SUSTAINING IN A CRISIS: CUSTOMER LOYALTY
Customer acquisition costs have increased by 80% in the last 5 years, data protection movements are on the peak of their powers and social media is being flooded with content. Paired with a global economic crisis, the probably best shield to sustain the storm is — fostering true customer loyalty.
The effect of Apple’s privacy policy on customer acquisition
The day Apple decided to increase customer privacy, Meta’s (Facebook’s new name) stock lost 25% in value. The vast majority of Apple users do not wish to be tracked. Targeting new customers as well as retargeting existing ones has become increasingly harder now. Without data, who do we target?
Customer loyalty matters — more than ever
Keeping in mind that it costs 5–25x more to acquire a new customer than retaining an existing one and that a 5% increase in retention efforts will boost profits from 25% up to astonishing 95%, it becomes obvious that investing into a sophisticated loyalty program will be inevitable for any brand that wants to grow its success in the coming years.
Many brands understood the importance of a loyal customer base a long time ago. Giants like Starbucks, Sephora, Nike or Amazon have excelled in this space and reap the rewards by being loved by their users and cashing in sustainable revenues. Even when faced with an economic crisis, those companies can rely on income being generated by their loyal customer base.
You might now think it will be impossible to set up such a program for your brand looking at the time and resources needed to reach a point where it will bear any fruit. And you are right — if you consider using the technology that has been used up to this point.
How to foster loyalty in customers
Most loyalty programs are merely transactional. Spend amount X, get discount Y. But is the outcome true customer loyalty?
The best way to get loyal customers is by giving them a reason to stay. By aligning the incentives of your company with the needs’ of your customers you will have made a major step. But what do your customers want?
Let’s take a look at an industry that has been criticized by many, yet is solving this issue brilliantly — NFTs. One of the pillars of NFTs is the idea of community and ownership. NFT projects are famously known to align incentives and take action based on the needs of the community. Imagine a world in which we don’t spend money on Instagram ads, but rather reward our most loyal customers for behaviors which we want them to take? This could range from sharing your social media posts with their friends (basically turning them into highly credible micro influencers) to helping someone inside your brand’s community with a question about one of your products (boosting this person’s customer experience and making their day).
Why NFTs?
By nature, the underlying technology yields several benefits to companies and their loyalty programs.
Ownership
NFT-powered loyalty programs turn customers into stakeholders. Customers are not only incentivized to collect points in a system, but now they own their loyalty profile as an NFT. This is an asset that can grow in value the more the customer interacts with your brand. Furthermore, these NFTs are tradeable, thus unlocking opportunities that have never been possible before: secondary membership marketplace for your brands.
Interoperability
Recently, Delta Airlines and Starbucks Coffee combined their loyalty programs resulting in a win-win situation: customers can earn Starbucks points while flying, and earn miles while drinking a coffee — thus both brands are massively increasing their customer base. Yes, these companies did that with existing technology, but at an immense expense of resources and time.
With NFTs, brands no longer need to spend huge amounts of time and resources to create one-off integrations. Interoperability unlocks radically new ways for what loyalty programs can look like. Brands can tell stories and form partnerships like never before, meeting the customers wherever they are. All this is possible with minimum effort thanks to no-code solutions such as FUEL.
Gated access
NFTs can also function as an access pass. Exclusive perks (discounts, giveaways), limited products, behind-the-scenes content and unique real-life experiences are just some of the examples of benefits that you can offer membership holders.
You might have already done this with existing tools, but likely the results weren’t satisfactory. Recent case studies show that exclusive perks offered through NFT-gated access have a 5x increase in engagement. The main drivers are ownership and gamification. For each successful engagement customers receive additional NFTs, which are owned by them and can be sold. Moreover, the NFTs could also be part of a future campaign that will be available only to specific token holders.
The future of loyalty is web3
Customer loyalty is the way to go and NFTs offer exciting ways to turn your customers into stakeholders. Stakeholders who can participate in your company’s product development, be a key participant in your marketing efforts and much more. Brands with incredibly strong fan bases have understood this and moved into web3 already, brands like Nike, Adidas, Starbucks, Lamborghini, Louis Vuitton and Coca-Cola, just to name a few.
What to do now
We believe that customer loyalty will not be won by giving out points based on spending, but meaningful interactions between your brand and your customers. That’s why we built FUEL, a no code, NFT-powered, customer loyalty program builder for brands. We handle the tech, so that you can focus on your loyal customers.
If you’re interested in helping create the next generation of customer loyalty programs, we’d love to hear from you! You can book a free call with us here.
