How NFTs can change the game for loyalty programs

As loyalty programs become more and more popular, each customer is likely to be a member of several loyalty programs. A study by Bond Brand Loyalty found that the average consumer is enrolled in 14.8 loyalty programs but is active in only 6.7 of them. The same study showed that less than 30% of members are very satisfied with the level of personalization of the communication channels and messages they received.

So to truly achieve the desired outcome of increasing customer lifetime value and inspiring their continued loyalty, modern loyalty programs must be developed to better serve customers’ interests.

At the same time, there are great rewards for companies that succeed in improving their loyalty programs. Loyalty leaders grow revenue approximately 2.5 times faster than other companies in their industries. Achieving just a 5% increase in customer retention can lead to a 25%-95% increase in profits.

NFTs, or non-fungible tokens, are a type of digital asset that exists on a blockchain. They are unique, verifiable and cannot be replicated. Unlike traditional digital assets such as a digital music file, which can be copied and shared, NFTs are unique and have a unique digital signature that is stored on a blockchain. This makes them a perfect match for representing digital collectibles such as virtual trading cards, digital art, virtual real estate, virtual clothing and more.

NFTs are created using smart contracts, which are self-executing contracts with the terms of the agreement written directly into the code. These smart contracts can be used to create, manage and transfer ownership of NFTs on a blockchain. Thus, NFTs can be bought, sold and traded on digital marketplaces. They allow for true digital ownership and scarcity of digital assets, and also have the potential to have real value.

Loyalty programs based on NFTs have the potential to be superior to regular loyalty programs in these six ways:

1. Unique and exclusive rewards: NFTs can be used to create unique and exclusive digital assets that are unique and cannot be replicated. This can create a sense of exclusivity and prestige for customers who earn or purchase these rewards, making them more attractive and valuable.
2. Fair value: A tool NFT can give the holder discounts, early access to products, exclusive goods or other concrete benefits. Combined with the tradability feature, this means that customers who earn or purchase NFT rewards can potentially benefit from reselling, making the rewards more valuable and attractive.
3. Increased commitment: NFTs can be used to create interactive and engaging customer loyalty experiences. For example, customers can show off their exclusive NFT rewards to friends and other users. This can create a sense of community and belonging among customers and increase engagement with the brand.
4. Greater transparency: Building on blockchain technology, NFTs are unique, verifiable and cannot be replicated. This makes them more transparent and secure than regular loyalty programs, where rewards can be replicated or changed.
5. Personalization: NFTs can be used to create rewards and experiences that can be tailored to different customers based on their preferences, behavior or demographics.
6. Interoperability: With NFTs, brands can easily collaborate with each other without the hassle of integrating their backend systems. For example, a customer can earn loyalty tokens from multiple businesses and then use those tokens to redeem rewards at any participating business. NFTs enable this interoperability because they are based on open standards and can be easily transferred and tracked on a blockchain network.

“We are leveraging Web3 technology to reward and connect with our members in new ways, such as offering collectables that can be owned by digital stamps, a new digital community and opening access to new benefits and immersive coffee experiences – both physical and digital, ” said Brady Brewer, EVP and Chief Marketing Officer of Starbucks.

In March 2023, Starbucks released its first paid collection of NFTs, selling all 2,000 Siren items in just 18 minutes.

Soapy Joe’s Car Wash
Soapy Joe’s, a car wash company in San Diego, launched an NFT promotion in July 2022 that allows customers to collect Ethereum-based NFTs from each of its 17 locations. The more NFTs a customer collects, the more rewards are unlocked, such as physical key rings, hats and even tickets to theme parks.

Since the campaign began, customers have minted more than 10,000 NFTs from approximately 2,000 wallets. Soapy Joe’s has also seen a 10% increase in online users since the start of the campaign and a significant increase in customers visiting more than four locations. The NFTs are based on the design of air fresheners given out by the car wash and have become a cult favorite among the company’s loyal “Soapy Squad”. Soapy Joe plans to build on its digital aggregator strategy over the coming months.

Despite competition from larger companies, Soapy Joe’s smaller-scale NFT campaign has produced impressive results, with high customer engagement and increased web traffic. The company plans to continue exploring NFTs as part of its digital collectibles strategy, with future plans yet to be announced. The campaign is inspired by Ellen DeGeneres’ NFT segment featuring a “stick cat” image, and the NFTs are designed based on the company’s air fresheners, which have become popular collectibles among customers.

Innovative businesses have shown that NFTs can offer new opportunities for growth and drive customer loyalty. To successfully use NFTs, brands must focus on building engagement and community while understanding how to create successful NFT projects.

As reviveCEO and co-founder, Mitul Jain, relies on more than ten years of experience using artificial intelligence and data to drive customer value. Having worked on these challenges across financial services, telecommunications and retail, he founded refive to solve brick-and-mortar retail’s biggest challenge – a lack of understanding of in-store customers. Prior to the revival, Jain built the first open banking customer engagement platform at OptioPay. He is a member of the 2Hearts Foundation, supports other immigrants in business, and is a passionate Web3 evangelist.