Image by Milad Fakurian
Recently we have been paying attention to the evolving landscape of web3, and how web3 in the context of loyalty programs and customer referral programs.
With a growing number of household brands, like Singapore Airlines, exploring blockchain based loyalty points as part of their marketing strategy, this emerging technology is increasingly becoming ripe for mass adoption.
Quick Primer on Web3
Web3 is a term given to a set of new capabilities on the web that make it possible for customers to buy and own digital assets. This is only possible with blockchain technology, or decentralised ledger technology.
A function of blockchain is to verify that a customer owns a certain asset. This is done with consensus, or agreement, between many parties in a decentralised way. It is a decentralised ledger of ownership that is verified by the community, in a reliable way, where incentives are aligned.
This is revolutionary because it means that digital value on the internet can be owned and exchanged.
The following are examples of what digital value could provide:
Digital art
Access rights to certain online functionality (i.e. software)
Access to exclusive products
Access to discounted pricing
Access rights to a professional community
NFT’s and Loyalty Programs
An example of how NFT’s could be used with customer referrals on your Shopify Store, is as follows:
Customers are given an NFT, which doubles up as essentially their loyalty account with you.
When a customer performs loyalty actions, like referring their friends, they are rewarded with points that are attached to that NFT.
They can choose to redeem those points, save them; or they could gift those points to their friends where their friends can redeem them at your Shopify store. The ability to do so requires rather advanced smart contract capabilities behind the scenes. There is ongoing research in this area to verify that this can currently be done, and whether it preserve a good user experience.
You can incorporate reward tiers and you can delight your customers with surprise rewards, drops, birthday gifts and so on.
How is this any different from any loyalty program?
The key difference here, is an NFT facilitates a medium of exchange.
As the technology advances your customers can easily gift or sell their NFT’s, or some of the contents of their NFT’s, to others.
As with loyalty points, the contents of the NFT’s are only redeemable for products at your store (or a network of complementary stores).
This means, that with your customers having the ability to sell or gift the contents of their Brand Loyalty NFT, they can bring you new customers (who can redeem NFT contents in your store), hence expanding the reach of your brand.
This is especially beneficial for customers who hold a substantial amount of loyalty points where they have no immediate plans to redeem them. Instead of sitting on them, they have the ability to make these rewards redeemable for other customers who may have more of an immediate need for your products (i.e. the loyalty points would facilitate a new acquisition channel).
This has the potential to make your advertising budget go further, and can provide an attractive customer acquisition ROI.
Over to you: Are Brand Loyalty NFT’s something you have considered for your Shopify store?