5 Tips to Start Blockchain-Based Loyalty Programs That Excite New Fans
To many business owners and CMOs, a blockchain-based loyalty program may seem like just another far-fetched piece of jargon that gets thrown around in the digital era.
Indeed, if you’re one of them, you’re probably used to hearing about digital products that seem to pose more questions than answers, including:
- How does this solution actually increase engagement and revenue?
- How can it help me capture customer data that new data privacy laws have made more difficult to obtain?
- Does it help me engage with a growing Gen Z audience that is set to influence the industry zeitgeist for years to come?
- How can I integrate and scale this technology into our everyday business operations?
Yet, for many brands, blockchain-based rewards programs, also known as “Loyalty 3.0”, are proving to be the spark that’s reigniting an ailing customer loyalty industry.
Statista research found that the global industry is set to more than quadruple in value from its 2022 level to almost $25 billion in 2029. Blockchain as a part of this new loyalty framework will play a big part in that, soaring at a Compound Annual Growth Rate (CAGR) of higher than 100% during that time.
In a broader context, this is unsurprising. Blockchain is proving to be a disruptive technological force across the globe.
In 2022, Gary Vaynerchuk, a famous US tech entrepreneur hosted the inaugural Web3 Demo Day open to more than 200 tech brands.
In his opening speech, he compared blockchain to the advent of the internet in his explanation of why he’d organized the event. “The internet was complicated in 1995, and the blockchain, the consumer blockchain, is complicated in 2022”, said Vaynerchuk. “And so, we take education extremely seriously here.”
“The internet was complicated in 1995, and the blockchain, the consumer blockchain, is complicated in 2022. And so, we take education extremely seriously here. – Gary Vaynerchuk, US tech entrepreneur, speaking at the inaugural Web3 Demo Day in 2022.
The education that Vaynerchuk speaks of is already becoming a necessity in many industries, with customer loyalty being one of them.
Knowing how to set up and optimize a blockchain-based loyalty program is about to become a must-have skill set across many rapidly digitizing industries today.
Ready to boost customer experience AND open up new revenue streams with a blockchain-based loyalty platform? Get in touch with Fanprime to find out how we can put you on the path to higher marketing ROI in just a few minutes.
How can blockchain be used for loyalty programs? Understanding its key benefits
The transition from centralized Web2 loyalty systems to decentralized Loyalty 3.0 is accelerating thanks to numerous tangible benefits for businesses.
One of these is the capability to hand users tokenized rewards in real time. Whereas in the past, users had to wait to receive perks or for loyalty points to appear in their accounts, new loyalty programs automatically add them to the user’s account immediately. This is the number one feature that consumers look for, according to a survey from Salesforce.
Loyalty cards, loyalty points, or rewards can be tokenized as a digital asset on the blockchain.
For example, any brand can create NFTs (Non-Fungible Tokens) as unique and irreplaceable incentives, such as exclusive digital art pieces with limited availability, proof of achievement, or a pass to unique experiences. They add a new dimension to loyalty programs, at limited costs. Your customers can then transfer or trade them easily with other users, even outside of your brand ecosystem, which increases their perceived value.
Let’s say you run an online travel start-up: you can create a one-of-a-kind “Elite Traveler” NFT that rewards an outstanding customer with lifetime benefits in exchange. This status symbol becomes a much sought-after perk among other customers, who are encouraged to increase their brand interactions to attain it.
Think of it as owning shares of your brand: if a customer moves abroad and won’t shop with you anymore, they can monetize their loyalty and resell their NFT or other benefits to another customer who will continue to shop with you. A win-win!
The next item on the consumer list above is “rewards applied to multiple brands”, and this is where web3 loyalty really comes into its own.
Operating within a decentralized blockchain network, new loyalty platforms allow customers to earn and redeem rewards across various businesses.
Let’s say a user receives a token for a purchase at an online retailer, they can now use that token at partner stores or mobile apps, creating a seamless experience that transcends individual brand boundaries.
This interconnected ecosystem speaks to younger users who are used to flexibility when it comes to their online interactions.
