Consumer retail spending continues to thrive, with online Black Friday sales reaching nearly $10 billion this year, demonstrating sustained demand for quality products despite inflation. In this fierce competition for consumer attention, an unexpected beneficiary has emerged: web3. As we look ahead to 2024, more brands and companies are expected to leverage web3 technology to strengthen the bond between their brand and customers.

Unlocking the Potential of Blockchain in Engagement Campaigns

The latest advancements in web3 offer consumer brands a powerful tool to enhance their membership and loyalty programs. Through web3 technology, customers can now own their interactions with brands as non-fungible tokens (NFTs), creating compelling incentives for customers to engage with the brands they value.

When a company establishes a brand incentive program, customers who fulfill specific requirements, such as reaching a spending threshold or engaging on social media, can be granted ownership of the rewards they earn, thanks to web3. These rewards are recorded on a public blockchain as NFTs, transforming points and status tiers into tangible and desirable assets, making them far more appealing as incentive mechanisms.

Customer rewards can now be owned, transferred, and treated like any other real-world asset. Ownership of these rewards brings a range of potential benefits, such as discounts and exclusive experiences, to the owners. This new generation of loyalty mechanisms bears resemblance to the traditional punch card system—buy nine coffees, get the tenth one free—but with digital asset NFTs, the rewards are harder to lose, easier to value, and significantly more transferable.

Most existing loyalty program rewards are non-transferable or challenging to assess and sell. However, imagine if a customer could give their top-tier airline status to a friend, rent it out, or even sell it on the open market. Enabling ownership and transferability of a consumer’s interaction with a business introduces entirely new dynamics. Now, consumers have more incentives to earn those rewards, benefiting both the consumer and the brand.

Brands can easily implement this use case by utilizing NFTs on public blockchains, facilitating seamless transfers of digital assets from one wallet to another or through marketplaces. Customers can bring their own web3 wallet, or brands can provide an integrated wallet within their membership app or account. Moreover, brands need not relinquish complete control by embracing this ownership model. By employing smart contract technology to power these NFTs, brands can determine the level of exclusivity or transferability, retain control over redemption values as earned fees, and track when these assets change hands. Brands can also choose to hide the use of NFTs or blockchain entirely, offering a familiar yet more powerful experience powered by web3 technology “under the hood.” Web3 provides a best-of-both-worlds scenario, enabling ownership aspects that enhance consumer incentives while allowing brands to curate the experience and gather additional data.

Empowering Consumers through Web3-Enabled Loyalty Programs

For brands that don’t directly sell to consumers, engaging with and understanding their buyers can present additional challenges. However, with web3 technology, companies can close the loop and gain insights into their customer base. For example, an apparel company could incentivize buyers to provide proof of purchase through a web3 wallet or app, earning them an NFT and additional rewards. By delivering satisfying web3-based incentives, companies can encourage consumers to sign up for a membership account integrated with a web3 wallet, enabling better customer reach.

Alternatively, if a consumer already possesses their own web3 wallet, brands can leverage web3 technology to market to new, qualified customers. Wallet contents are publicly visible (albeit pseudonymous), allowing a big box home improvement store to identify wallets that contain loyalty rewards from major competitors. The store can then target these wallet owners with promotional offers and incentivize them to shop with them instead.

Additionally, web3 technology facilitates brand partnerships by enabling programmed interactions between web3-powered loyalty programs. For instance, a coffee business could partner with an apparel brand that shares similar customer demographics. Using a smart contract to govern the interaction, a customer of the coffee chain could easily exchange their rewards for discounts at the apparel store. This joint engagement benefits both brands, doubling the advantages for consumers and expanding the companies’ audiences while gaining a deeper understanding of their customers’ profiles and interests. With the emergence of cross-chain protocols that offer easy interoperability, these two brands can even utilize different blockchains.

Web3-powered membership and loyalty programs empower consumers to take ownership of their investment of time and money, providing additional incentives for engagement. Forward-thinking companies can connect with their customers in creative new ways, effortlessly form partnerships, and ultimately increase profits through a customer base that is genuinely invested in the brand. While embracing web3 technology may seem daunting for companies, the rewards it offers are immense.