Find out how customer expectations are changing and learn practical strategies for boosting customer loyalty in a Web3 world.
NFT stands for “non-fungible token”. These are digital assets that are stored on distributed ledgers, also known as blockchains. They’re non-interchangeable, with each one having its own unique attributes and properties. (Read our NFT guide for more details.)
An increasing number of brands are experimenting with NFTs to help improve customer loyalty. Budweiser launched their Heritage NFT collection last year, celebrating their company's history by releasing 1,936 unique digital cans which fans can collect. Each NFT carries real-world benefits, and the 36 special gold versions provide even more perks in the “Budverse”. The collection was a massive hit, selling out in less than an hour.
Another big name using NFTs to strengthen its customer loyalty program is Prada. With Prada’s Timecapsule NFT, holders get access to private social media channels plus a chance to go to a 2023 fashion show in Milan.
In this blog post, we will explore how NFTs are paving the way for a new era in customer loyalty.
What is customer loyalty?
Customer loyalty can be defined as an allegiance a customer feels for a brand that inspires him/her to make routine purchases. Griffin, author of Customer Loyalty: How to Earn It, How to Keep It, distills customer loyalty into four parts:
- Buying regularly
- Referring or recommending to others
- Buying a product or service at the same place
- Being uninfluenced by a competitor to move
Customer loyalty is a crucial aspect of customer retention and customer satisfaction. Research into customer incentives from Wirecard found that 75% of consumers say they are likely to make another purchase after receiving an incentive.
How are NFTs used?
NFTs can be used in many ways – especially the ones which have utilities that bring tangible benefits.
Travala is a blockchain-based travel booking platform, with backing from Binance. They’re using NFTs, such as their “Travel Tiger Utility NFT”, to keep their customers coming back. A utility NFT brings tangible benefits and rewards to the buyer and holder. This NFT gives its holders access to “Smart Diamond” benefits which can unlock a membership. Members who have met the criteria have access to a vast range of travel benefits like concierge access, events in metaverses and real life, random travel airdrops, discounts, and loyalty rewards. This NFT can be sold on secondary markets, as a result, the utility provided can be transferred, as long as holders meet the requirements to be a Smart Diamond member.
Recently three holders of their NFT won a four-night hotel trip to Mendoza, with guided hiking and a helicopter tour included.
Two popular examples of utility NFTs are:
- Oracle Red Bull Racing giving gated access to exclusive experiences
- Starbucks Odyssey Experience, offering digital collectibles and one-of-a-kind rewards
If you want to learn more about how these NFTs are bringing their owners real-world benefits check out this post on utility NFTs.
How could NFTs set your brand apart?
NFTs can be a great catalyst for your brand to differentiate itself as they set the stage for you to strengthen the relationships you have with your customers. Through community input and feedback, NFTs can be constantly repurposed and improved to meet the customer's needs. As a result, your customers may feel closer to your brand. After all, who doesn’t want to have a say in the rewards, ideas, and processes that affect them?
By releasing an NFT you can enhance customer understanding whilst having access to a growing demographic. In Q3 of 2022, there were over 2.2 million unique NFT traders, an increase of 36% compared to Q3 of the previous year. Due to the ledger-like abilities of NFTs and blockchain, your customers' wallets can give a brilliant insight into spending patterns and behaviors.
For example, you can break down which rewards customers are redeeming and if there are any that they particularly enjoy or avoid. In comparison to data sourced from advertising and cookies, NFTs held in customers' wallets can give you a range of insights that weren’t previously accessible.
Most customers are acquainted with the humdrum ways of accessing loyalty programs, like scanning their customer QR code or checking in with a phone number. But NFTs can give your customers a much more personalized experience. By replacing their customer ID or punch card with a unique one-of-one NFT only they own. Some NFTs even give their users the chance to customize them. This form can allow for a much more personal connection when it comes to customers interacting with your brand.
What do customers really want?
Before Web3 and NFTs, a lot of customer loyalty programs were very one-sided, with companies reaping most of the benefits. But customers don’t like to grind out for rewards that aren’t worth it for the time or money spent. It’s tedious. Having recently revamped their loyalty rewards program, customers at Dunkin Donuts will now have to spend $50 to earn a basic coffee – a $10 increase in spending for the same reward.
This is why we are starting to see some companies slowly gravitate towards Web3 loyalty and rewards. Customers want continued value from their purchases. And they want to feel valued. NFTs now allow brands to provide customers with an ongoing experience compared to a more one-and-done approach. With the use of NFTs, customers will have new options to explore like being able to gift and trade their earned rewards.
More and more we’re seeing customers lean towards wanting an experience tailored to meet their needs. New Epsilon research found that 80% of consumers are more likely to make a purchase when brands offer a personalized experience.
NFTs offer fresh ways for brands to personalize customers' experiences. Through the overall aesthetics of an NFT, customers can connect more to a brand and its values. NFTs also have the flexibility for you to be able to tailor-fit rewards to each individual. Something which can prove challenging if using traditional loyalty systems.
Building brand and demand with NFTs
Offering a unique and personalized customer experience with the use of NFTs can help with your brand's bottom line. NFTs can be that final push toward people choosing you. You are more likely to retain customers, as they are being recognized and rewarded for their engagement. Research from IMPERO has shown that 82% of Gen Z audiences actively want to be a part of a community. This younger, more digitally savvy generation's core values trend towards personalization and community.
There’s also plenty of research that shows, loyal customers often tend to spend more. For example, a superior customer experience earns stronger loyalty, which in turn makes customers into promoters with a lifetime value six to 14 times that of detractors. As well as seeing growth in revenues four to eight per cent above their market.
The NFT market is still very young. Grand View Research, a market insight company, predicts an annual growth rate of 33.9% from 2022 to 2030. With a predicted value of over $200bn in 2030. This research shows us that NFTs are here to stay. Eventually, they’ll be a part of our daily lives and even more so a way for brands to amplify their customer loyalty.