How AI & Web3 revolutionize the future of value exchange (Part 1)

Author: Muddy Bhatt, Co-Founder @ CUB3

Introduction

As we embark on an era of unparalleled technological advancement, with AI-powered language models (LLMs) and generative models such as Stable Diffusion becoming our closest collaborators, we are ostensibly being led to an AI-centric future. It is possible, and should be the goal, to leverage these technologies towards a better human-centric future. We will be able to shift our focus from low-level tasks like programming or hosting software, into ideation and problem solving. Instead of software, we may be working on ‘thoughtware’ — ideas that we understand to be technically plausible, without worrying about implementation details. This will allow us to spend more brainpower on better solution crafting and less time on execution minutiae. This is a 3 part series on how we can utilize these novel technologies and new thought paradigms to revolutionize equitable value exchange between humans. In part 1 we will focus on traditional customer-brand relationships, and how they are changing. In Parts 2 and 3 we’ll explore how to revolutionize large scale industries with regulatory barriers such as healthcare and climate, and how to go from ideation to execution rapidly, at scale, using emerging technologies in data abstraction and LLMs.

Let’s start with loyalty programs

The Inherent Limitations of Traditional Loyalty Programs

Loyalty programs serve as a proxy for the current state of affairs between consumer and brand value sharing, and frankly, they fall short. Moreover, traditional loyalty programs often suffer from operational inefficiencies, high costs, and a lack of personalisation, which means they’re sort of soulless and not very effective. In many cases loyalty programs don’t even incentivize you to be loyal, because they are designed to entice new or former customers to engage with their brand, instead of focussing on existing customers who actually display long-term loyalty to a brand, and maximising the value existing customers can generate.

In general, consumers aren’t fairly rewarded for the accrued value they are creating on behalf of brands. While consumers generate a significant amount of ancillary value (sharing content, engaging others into the brand community etc), they receive only a small fraction of that value back. This means that there is a bunch of consumer ‘value’ left on the table by brands that could and should be leveraged to improve the customer experience and lead to better growth for brands who understand how to tap into this latent value using emerging technologies.

Let’s consider an example:

Jane is a loyal customer of a coffee shop called “Brews & Beans.” They not only purchase coffee regularly but also frequently share their experiences on social media, attracting more customers. Despite generating value for the coffee shop, Jane receives only minimal rewards, like a free coffee after purchasing ten. With better tools, “Brews & Beans” could measure and attribute the value of Jane’s social media exposure at some discounted rate on their next coffee, proportional to the engagement they generated for the brand, thus offering more personalized rewards and fostering a stronger sense of loyalty.

Generating capital efficient growth through better value attribution

The key to creating equitable loyalty programs lies in the ability to measure and attribute valuable behaviors fairly and accurately at scale. That means data, and the ability to interpret it at scale from multiple sources, in privacy preserving ways. This is where novel technologies like cloud databases, blockchain and AI offer meaningful solutions. Brands have an opportunity to optimize customer loyalty through modern tooling by better measuring, valuing and rewarding consumers for the quality of their engagements and conversions, whilst becoming far more capital efficient in terms of brand growth and customer acquisition.

Lets explore the capital efficiency argument by taking a closer look at Jane from the previous example:

Jane frequently purchases coffee from Brews & Beans, which makes a margin on these sales. Jane gets coffee, and the company gets enough to cover their costs and a little more on top. Feels fair. Jane gets home, posts and shares content about their coffee experience on social media, creating ancillary value for Brews & Beans. Jane drives new business to Brews & Beans, but gets nothing in return. If the brand can accurately measure the value of Jane’s social media actions, they can provide Jane with a proportional reward, such as a discount or merchandise. Brands can also convert fandom to growth more directly by offering other intangible benefits (e.g. recognition, status, shout-outs e.t.c), in exchange for measurable value. This encourages Jane to create more content in the future, fostering a stronger bond between the customer and the brand, and leading to even more growth for Brews & Beans, through higher revenues generated through attracting new customers.

The most interesting point here is the exchange medium where value transfer occurs. Traditionally, Brews & Beans may have invested capital directly into something like google-ads, or paid influencer marketing. They would see some ROI on that basis, but had to pay for it using their cash reserves. In the case of Jane and the coffee, Brews & Beans are able to reserve their cash for product purchasing (where they maintain a margin and are able to sell the product on for a higher price), and then effectively degrade their margin by some proportional amount for Jane in a personalized reward, relative to the value Jane created. This makes the growth side of the business far more capital efficient. Brews & Beans can not only invest in growth by fostering loyalty amongst customers, but use their margin structure as opposed to their cash reserves to do it. On the customer side, Jane feels a strong sense of being valued by the brand due to the personalized and proportional nature of the rewards they receive back, creating a fly-wheel effect where Jane is incentivized to create even more content, delivering even more value and so on.

This changes the traditional customer acquisition game from being a direct cash based expense, to one where a company may be able to slightly degrade margins on ‘margin optimal’ products or services in order to lead to better growth. Further, this better aligns the definition of loyal customers to a system based on accrued value. This properly aligns consumer and brand incentives.

To implement this value-driven approach at scale, we need to analyze consumer behavior, value it accurately, and distribute and track digital rewards across a wide variety of platforms. This has been a key barrier for brands adopting this approach, but recent technological advancements can finally offer meaningful solutions at scale.

Bridging the Gap: Measuring and Attributing Value with Advanced Technologies

Introducing CUB3

CUB3 was founded to actualize this approach and address the challenges faced by traditional loyalty programs. The platform monitors large amounts of data across Web 2.0 and Web 3.0, contextualizing it into individual behaviors that can be measured, valued, validated, and rewarded directly. We enable brands to select valuable behaviors they wish to incentivize consumers to perform on their behalf, and then set both blockchain and non-blockchain rewards for these actions, all accessible through an easy-to-use API or web dashboard.

Web 3.0 becomes key at scale for autonomous value distribution. By automatically distributing rewards through programmatic contracts, consumers know they will be guaranteed their rewards in exchange for loyal actions. Further, web3 infrastructure allows brands a high degree of control over reward types — from discounts, tickets, merchandise to direct profit sharing — it all works from the same infrastructure.

Over time, our platform will optimize the value functions for measured value-generating actions, using machine learning to recommend individual fair value rewards based on actual value generated by consumers within specific campaigns. This approach streamlines the process for brands, making it easier for them to build a loyalty program that accurately rewards and engages their customers, and gives consumers a true sense of belonging within the brand community.

CUB3’s goal is to pave the way for a new paradigm in value exchange, starting with loyalty programs. Ultimately, CUB3 aims to create a human-centric future by leveraging AI and Web3 to provide the tools we need to facilitate fair, precise value-exchange between humans. By measuring ever more advanced and granular actions, and combining trust and verification through web3, we can compose and extend commerce beyond monetary exchange to composite value-generation involving multiple modalities of fair-value exchange. These tools will help lower the barrier for people to give and receive value with a diminishing focus on execution and tooling and an increasing emphasis on the human-centric value we want to create for each other.

Thanks for reading — next time we’ll discuss how CUB3’s approach to value distribution extends beyond brand loyalty and can revolutionize community management to pursue zenith use cases such as healthcare compliance and climate adherence, both online and in the real world.