Building loyalty with Web3

Customer Loyalty Programs Reimagined: Exploring the Possibilities of Web3

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September 20, 2023

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Web3 is not just about reshuffling the deck, it's about creating experiences that resonate with customers on a deeper level. Find out why now is the perfect time to rethink customer loyalty.


Web3: A catalyst for reshaping customer loyalty

In today’s internet landscape, a handful of tech behemoths hold the reins, controlling the flow of information and our online experiences. Microsoft, Alphabet, Meta, Amazon, Apple (MAMAA), and Netflix account for nearly half of the ever-growing internet traffic. But such concentrated power raises concerns about the content we consume and how our data is used for profit. 

An internet oligopoly carries worrying ramifications: 

  • Influence on policy and legislation
    Oligopoly platforms can have substantial lobbying power, enabling them to influence policies and legislation in ways that favor their interests, potentially undermining the broader public good. For example, in 2022, lawmakers accused big tech companies of deceiving them during negotiations on two landmark EU tech laws. The tech companies funded and instructed lobbies pretending to represent small businesses while serving big tech's interests without disclosure. 
  • Platform’s monetary goals dictate viable content
    Platforms prioritize profitability over content authenticity or diversity. Take YouTube, for instance. YouTube enforces rigid advertiser-friendly content guidelines to ensure that every piece of content can be monetized without issue. This often makes it challenging for creators to address grievances or dispute decisions.
  • Data monopoly and privacy concerns
    Billions of dollars are made from user data, without any compensation to the individual. According to data privacy company LetAlone, many people are unaware that platforms like Facebook make up to US$900 per year by selling each user's personal information to other companies. Now Meta's new platform, Threads, stands poised to potentially further exploit user data. Mandatory disclosures on iOS reveal that Threads could collect highly sensitive user information, such as health and financial data, search history, precise location, and contacts. 
  • Influence on social and political discourse
    A platform's control over information dissemination and communication channels can shape public opinion and discourse in ways that align with its interests. For example, British consulting firm Cambridge Analytica collected personal data from millions of Facebook users without their consent, primarily for political advertising purposes.

Enter Web3, a new and viable alternative to today’s incumbent systems. Web3 seeks to empower users by giving them greater control over their data and interactions. Web3 is not just an internet upgrade; it's a paradigm shift that challenges the status quo and paves the way for a more equitable digital world.

What is Web3?
This initially enigmatic term simply refers to a future version of the internet that is decentralized through blockchain technology.

Centralization is one of the core characteristics of today’s internet (sometimes referred to as “Web2”). A decentralized internet refers to a network structure where data and control are distributed across multiple nodes or computers, instead of being concentrated in a single central entity or server. In a decentralized internet, there is no central authority or control, and users can interact directly with each other without the need for intermediaries or gatekeepers.

Web3 is already changing the way people do business. Using Web3 technology, brands are exploring new models of decentralized governance, enabling direct peer-to-peer transactions, and granting users true data ownership. As the technology continues to evolve, customer loyalty programs are emerging as one of the most promising use cases for Web3. 

Given that customer loyalty is big business, this is no minor development. Existing customers are 50% more likely to try new products and spend 31% more than new customers. For many businesses, building a loyalty program just makes economic sense. 

Most of us know points-based loyalty programs: customers earn points with each purchase and redeem them for rewards after reaching a certain amount. This system naturally encourages further spending in anticipation of discounts or complimentary products.

Such programs have been popular due to their simplicity and clear value to customers. But in the digital age, they face stiff competition. Amidst the sea of loyalty programs, traditional ones often fail to make a ripple, let alone a splash. 

While these programs might attract short-term interest, they often suffer from high breakage – a fancy term for members losing interest and letting their hard-earned points go to waste. The result? Inactive, unengaging loyalty programs with high upkeep costs and no real revenue. 

This is where Web3 loyalty programs come into play. Web3 loyalty programs offer innovative solutions that address the shortcomings of traditional loyalty programs. This guide will show you how to sidestep customer ambivalence and design a customer loyalty program that your customers genuinely want to join.

CUSTOMER LOYALTY GUIDE Want to read this later? Find out how Web3 is taking loyalty programs to new heights��.  Download now and stay ahead of the curve!   

