Is the future of brand membership built on web3?
Building lasting customer relationships is essential for any brand looking to stay competitive. In the past, loyalty programs were rooted in businesses telling customers what they needed to do to earn rewards, and customers following course. The best brands have moved beyond that, providing surprising kinds of value and interesting membership models that connect vast offerings and services. Just look to Nike’s membership universe, which is really the scaffolding for connecting the entire brand, from SNKRS to Run Club and beyond, while also including transactional basics like free shipping that members count as tablestakes.
But we’ve only seen the beginning of how loyalty will evolve to become a container for brands. With the increasing advances of web3, there is a new opportunity to build brands that are truly reciprocal in nature. At Hellen we talk a lot about building two-way relationships to create loyalty. Web3 allows for member ownership and participation from members in ways we haven’t quite seen before.
While a lot of initial brand entrants into the web3 space feel more gimmicky in nature, there is a huge opportunity to increase participation and build emotional attachment by establishing membership communities. These new membership models allow for brands to be co-owned, co-created and even co-governed. They allow for new, surprising benefits of interacting with brands, while making them more democratic, adaptable, and engaging, giving businesses a powerful platform for creating belonging and building long-term customer relationships.
Traditional loyalty programs have done little to innovate in decades, leaving consumers feeling increasingly disenchanted with their offerings
Almost every business, from your local gas station to Neiman Marcus has some form of points-driven rewards program. The formula is simple: buy stuff, get more stuff. If it’s not a frequent stop, points are often amassed and sit there and stagnate, quickly losing their luster. Or, more frustratingly, in an inflationary environment points can feel like they’re worth less and less.
These transactional reward loyalty programs often focus on data collection, with the intent of tracking customers’ purchasing habits in order to upsell. Sometimes this is useful for the member, helping to push them into a new product or service they might love, but we don’t really see this as loyalty. It’s really more of a mechanism for driving deals and it leaves a lot of value on the table. What’s worse, this singular approach often discounts the brand, and doesn’t do anything in terms of creating emotional loyalty for the business. Instead, interacting with a rewards-driven brand can feel a bit like a coupon scavenger hunt.
As a result, many programs have become transactional instead of forging personal connections. Web3 is set to revolutionize these loyalty models by leveraging new technologies to create deeper engagement and more meaningful experiences that operate beyond traditional marketing tactics like frequency-based rewards and offers.
Instead of just getting more points, members could have a role in brand governance, participate in product creation, connect with like-minded members, and potentially even get paid by the brand community for their efforts. The move shifts the control of data from the business to the member.
There are brands on the forefront of employing a web3 membership model. Super sleek outdoor apparel brand Early Majority (a friend of ours, co-founded by former Lyft, Sonos, and Patagonia exec Joy Howard) is marching into this future, galvanizing a community of people passionate about sustainability in fashion to become an actual stakeholder in the business.
Web3 isn’t just for crypto bros: brands like Nike and Starbucks are already experimenting with web3-enabled member experiences
We’re seeing certain brands that have always been on the cutting edge take full advantage of this new web3 technology. Nike recently launched .SWOOSH which is “a new community experience, designed to give you the opportunity to co-create the future of Nike.” Members can collect, create and share virtual creations, get early access to new drops and attend exclusive .SWOOSH events. One of the most interesting aspects to Nike’s approach is that they’re using .SWOOSH to bring existing web3-curious Nike members into web3 instead of targeting the existing early adopter web3 community.
“This approach meets consumers wherever they play and shop sport and offers a gateway into a new digital arena”, says Ron Faris, GM of Nike Virtual Studios. “We are shaping a marketplace of the future with an accessible platform for the web3-curious,” Faris says. “In this new space, the .SWOOSH community and Nike can create, share, and benefit together.”
Starbucks has also entered web3 with the launch of Odyssey. The beta experience allows participants to engage in Odyssey Journeys to earn collectible stamps (NFTs) and Odyssey Points that unlock additional benefits. It’s current state is primarily focused on digital collectibles, which can feel gimmicky and offer little value; that being said, we’re sure there’s a lot more to come and as the website claims the participants will have a say in shaping the future of the experience.
The challenges of implementing a web3-based membership — and the opportunity
Not only are most brands too risk-averse to experiment with web3 in its early days, but they’re also likely still struggling to catch up to best-in-class web2 experiences. The weight of this tech debt makes it especially challenging for brands to invest in something so new.
Web3 is also not well understood. Unlike more common digital platforms like social networks, brands are still unsure of how to apply web3 in ways that will create real value and most of the early experiements have focused on gimmicky collectibles and gaming integrations further fueling brands’ doubt on the possibilities of web3.
Memberships will fall flat when simply using web3 to offer the same kinds of benefits that have become tablestakes to joining any kind of loyalty program of the past. Web3 opens up a world of value exchange possibilities for businesses, allowing the creation of entirely new value propositions that have previously been impossible to achieve. By leveraging smart contracts and token incentives, brands can move from simply offering rewards to creating value-centered experiences that provide real value to members. In this new era of web3, businesses have an incredible opportunity to unlock unique ownership models, incentivized collaboration opportunities and highly personalized relationships with consumers — value exchange that provides tangible value far beyond traditional rewards schemes.
Web3 presents an opportunity for brands to create belonging in a completely new way
As brands begin to explore the opportunities of Web3, they need to focus on creating modern memberships that are driven by a deep understanding of members’ needs. To build an atmosphere of belonging and emotional loyalty, brands must be willing to let members become stakeholders in their brand and yield some control to members. This new approach requires a shift away from traditional metrics such as clicks and transactions towards longer-term dynamics that measure members’ emotional connection and provide meaningful value exchange.
With this innovative mindset, brands can revolutionize how they foster relationships with members through modern memberships, unlock unique benefits for both members and the organization alike.
Hellen Contributors: Adrian Ho, Pierre-Laurent Baudey, Elsa Perushek, Peter Petrulo, Jason Zabel
