Web3 Loyalty Best Practices (1️⃣): An Introduction

Published in

THXprotocol

4 min readApr 7, 2023

Web3 technology is rapidly transforming the loyalty landscape, with many early adopters exploring the benefits of token-based loyalty programs.

However, the bulk of organizations are still unsure about how to create effective and engaging programs that leverage the unique capabilities of blockchain-based tokens. This series of article explores best practices in web3-powered loyalty, drawing from research by Boston Consulting Group (BCG), McKinsey, Salesforce, and others, as well as aggregated usage data from THX Network.

Problems in existing Loyalty Programs 😟

One common reason for organizations to experiment with token-powered loyalty is that web3 technologies tackle the most pressing problems within loyalty programs.

Source: Web3 Opens New Paths to Customer Loyalty

Boston Consulting Group (BCG) identifies these as fragmentation, low activity and difficulty of setting up partnerships because of the closed nature of existing loyalty programs.

While many marketers, loyalty program managers and growth hackers recognize these issues, how does one go about tackling them?

From Marketing Strategy to Loyalty Objectives 💛

Before launching any loyalty initiatives, organizations are encouraged analyze their current marketing approach and identify areas for improvement. Next leaders need to define and prioritize their objectives. Subsequent loyalty use cases should address the underlying issues of the marketing strategy and support the prioritized objectives.

The loyalty strategy that an organization should adopt will vary depending on factors such as whether it is a brand or a nonprofit, and whether there is an existing community or not. Nevertheless, in general, loyalty strategies aim to reduce customer acquisition costs (CAC) and increase the lifetime value (LTV) of customers or members.

Specific tactics to achieve these strategic goals will differ depending on the case, but common loyalty objectives include:

Attracting new members and customers
Lowering churn, meaning retaining existing members and customers
Growing revenue by upselling, for example, using paid perks
Boosting frequency and/or recency of interaction and purchases
Create partnership offerings with other brands and organizations, that support primary objectives stated above

Measuring Objectives

THX Network provides an easy-to-use solution for organizations to launch their own loyalty programs, which we refer to as “loyalty networks” due to their emphasis on community building and cross-brand partnerships.

The solution also includes an analytics dashboard that measures various engagement metrics, providing valuable insights into the effectiveness of the loyalty network in meeting tactical objectives.

Close to 30% open and participation rates in the embedded loyalty offering powered by THX Network. Source: aggregated THX Network usage data, measured by Mixpanel.

Additionally, the platform gathers large amounts of aggregated and anonymized usage data across different loyalty programs, allowing for continuous improvements and increased effectiveness of the solution as a whole. For example, shown above are the engagement rate percentages for our embedded loyalty widget reaching up to 30% of all website visitors.

Next up: A Practical Guide 🗺️

Tokenized loyalty programs offer a new and exciting way to engage with your customers or members and boost revenue. By following best practices for web3 loyalty strategy and tokenization, such as establishing objectives, you can create a successful loyalty program that leverages the unique capabilities of blockchain-based tokens.

Stay tuned for the next article in this series where we explore another fundamental aspect of web3 enabled loyalty; the underlying digital assets, also known as tokens. We can’t wait to share more with you!

About THX Network 🤜🤛

When receiving something nice, the logical reply is “thanks”!

Our team believes that in ten years’ time, having digital assets such as NFTs will be as common as having a website. We are making this future possible for everyone by offering you token-powered marketing solutions that can be embedded in 30 minutes or less.