The loyalty landscape

Looking back at loyalty 

Loyalty programs have existed in the US since 1793, when a merchant in New Hampshire introduced redeemable copper tokens with each purchase. But as the internet introduced digital marketplaces with an endless array of products and companies, loyalty programs had to innovate, adapting to engage and reward customers in new and exciting ways.

Today, most loyalty programs fall into one of three types: 

  • Points-based: Customers earn points for purchases that are redeemable for rewards, discounts, and incentives. 
  • Tiered: Customers are categorized into different tiers based on their level of engagement, spending, or loyalty to a brand. Higher tiers typically receive more exclusive rewards and perks.
  • Paid membership: Customers gain access to exclusive benefits and services in exchange for a recurring fee. 
Examples of different types of loyalty programs - tiered, points based and paid memberships

Although loyalty program rewards are often transactional (discounts, free products, etc.), they can be experiential and personalized. Experiential rewards may include access to exclusive communities, unique experiences, VIP treatment, and more. The more personalized the reward, the more likely a customer is to make a positive association with your brand. A positive memory or experience is the key to forming an emotional connection with your customers. 

Rewards earned are generally distributed through a company’s app or website that requires certain infrastructure to maintain, update, and manage customer accounts. Some examples of popular loyalty programs include Starbucks Rewards, Amazon Prime, and DSW VIP. 

The top 5 challenges of traditional loyalty programs

Building an effective loyalty program requires attuning to your customers’ motivations. Why do your customers buy from you? How could a loyalty program cater to your customers' interests? What kinds of incentives would resonate most with your customers?

Most loyalty programs, as you may have observed, answer these questions in the simplest way possible: discounts and points. While monetary rewards are a catch-all solution, they may not address the core issues behind poor customer engagement.

1. Inability to demonstrate real value 

The ideal loyalty program seeks to be mutually beneficial to all parties. Rewards should be designed and implemented to build customer loyalty – meaningful for the customers and, hence, beneficial to them. The consequential repeated business creates value, or revenue, for the company. Sounds simple, doesn’t it? So, why do traditional loyalty programs often struggle to demonstrate this value?

According to a Harvard Business Review article on rewards, in a loyalty program, the “value created must exceed cost of value delivered”. A traditional loyalty program may offer a significant point value or discount for signing up but lack ongoing rewards that incentivize long-term loyalty.

If a program fails to demonstrate value to customers, it’s falling short. Moreover, the business only derives value when customers continue to engage with the program and grow more loyal. If customers sign up for a program and then “cash out”, the program is costing the business money. This is a common pitfall with many loyalty programs: The rewards aren’t effectively designed to encourage the desired behavior. 

2. Transactional friction and program complexity 

Membership tiers or reward thresholds may also be too complicated from a prospective customer’s point of view. This is doubly true if there’s a lot of friction during the sign-up and reward redemption phases. As an example, a customer may understand that a discount can be redeemed for 500 points but not understand the value of 500 points. Are they able to see how to earn that many points? How much do they have to spend to obtain rewards? A poor experience or understanding of a rewards structure or the loyalty program as a whole will only inspire short-term customer commitment. 

3. Clunky customer experience

It’s also difficult to ensure a smooth experience across all customer touchpoints in a loyalty program. The infrastructure required to handle multiple membership accounts can quickly get out of hand. If your program, for example, gives out rewards when someone signs up for free, there will be many low-activity accounts cluttering up your customer database. 

4. Irrelevant rewards

Loyalty program rewards might not always align with customer interests. Often, customers have limited autonomy in choosing rewards and are merely given preset options. Over time, this can lead to growing indifference towards new incentives.

As you get to know your customers’ unique interests and desires, you may notice that traditional loyalty programs tend to generalize your customers too broadly. They assume that all customers engage with the brands they buy from in a purely transactional way – which is not true. These programs present basic rewards that aren’t personalized to individual interests and generally have very limited value. 

5. Poor first impressions 

On top of all this, you only get one first impression. A poorly planned or maintained loyalty program will dissuade past, current, and future customers from engaging with any other programs you develop. If your loyalty program isn’t initially engaging or well-crafted, it could even damage your brand’s credibility.

You may also notice that your competitors are structuring their loyalty programs the exact same way with the same incentives. Given the choice, why should a customer choose your rewards over theirs?

Why the resurgence in customer loyalty programs?  

