Will loyalty programs be NFTs’ saving grace?
Some people believe NFTs are old news: just a passing fad born out of the gargantuan price tags and a whole lot of hype.
The reality is much more nuanced than that.
Some brands created cool NFT collectibles. Others experimented with new takes on utility. And, frankly, some NFTs were a dumpster fire. Across the board, NFT collectibles are still finding their footing with audiences.
This year we expect to see NFTs cement their purpose in a few key areas for brands. Among these are consumer loyalty programs, where NFTs stand to solve technical issues and make incentivising brand loyalty more exciting for consumers.
Loyalty programs are more important than ever
Digitisation, especially within the past three years, has made customer loyalty more important than ever. With endless options and endless choices just a flick of a finger away, you now have to fight to keep your customers coming back.
To earn their loyalty, you need to engage with customers directly. Loyalty programs can act as a part of a larger omnichannel strategy dedicated to fostering and maintaining a dialogue with customers.
The most effective loyalty programs, like Starbucks Rewards, go above beyond incentivising regular purchases by incorporating three things:
- Convenience – Making it easy for customers to save time as well as money.
- Personalisation – Delivering relevant promotions at crucial times based on customer history and data.
- Exclusivity – Offering perks, products, or rewards unavailable through other channels or other brands.
From a business perspective, loyalty programs also provide insight into the drivers behind customer loyalty and a means for measuring loyalty within your base. But creating a successful loyalty program that benefits both brand and customer requires continuously innovating to provide these criteria in a way that aligns with your brand’s values and stands out from competitors.
This is where NFTs stand to become loyalty program VIPs.
NFTs: Loyalty program VIPs
NFTs can be a unique and innovative way for you to design loyalty programs.
Giants like Louis Vuitton and even Starbucks have successfully integrated them to allow access to members-only perks and experiences. Looking ahead to 2023, Gartner predicts that more and more forward-thinking brands will also take advantage of what NFTs offer loyalty programs.
Within loyalty programs, the primary function of NFTs will be to represent the points, tokens, and other rewards that customers earn. By transitioning to blockchain-based loyalty points, you are well-placed to meet those three criteria—convenience, personalisation, and exclusivity—that make a gold-standard loyalty program.
- As NFTs, loyalty points increase convenience because they can be easily tracked and managed by members in a digital wallet.
- Customers who hold certain NFTs could use them to get early access to products, perks, communities, or other personalised experiences, which research shows Millennial and Gen Z consumers value twice as much as older generations.
- The decentralised nature of blockchain technology emphasises community and ownership, adding legitimacy to loyalty members’ status and the exclusivity of the program.
The Hundreds, a Los Angeles-based streetwear brand, provides a standout case for how NFTs can elevate the customer experience through blockchain’s convenience, one-of-a-kind personalisation, and the exclusivity of ownership.
When The Hundreds released 25,000 one-of-a-kind editions of its iconic Adam Bomb symbol as NFTs, it also gave the customers who purchased them royalties—in the form of store credit—on any products created using that iteration of the Adam Bomb.
The Hundreds’ NFT program, while not created as part of an existing loyalty program, did succeed in offering some of its most loyal customers the ultimate reward: stakeholder status.
Loyalty program power-ups
On a more technological level, NFTs solve other challenges as well.
As privacy and data use becomes more of a concern for customers around the world, using NFTs allows you to build loyalty programs with rewards that can be redeemed without compromising personal information. Because NFTs are governed by an unbreakable blockchain-based system of ownership, the added security they offer comes baked in.
Using NFTs also allows you to create your own loyalty network. This allows you to operate alongside vendors, partners, and customers within a single system, eliminating the need to redirect these groups to intermediary providers. Without loyalty intermediaries, you add another layer of protection to customer data and could even reduce long-term costs for maintaining the loyalty program.
The non-fungible future
As Forrester explains, the era of NFTs that simply exist to be “cool” is wrapping up. Customers are looking for NFTs that offer something more.
Loyalty programs stand to provide NFTs with that extra purpose. In turn, NFTs offer loyalty programs valuable technical solutions as well as an opportunity for you to reward customers in a new and innovative way.