Millennials and Gen Zers (the latter born between 2000 and 2011) also search for the gamified features that new loyalty programs come equipped with, from interactive challenges to personalized rewards.
Gen Zers also happen to be the holy grail of today’s consumer market. Not only will they shape the market over the coming decades, but they’re also more likely to refer your brand to friends and family than other generations.
The high security of blockchain-based loyalty rewards programs is also a big step up from the weaknesses that blighted previous systems. Human error or fraudulent activity meant that customers were sometimes able to use certain benefits more than once or become victims of hackers.
Instead, smart contracts now ensure impenetrable and time-stamped transactions that save brands large amounts of money by eliminating misuse.
These new programs also make it easier to comply with new stringent data privacy laws, which mean customers now share less data.
However, built-in gamification has provided a new way for companies to recover these insights: now, users willingly participate in interactive challenges, surveys, and quizzes, providing valuable data in exchange for engaging rewards and incentives.
5 tips to help your brand start up a blockchain-based loyalty program
Blockchain-based loyalty solutions are growing in number, so new entries into the market need to create a smart strategy if they are to stand out from rivals.
When done well, a structured approach will not only build customer trust and engagement, but it’ll improve the loyalty network’s efficiency, too.
Here’s how to go about it.
1. Set out clear objectives
Entering the brave new world of blockchain technology doesn’t mean that traditional marketing principles don’t apply.
The best traditional loyalty programs always have clear and specific objectives in mind, and updated targets will ensure your digital rewards program is also a success.
First of all, establish what the overall aim of the program is. Do you want to focus on data acquisition, customer retention, or monetization? These will influence the next sub-set of questions that will help you achieve this goal.
Ask yourself and your marketing team questions along the following lines:
- Who are your target audience, and what are their behaviors, motivations, and expectations?
- Which incentives would appeal to them and also align with your brand values? For example, offering reward points that go toward flight discounts might appeal to your travel-loving customers, but may also clash with your brand’s commitment to eco-friendliness.
- Which key performance indicators (KPIs) that show you’ve connected with these people? These might include customer engagement metrics, new user acquisition, and customer retention rate.
- How will creative design, storytelling, and gamification help you to improve the customer experience?
- How will your media strategy help you achieve your targets? Will you focus on social media or targeted email marketing, for example?
Clear objectives will serve as the roadmap that will guide you and your team through the project and avoid getting lost along the way.
2. Start small and scale later
Forgive the cliche, but Rome wasn’t built in a day — and neither was a crack blockchain-based loyalty program.
Yet, you don’t need to start from scratch. Often existing programs have useful features that you can build upon. You may already have a tried-and-tested rewards system in place, for example.
With the Web3 loyalty cycle still being in an experimental phase, it’s fine to start small with a limited scope of gamified features, and then transition to other activations later on.
These might include simple rewards initiatives based on rewarding loyalty tokens or (NFTs) in exchange for interaction with your brand.
Then, once you’ve tested these on users and learned from their feedback, you’ll be ideally placed to build on what works well
3. Enable seamless onboarding and user experience
In our clamor for the likes of non-fungible tokens and smart contracts, we run the risk of alienating customers who are still comfortable in the world of Web2.
It’s easy to get caught up in all this Web3 jargon as we try to make our brands sound “cutting-edge and dynamic”, but we should also make sure we include entry points for those who are not fully familiar with cryptocurrencies and blockchain
This means smooth and empathetic onboarding which explains each step of the process clearly, backed up by accessible “FAQs” and tutorials that help people understand how to participate.
Intuitive and user-friendly interfaces are also key. A simple and visually appealing dashboard, for example, that guides users through the various functions of the program can massively enhance the user experience
Users who feel welcomed and supported are the ones who become loyal customers
4. Optimize your digital assets
Although the world of web3 tokenization can be complex, many of its underlying principles are straightforward.
One of them is the concept of scarcity. Web3 tokens, such as NFTs, are easy mechanisms that you can use to highlight the value of your digital assets, which might include premium content, exclusive virtual events, or access to a cross-partner promotion. The level of scarcity can vary according to how unique the reward is.