Although we’ve alluded to why loyalty programs work, you’re probably wondering why now, of all times, you should be rethinking customer loyalty. The answer: A perfect storm of changing customer expectations, new technology, and the escalating costs of acquiring new customers.

An eMarketer survey found that over half of consumers say they’re more likely to choose brands with loyalty programs. While Bond’s 2022 loyalty report revealed that 72% of members value loyalty programs in their brand relationships. Also, consider that 70% of millennials are ready to pay for a premium membership in exchange for enhanced benefits. This data indicates modern customers aren't just interested in loyalty programs – they expect them.

Offering personalized experiences can deepen the connection with your customers. Epsilon Research found that 80% of customers are more likely to do business with companies that provide personalized experiences. Of course, this requires collecting some amount of customer data. While there’s a stigma around personal data collection, the majority of grievances usually arise from mishandling this data. 

Certain companies, particularly tech giants, tend to lack transparency in how they use customer data. This data becomes a commodity, traded for corporate gain. With little to no benefit to the customer, it’s not surprising that 87% of loyalty program members express interest in having their data monitored to receive personalized rewards. 

In the past five years, customer acquisition costs have increased by 50%. Because of this all-time high, customer retention is the secret to sustainable business. Existing customers spend 30% more than new customers, and increasing your customer retention by just 5% can increase profits from 25% to 95%

Capitalizing on this, it's crucial to reward and engage your existing customers in ways they value. Emerging customer loyalty trends provide a roadmap, but to truly harness their power, it’s essential to address the flaws in traditional loyalty programs. In doing so, you set the stage for a loyalty program that meets and exceeds modern customers' expectations.

Taking a Web3 lens to loyalty

A Web3 approach to loyalty focuses on building rapport with your audience and forming a personal, emotional connection with them. This is achievable through the powerful blockchain infrastructure that Web3 utilizes to manage loyalty program members. Transactions that occur on the blockchain are automated and encrypted for frictionless transactions. Web3 technology, like NFTs, also offers an effective record-keeping solution that’s nearly impossible to falsify or alter by a malicious party.

What is an NFT?
A non-fungible token is a digital item that has a unique piece of code registered on the blockchain so that it’s verifiably unique. Because it’s not fungible, it can’t be interchanged or exchanged with another token for the same value.

With this tool in mind, information for customer personalization can easily be collected and attached to individual NFT holders. This makes distributing personalized rewards an achievable goal for any loyalty program. Utilizing NFTs and the blockchain, the realm of rewards expands far beyond what’s possible within traditional rewards systems. 

An example of a successful Web3 loyalty program is NIKE.SWOOSH. This program focuses on creating immersive experiences and building a community of Nike enthusiasts. Through the .SWOOSH platform, members can collect and create virtual merchandise that exists as NFTs. The .SWOOSH digital apparel features designs with physical counterparts and future product teases. Its most dedicated members can even co-design their own virtual creations, opening opportunities for user-generated content. The first .SWOOSH NFT sneaker collection launched in May 2023 and surpassed US$1 million in sales. 

Starbucks Odyssey is another prime example of a successful Web3 loyalty program, leveraging NFTs as collectible stamps. Members earn these by embarking on digital journeys within the Starbucks app, with the flexibility to buy, sell, or trade them. Accumulating these stamps paves the way to a range of unique rewards, ranging from virtual coffee workshops and limited-edition goods to the opportunity to christen coffee trees and take exclusive coffee farm trips. What makes Starbucks Odyssey special is the vast variety of its rewards.

The building blocks of Web3 loyalty

Web3’s underlying technologies

As we delve further into Web3 loyalty programs and rewards, it's helpful to grasp the three core underlying technologies that facilitate the creation of personalized reward programs.


Truly the foundation of Web3, blockchain databases are decentralized public ledgers where data is stored in a series of blocks that are linked together. These blocks are stored across thousands of individual computers operated by people that are dedicated to contributing to the blockchain. Transactions – or changes in ownership of digital properties like NFTs – are stored within these blocks. 

When enough transactions occur, a new block is created and linked to the previous block by a cryptographic hash. Blockchain databases are extremely secure because all data in the most recent block is dependent on every other block that’s come before it. To falsify even a single piece of data, a hacker would have to alter all data in the previous link at the same time! 

