By Mary Naylor
C200 Mid-Atlantic Chair Mary Naylor has been driving innovation in the customer loyalty industry for over 25 years. As Founder and CEO of Capitol Concierge and VIPdesk, Mary has pioneered customer engagement strategies in the financial services and hospitality sectors. She serves as an Advisor to Vatom, a Web3 enterprise SaaS engagement platform, and sits on the Advisory Board of Frontier Crypto Capital, a digital assets fund of funds.
The advent of Web2 was a game-changer that transformed the online landscape, spawning an explosion of e-commerce, social media, and user-generated content. The winds of change are blowing once again, and we stand at the brink of an even more transformative shift: Web3. This emerging technology, also known as the decentralized web, promises to revolutionize customer loyalty: forever changing the way businesses interact with their customers while ushering in the genesis of Loyalty 3.0.
The impact of Web3 will be felt by every single business—similar to how websites, mobile marketing, and social media engagement have in the past. For companies that want to stay ahead of the curve, now is the time to get on board with a Web3 strategy.
When new technologies are introduced, there is typically an initial rush of get-rich-quick schemes and hyper speculation; it is critical to realize the true value from the noise. Forward thinking companies that embrace the adoption of Web3 technologies will be well positioned to unlock new sources of real and tangible value. Companies will have the ability to create meaningful, value-based relationships with consumers—by using the power of Web3.
What Makes Web3 Different?
Web3 refers to the next generation of the internet, where customers have more control and ownership over their data and online identity. An extension of Web2, Web3 incorporates advanced technologies that provide key advantages:
Decentralization: Web2 is dominated by centralized services like Facebook, Google, and Amazon. Consumer data is stored and controlled by these centralized entities. Web 3 is the overriding term for the next generation of the internet’s move to a decentralized format. Because Web3 is built on blockchains, a decentralized network, there is no centralized control point. Thus, the primary difference between Web2 and Web3 is the way data is stored and controlled.
Ownership: Ownership is a key element of Web 3. Over 94% of consumers say increased control over their online identity and data is important. In Web3, customers will have full control of their data and can choose to share it with businesses on their own terms, without the need for Web2 centralized intermediaries such as social media companies. The Web3 era has the power to change how we participate on the internet, turning customers into brand stakeholders and through consent and community.
The Web3 era has the power to change how we participate on the internet, turning customers into ... [+]
Unlocking Loyalty 3.0 – Forging More Powerful Bonds with Direct Customer Relationships
The fundamental shift to a decentralized web—where consumers own their data and digital identity—making possible the most powerful impact of Web3 on customer loyalty: companies can now create a direct relationship with consumers. With the demise of third-party cookies in 2022 and the dramatic increase in customer acquisition costs (CAC), Web3 brings the opportunity to tap into first- and zero-party data to build digital communities and drive customer loyalty in new ways.
An average consumer is enrolled in 18 loyalty programs, yet actively engaged in less than half of them. Web3 technology offers the opportunity for companies to create stronger customer loyalty by rewarding digital engagement in an ongoing relationship. By offering digital rewards that are ownable, tradeable, and collectible, a company can transform conventional transactional rewards/customer engagement into a more immersive and interactive experience.
Harnessing Web3 Digital Rewards/Collectibles to Increase Customer Loyalty
Web3 digital rewards and collectibles using NFT (non-fungible token) technology are one-of-a-kind digital assets that represent ownership of a specific item or experience stored on a blockchain network. Think of them as digital containers for content files that can be programmed to deliver true utility or benefits. Brands can essentially program anything into an NFT via smart contracts—making it a digital collectible/reward/object with awards, perks, community access, or experiences attached to it.
For example, a company can issue digital rewards to offer event tickets, limited edition products, special offer vouchers, or brand memorabilia. They’re able to incentivize and award specific behaviors or allow access to exclusive content.
Companies have already started using Web3 digital rewards and collectibles to increase customer loyalty: The Broadway Exchange is an excellent example of combining digital and physical rewards to bring the full theater experience to life. Through redeeming, fans can own iconic scenes from their favorite shows, collect and trade merch, posters, and digital cards of actors, plus get access to behind-the-scenes moments, cast meet-and-greets, and digital copies of early scripts and rehearsals.
Starbucks Odyssey is an extension of the Starbucks Rewards program, where customers can earn digital collectible stamps based on completing journeys. This unlocks new benefits and experiences such as virtual espresso martini-making classes, unique merchandise and artist collaborations, and invitations to exclusive events at Starbucks stores and coffee farms.
Engaging with Customers to Increase Loyalty
Digital rewards offer brands a direct way to connect and collaborate with customers without traditional intermediaries, while building a community of brand advocates and encouraging long-term engagement. By leveraging Web3 digital rewards and collectibles companies can increase loyalty in several ways:
Branding: Companies can use digital rewards and collectibles to strengthen their brand image by creating unique and valuable assets. For instance, a sports team could create a digital collectible of a memorable play, and fans could collect them to commemorate the moment.
Gamification: By offering rewards for customers’ actions, companies encourage engagement with their products and services. A retailer could offer a digital reward for every purchase made; customers collect these to redeem for discounts or exclusive products.
Exclusivity: Web 3 digital rewards create a sense of exclusivity, which drives customer loyalty. A music artist could release a limited-edition digital reward that grants access to backstage passes or exclusive merchandise.
Personalization: Digital rewards provide an opportunity for brands to gather valuable data on their customers. By tracking NFT ownership and usage, brands gain insight into customer preference and behaviors, allowing them to tailor their offerings and experiences even further.
Community Building: Companies can offer a unique digital object that provides access to a brand community where customers provide product feedback and connect—not just with the brand, but also with fellow brand advocates.
Digital rewards offer brands a direct way to connect and collaborate with customers without ... [+]
Getting Started with Loyalty 3.0
Powered by Web3 technology, Loyalty 3.0 offers a cutting-edge solution for creating a direct, robust, and engaging loyalty experience. Here are four key steps to get your program off the ground:
- First, invest in education and training for your team with Web3 agencies and platform companies to learn the ins and outs of this new technology. Then, experiment with a pilot test as a stand-alone to avoid disrupting existing loyalty initiatives.
- To ensure a smooth journey for your audience, minimize Web3 jargon and provide familiar Web2 on-ramps for customers. For example, you can deliver digital rewards via email or text.
- Approach your brand’s digital rewards program design like any other marketing campaign: establishing clear objectives, target audience, use case, creative design, and developing a media strategy to promote the collection.
- Finally, determine the utility or benefits for your digital rewards program. There are three broad categories to consider: transactional utility, experiential utility, and community-building utility. The most successful projects include at least two of these categories.
Web3 will be a seismic shift transforming not just the digital world, but the very nature of customer loyalty itself. Companies who take the time to invest and execute early can apply their learnings and maximize success in the long run. Loyalty 3.0, the time to act is now, as the future belongs to those willing to embrace change and seize opportunities. It’s going to be an exciting ride!