By making these features challenging, but not too difficult, to obtain, you can trigger two essential dynamics:
- Increase the tradeability of your tokens thanks to the value they hold
- Foster a culture of active interactions with users eager to earn the right to own a digital asset.
Let’s take the example of an e-commerce brand. They might decide to reward customers with branded coins after each purchase. These could then be used to unlock exclusive benefits, such as early access to limited edition stock, or discounted products.
Gamification loyalty programs can also help to increase participation via coin leaderboards and brand-related quests that users can access via a digital platform.
We’ve already seen the concept of scarcity work wonders for the likes of Bitcoin. Doing the same with your brand’s digital assets can be the rocket fuel that powers your blockchain-based loyalty program to new highs.
5. Use Web3 to future-proof your customer loyalty program
Web3 technology is here for the long haul, so short-term objectives like one-off activations and quick money-makers are no longer effective.
Your blockchain-based loyalty program must be ‘future proof’, in that it has the capacity to adapt to quick-changing Web3 industry. Working with a forward-thinking Web3 provider is the best way of doing this.
But which one to choose from thousands of options now in the market?
Experience and economic sustainability are key here. A provider should demonstrate a series of successful live use cases. They should use compatible open technology that demonstrates long-term reliability, such as EVM blockchains or on-ramp/off-ramp platforms.
‘Future-proof’ smart contracts can also help build sustainability. In the world of Loyalty 3.0, these open-source mechanisms can be purpose-built for memberships and subscriptions. Flexible and adjustable, they can anticipate future scenarios by adjusting to changing membership needs, meaning they deliver a lifetime of benefits for the user.
Future-proofing your program may require effort and resources now, but the long-term benefits will likely be huge.
Set up blockchain-based loyalty rewards with a Loyalty 3.0 management system
In the fast-paced world of business, it’s often difficult for companies to find the time and specialized knowledge to carry out the above actions, so many are turning to outside expertise.
By outsourcing rewards management to Loyalty 3.0 professionals, businesses can tap into the skills and experience of a specialized team to execute the program launch, often at a more affordable cost.
Fanprime is one such Loyalty 3.0 platform. As a versatile white-label solution, it combines three crucial pillars of the latest loyalty technology to open up a long-term revenue and data stream for brands. These are:
- Scalable support-to-earn capabilities – Incentivizing customers to interact with brand via virtual stores, mobile apps and social media
- Advanced gamification features – Interactive gaming challenges that appeal to younger generations, build up user rewards, and capture invaluable data.
- Blockchain-based token rewards and interoperability between products – Harnessing the power of Web3 to build a metaverse of unique rewards and build up a network of affiliated partners.
How Fanprime unites three pillars of the latest loyalty technology
Getting started is easy for your business, whether you’re a small startup or an international firm.
Our unique suite of developer tools allow you to plug and play a customized program from scratch, via one of two routes:
A white-label consumer app for small-to-medium-sized enterprises
- For businesses operating within Tier 2 or Tier 3 communities (less than 1 million followers), Fanprime provides a white-label consumer app solution by using a configuration module to build a new plug-and-play loyalty program from scratch.
- This mechanism streamlines the set-up process and allows businesses to customize the loyalty program app with their branding and identity.
API-based solution for large businesses
Fanprime offers an API-based solution that enables businesses in Tier 1 communities (more than 1 million followers) to enhance their existing consumer apps with Fanprime’s advanced loyalty features.
This integration allows businesses to seamlessly incorporate Fanprime’s powerful tools into their current consumer app infrastructure, enhancing user engagement and loyalty without disrupting the existing user experience.
With Fanprime, you can get the keys to the new world of blockchain-based loyalty, and the myriad revenue and data streams that come with it, in a matter of hours.
Ready to see how web3 can boost your brand’s customer engagement? Get in touch with Fanprime to find out how our blockchain-based loyalty platform can help you skyrocket your revenue, capture invaluable first-party data, and put your brand ahead of your rivals.