Because of how secure blockchain databases are, there’s little to no risk of a few bad actors falsifying data. Individuals who operate nodes for a blockchain receive incentives for letting the database run from their computers. Therefore, no controlling centralized entity is required to host and maintain the infrastructure. The blockchain is the foundational piece of data storage technology that allows for decentralized businesses to exist. 

Smart contracts

A smart contract is an autonomous program that will perform a certain function if the conditions of a contract or agreement are met. In a basic example, if I wanted to buy five apples from you for $5 on the blockchain, the smart contract would verify that the condition of $5 was met and distribute the five apples to me if the condition is true. This process is entirely autonomous and secure, which eliminates the need for trust between parties to make a transaction. This is why a smart contract transaction is considered “trustless”: If you engage with a smart contract, you know exactly what the outcome will be if the conditions are met. 

Non-fungible tokens (NFTs)

A non-fungible token (NFT) is a verifiably unique digital token, unlike currencies and cryptocurrencies that can be exchanged one-to-one. This means you can exchange your $1 bill for my $1 bill – they are worth the same thing. NFTs have a piece of code that makes each one distinct from other digital properties, breaking the exclusivity of non-fungibility in the physical world.

With this technology, you can differentiate between individual token holders and access historical records of which wallets have owned specific tokens. You can also attach certain rewards to an NFT. Although the NFT is technically just the verifiably unique code stored on the blockchain, holding a token can fulfill a smart contract to claim a reward. 

When you buy an NFT, your digital wallet won’t actually “contain” your digital property. But, rather, a smart contract gives you a reference to where the NFT is located within the blockchain database. You are verifiably the owner and the smart contract secures that fact. The rewards, benefits, and ownership are tied directly to your digital wallet

Digital wallets

The digital properties that you own need to live somewhere, right? A digital wallet acts as this space, holding your currency and digital properties without the need for physical cards or banks. Within the loyalty program world, digital wallets function similarly to a user account. The notable difference is that a digital wallet is controlled by the owners themselves rather than a company. 

Digital wallets allow for tokenized items, such as NFTs, to be accessible from anywhere at any time. This allows users to have direct ownership of the digital rewards they receive from a loyalty program. 

Beyond this, tokenized rewards can act as “keys” that unlock unique benefits for customers. The token acts as a credential that can be distributed to customers based on meeting certain criteria. Upon verifying that a wallet contains a token, the customer can gain access to any number of perks, benefits, or experiences that a company wishes. 

The characteristics of Web3 rewards 

Web3-based rewards are, on a fundamental level, an enhancement of traditional rewards. Traditional rewards struggle to connect with customers on an individual basis. But, Web3 allows you to: 

  • Personalize rewards: Authorized personal data collection allows you to create unique rewards that match individual user interests and preferences.
  • Streamline customer experience: Smart contracts automate loyalty program processes, reducing the friction of buying, selling, and trading.
  • Collaborate with multiple brands: Web3 is highly interoperable, which means that if another business is operating on the blockchain, cross-collaboration is easier than ever. 
  • Offer more reward options: Free prizes, access to groups, and exclusive merchandise are all examples of rewards that can be tokenized and distributed through Web3. 
  • Build a brand community: Web3’s inherent decentralized infrastructure makes collaborative social spaces an excellent option for boosting engagement with your brand. 

Considering these factors, you can start to visualize what Web3 rewards look like. Here are some examples:

  • Unique brand experiences: Events, social meetups, and other brand-related social experiences.
  • VIP treatment: Enhanced, preferential treatment as they engage with your brand. 
  • Community access: An exclusive social space where your customers can easily collaborate.
  • Gamification: Games, badges, checkpoints, interactive challenges, and other game elements 
  • Exclusive products: Exclusive rewards are purchasable only by loyalty program members. 
  • Early access to features and products: Get feedback for your latest products or ideas and reward your customers at the same time.

The rewards that you build into your Web3 loyalty program are ultimately only limited by your imagination. An effective trend is to create non-financial rewards to boost your customer engagement. Some Web3 loyalty programs include access to physical properties that have a “digital twin” that exists in a space like the Metaverse. With Web3, it’s even possible to tokenize the rewards themselves. 

You can also leverage your customer’s direct ownership of tokens to enable interactions with other blockchain-based platforms and loyalty programs. Easier cross-collaboration for all parties involved.

