing loyalty program that will allow members “the opportunity to earn and purchase digital collectible assets that will unlock access to new benefits and immersive coffee experiences.” (Starbucks Stories)
- Flipkart: experimenting with gamified and immersive metaverse experiences where users will be able to collect FlipKart tokens, as well as digital collectibles from partners on normal transactions. (TechCrunch)
- Scotch & Soda: partnered with Salesforce to build a web3 extension to their existing loyalty program, which will enable a stronger member sense of ownership and access to exclusive experiences. The brand views this move as part of their long-term business strategy, not simply hype-based. (FashionUnited)
- Professional Bull Riders: partnered with Smart Media “to create a new PBR branded loyalty and engagement program.” The program consists of digital fan tokens, which can be collected/earned at a variety of events, and redeemed for discounted tickets, digital products, merchandise, etc. (Cision PR Newswire)
In relation to the brand activity, there are dedicated software providers who are doing their part to ease the implementation of this for enterprise, some of these include SmartMedia Technologies, Glow Labs, and Hang — all with their own variation of solution design. When speaking with Tyler Moebius, CEO of SmartMedia, he shared with me his take on loyalty:
“We are seeing brands rapidly adopt the tokenization of loyalty programs. Because the brand is able to reward users for not only transactions, like a purchase, but engagement as well, such as sharing first-party data or by visiting a retail store to pick up a token in AR that unlocks certain perks or promotions. And, rather than using loyalty points that are stored in a centralized database specific to one brand, users can sell or trade their loyalty tokens to others if they mint them to a blockchain. The tokenization of loyalty means all loyalty programs can be interoperable, and therefore more valuable to everyone.”
Speak to any marketer and they’ll tell you that customer loyalty is highly correlated with customer engagement. To improve loyalty, brands must find ways to consistently engage their customers, especially the younger generation. With the onset of web3 and the wider metaverse, there’s never been a better opportunity to build a wholistic loyalty program centered around the user.
Engagement is key — it is the future of loyalty.
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