Beyond this, it’s a popular strategy to involve access to exclusive communities, events, or even experiences as part of a loyalty program. This is all part of engagement marketing and increasing your customer retention.

How Web3 loyalty programs work 

Web3 loyalty programs use NFTs as passes or tickets to join the loyalty program. The major benefit of structuring the program this way is that the blockchain infrastructure handles the administration of distributing and verifying ownership with incredible scalability. But an NFT’s role isn’t confined to granting access – it’s also instrumental in the distribution of rewards and experiences within the program. 

We’ve spoken about how Web3 loyalty programs tailor rewards to customer preferences, but these rewards aren’t necessarily tokenized. Rather, you can select the reward structure that suits your brand best (be it experiences, merchandise, VIP access, etc.) and use NFTs to verify a customer’s eligibility.

Speaking of personalization, the true beauty of NFTs lies in their ability to encapsulate a customer’s unique journey with your brand. NFTs are dynamic, meaning that they can be adjusted and customized based on how an individual is engaging with your brand. This means that each NFT can represent their unique preferences and interactions with your brand.

Gamification elements like quests, journeys, stamps, and achievements can also be incorporated into your loyalty program tokens so you can gauge and quantify customer engagement. As customers interact more with your brand, you can distribute rewards through the NFT based on the objectives they meet. These reward conditions, governed by smart contracts, can be triggered by actions like social media interaction, collecting multiple NFTs, or responding to polls.

And don't forget: NFTs are based on public blockchain technology. This facilitates open collaboration among brands, making the identification, targeting, and rewarding of new audience segments more streamlined than ever.

Taking the first few steps to see how Web3 can enhance your loyalty program, we’ll go through the benefits of Web3-based loyalty to help you understand what your brand has to gain from reshaping your loyalty program. 

Reimagining customer loyalty with Web3

How Web3 helps brands strengthen customer relationships 


Non-financial or otherwise, personalized rewards are likely to build deeper connections. To create customer-centric rewards, you’ll need to understand your customers better. What is the psychological driver for them to buy from your brand? What need are they trying to fulfill? Once you’ve crafted a suite of reward types, you can begin to collect more nuanced data on individual customer preferences using a Web3 platform. The final reward distributed to your customer will feel almost hand-picked to their interests!

Unique and tokenized rewards

The rewards your customers collect will not only be tailored to their interests, but also entirely unique to them. With NFTs, digital assets can be verifiably unique, one-of-a-kind tokens. Because they exist within the blockchain ecosystem, all rewards can be bought, sold, and traded, with the original creator (you!) collecting royalties from subsequent sales. 

Gamification and engagement 

Creating achievements, checkpoints, and even playable games as a way to earn rewards is a great way to keep your customers coming back every day. Gamification helps increase user engagement and retention. A Web3 platform will help in creating and maintaining a game’s infrastructure.

Community access 

Managing, maintaining, and moderating a brand community can seem initially unwieldy. Fortunately, Web3 allows forums, events, and community social spaces to be accessed exclusively through tokens that you distribute. Creating these spaces can be excellent motivators for customers to engage more deeply with your brand to eventually find a place of belonging with other like-minded individuals. 


We mentioned how access to exclusive brand communities can be tokenized with NFTs. But these communities also serve as spaces for your most dedicated brand advocates to become more involved with your brand and loyalty program. You can collect highly-coveted qualitative feedback about your brand’s public perception and loyalty program, as well as foster your connections with customers as you involve them in the decision-making process. These deeper connections can take the form of products or services developed in direct collaboration with your community. For example, Nike .SWOOSH allows community members to design virtual apparel that may eventually be developed into physical products. 

Transparency and trust

Did you know that most blockchains are entirely open-source? This means that anyone interested can review and understand the code that serves as the infrastructure for Web3 projects. That’s not to say it isn’t secure – in fact, because all nodes in a blockchain network verify the creation of a new block, it’s incredibly hard to falsify or modify existing data in any way. With this process being automated by smart contracts, the system is entirely decentralized with no concerns over a single authority having access to records. Building a Web3 platform means leveraging unprecedented levels of accountability and trust with customer data. 

Ownership and control

Traditional digital assets are, notoriously, tied to customer accounts rather than their unique identity. This means that a central authority ultimately controls how “owned” digital assets are used. With Web3, rewards that your customers earn can be used, bought, and sold as they see fit. Customers have direct ownership of their tokens and can create an economy of buying, selling, and trading rewards with one another. Direct ownership also applies to a customer’s data – a customer can choose who they want to share their data with. Sharing personal data can be a mutually beneficial exchange where the customer receives appropriate benefits and the brand collects useful information about customer preferences.

The business benefits of Web3-based customer loyalty

With a new perspective on how to reward customer loyalty comes an undeniable question: What are the real-world benefits of Web3-powered loyalty programs?

Increase customer retention

A focus on increasing customer retention through more relevant, engaging rewards will have a direct impact on profits. Your brand is 14 times more likely to sell to an existing customer vs a new one. Furthermore, building a loyalty program in an e-commerce platform can increase the average order quantity by 319%, with customers enrolled in the program providing 665% more in monthly revenue.

Create stronger relationships with customers

When a customer earns a reward tailored to their interests through a loyalty program, it has a greater psychological impact on their attachment to a brand. Remember, a customer is 83% more likely to purchase from a brand they feel emotionally connected with. 

Create brand advocates

Quantitative reasoning aside, increasing customer satisfaction through a Web3 loyalty program will have a tangible impact on the public perception of your brand. This is because increasing customer retention converts more repeat customers into brand advocates. Brand advocates are your most loyal customers that recommend and personally advocate your brand’s integrity to people they know. This is particularly important when 81% of consumers trust advice from friends and family over businesses. 

Differentiate your brand 

Having a loyalty program is an expectation for 71% of customers, who say that loyalty programs are a meaningful part of their brand relationships. Consider the competitive advantage that a unique loyalty program with innovative loyalty experiences and personalized rewards offers. Because Web3 rewards systems focus on user growth, experience, and co-creation, you have a tangible advantage over traditional loyalty programs that only inspire short-term customer commitment. 

Easily create a co-branded program

Co-branded rewards are mutually beneficial and a great way for two brands to tap into one another's customer base. With blockchain interoperability, organizing and executing a co-branded rewards campaign is a feasible way for two brands to tap into one another's customer bases. This increases both brands' exposure and allows customers to share an even more unique experience. 54% of companies reported that partnerships drive more than 20% of total company revenue. Co-branding lets you tap into new markets and synergies with other brands for a more fulfilling experience that eases the customer acquisition process. 

Streamline processes through automation

Web3 offers a foundation for automating the reward collection and distribution process through the blockchain. A Web3 platform solves the issues of building infrastructure for managing and verifying ownership of customer rewards. Having a loyalty program that’s easy to use is an attribute that 36% of Web3 consumers consider when increasing their engagement with a brand. This automation also facilitates seamless collaboration with other brands, thanks to blockchain’s interoperability. 

Gain meaningful customer data

Finally, Web3 loyalty programs allow your business to collect customer data that 87% of Americans are willing to share in exchange for more personalized and relevant rewards. In fact, being able to control one’s data is the #1 driving factor for increasing engagement with Web3 consumers. The aforementioned interoperability of the blockchain platforms also enables data aggregation between multiple sources, fostering mutually beneficial data-sharing relationships. 

Businesses best positioned to leverage Web3 loyalty

We’ve covered the general benefits of Web3-powered loyalty programs, but what are the nuances of how an advanced loyalty program can specifically aid your business type and industry? 

Your business has certain characteristics that Web3 can capitalize on. If you’re a SaaS company, for example, you could use Web3 to distribute coupon codes for discounted subscription fees and manage exclusive gated webinar content. Here are some examples of Web3 rewards matched with common business characteristics:

Business characteristics Examples Reward type
Customer-focused and relationship-driven Retailers, service companies, and direct-to-consumer businesses Personalized rewards that inspire deeper customer-brand relationships
Subscription-based models (i.e. memberships) Gyms, beauty products, health & wellness services, streaming services, and SaaS Paid subscriptions encourage long-term engagement with programs that involve VIP treatment and unique experiences
Products with high repeat purchases Coffee, meal kit services, and beauty products Exclusive and early access to products, discounted merchandise, or increases in discounts for subsequent purchases
Highly competitive Food and fast-moving consumer goods Web3 gives you an edge in rewards personalization
Low customer engagement Airlines, insurance, and fast food Building positive brand memories with personalized rewards leads to more engaged customers
High-customer lifetime value Software and service business (e.g. hairdressers) Converting first time-buyers to brand advocates is made easier as you attract, engage, and delight customers with more personalized rewards
Already have strong brand loyalty Consumer tech, video streaming, and social media A strong brand affinity is enhanced by Web3 infrastructure that automates rewards distribution
Strong online presence and sales Entertainment, events, e-commerce, and GenX & GenZ products Companies with e-commerce platforms can leverage their technologically literate customer base to build robust loyalty programs with more advanced rewards

The products and services that these industries offer fit extraordinarily well into Web3 loyalty programs. Content creators and influencers can tokenize community access and gate exclusive content based on any number of factors. An event organizer can include behind-the-scenes information, VIP access, or use NFTs as proof of attendance protocols (POAPs) to enhance an experience before and after it’s happened.

Building loyalty with Web3

Supercharging your loyalty program with Web3

Why is now the ideal time to enhance your loyalty program with Web3 rewards? The momentum in the loyalty market speaks volumes. The global loyalty market is on an upward trajectory, anticipated to jump from US$135.9 billion in 2023 to a staggering US$215.5 billion by 2027. In the backdrop of this growth, there's been a surge in new customer loyalty programs. Businesses everywhere are introducing apps with varying loyalty strategies, be it points-based, tiered, or membership-driven. Just this year, 16 major brands have either introduced or revamped their loyalty programs.

The benefits of creating a program are there, but you’ll have to do more to stand out from the competition. Utilizing the techniques, rewards, and infrastructure offered by Web3 will give you a necessary edge over the competition. Points and discounts aren’t particularly unique or exciting to your audience unless they’re significant. And at that point, is the program feasible? 

Personalized, non-financial, or experiential rewards act as the secret weapon in your loyalty program toolkit. 

Aspects of a failing loyalty program

Most customers are quick to determine whether or not a loyalty program is worth their time. With so many brands launching programs in the past five years, it’s increasingly difficult to successfully launch a traditional loyalty program. Let’s look at what makes a loyalty program unsuccessful and how Web3 addresses each point.

Long-term loyalty isn’t incentivized

Using a cookie-cutter rewards structure may have worked for the original brand, but won’t guarantee success for your business. Customer research and brand-specific goals contribute to the design of loyalty programs. If your program lets customers redeem discounts with points, what percentage of customers are actually redeeming those points? And how many of them are quickly cashing out? 

Rewards have to be structured to encourage customers to stay with you for the long haul. Web3 takes a more nuanced approach to rewards with meaningful, personalized, and experiential rewards that are continually given to your customers as they engage with your brand. 

The enrolment rate is low

How are you advertising your loyalty program to your customers? How many members do you have when compared to your overall customer base? Does your loyalty program feel like a separate, third-party service rather than an extension of your brand? 

A loyalty program should be a seamless extension of your brand that encourages your most engaged brand advocates to deepen their relationship with your brand. Partnering with Web3 experts allows you to utilize the latest digital marketing trends to get your loyalty program in front of your audience and customers alike. 

Customer preferences are generalized 

Every customer interacts with your brand differently. Some may see it as a casual interest, while for others, your brand might be an integral part of their lifestyle. Blanket rewards can leave certain customer segments feeling overlooked.

Web3 offers a subtle approach to data collection, allowing customers to share personal data in exchange for more personalized rewards. Harness blockchain and smart contracts to offer rewards that cater to the unique interests of various customer segments.

How to get started with Web3 loyalty

Technologies like Web3 are exciting but can be tricky to plan and execute. If you’re concerned about how to implement or replace Web3 rewards in your existing loyalty program, the inclusion of personalized or experimental rewards can be a great way to test the market and gauge a response from your most dedicated customers. Think of it as a dynamic strategy that can evolve over time. In doing so, your brand not only showcases its commitment to innovation but a genuine commitment to enhancing the experiences of your customers. 

  • See how Step3 helped festivalPass, a no-fee event live marketplace, break into Web3 by launching their Web3 membership program. 

Step3 is committed to spreading brand awareness and creating inventive, personalized rewards. Want to make the process of adding Web3 rewards to loyalty programs easier? Expert guidance can smooth the transition. If you’re interested in developing an effective Web3 strategy, book a call with our team. 

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