The Loyalty Revolution: How Web3 Can Take Your Rewards Program to New Heights
Today’s customer loyalty industry is experiencing a paradox, but web3 loyalty programs are well-placed to solve it.
What is this paradox, you ask? Put simply, 93.1% of companies report positive returns from their loyalty initiatives, according to research by SaaS loyalty solution Antavo. Yet, the share of inactive loyalty members (59%) is the highest it’s ever been (KPMG).
With the loyalty industry set to rocket to over $24 billion in the next five years (over four times its 2022 value), there is a lot of latent revenue waiting to be unlocked.
Web3 loyalty programs are the most likely route to these golden returns, but they’re still something of an unknown among many business owners looking to upgrade their existing loyalty programs.
If you’re one of them, you may be wondering how web3 loyalty programs can help you:
- Get over a customer engagement plateau with high levels of dormant users and low returns
- Collect insightful customer data following new stringent controls around data sharing
- Improve your program’s returns through techy-sounding concepts like blockchain technology and non-fungible tokens (NFTs).
Yet, failing to upgrade your loyalty program risks stagnating customer interactions and turning it into a loss-making venture that lags behind those of your rivals.
Customers agree. KPMG research cites how 96% of loyalty customers felt that their current program needed improving. The answer to this is to go digital instead of sounding the death knell for brand loyalty, according to experts.
“Customer loyalty is not dead, it’s not even dying — it is being reinvented for the digital age,” says Paul Martin, Head of Retail for KPMG in the UK.“If brands are to successfully reinvent their loyalty schemes, they should be offering privilege loyalty programs with personalized offers or a kind of ultra-convenient umbrella loyalty currently offered by companies.
A web3 loyalty program can offer the digital breakthrough that loyalty brands are looking for.
By fusing emerging technologies and a customer-focused approach, it will help brands reengage with inactive customers and attract high-value new customer segments. Not only will this enrich current loyalty programs and bolster subscriptions, but it’ll also reduce costs.
Starting on web3 today can prepare you for the next generation of loyalty programs. It can also help you prepare your whole company for future web3 opportunities.
Ready to see how web3 loyalty can boost engagement and revenue in just weeks? 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.
What are Web3 loyalty programs?
Web3 loyalty programs use emerging technologies – blockchain chief among them – to offer users more control over their loyalty activity.
We’re about to enter the latest iteration of the internet’s evolution. Web1 (from, say, 1990-2005) was the era where publishers controlled content (and revenue) and users consumed it; web2 (2005-2020) was the platform era, where social networks and platforms put content creation in the hands of the users.
Web3 propels us into a tokenized economy, where users can own and monetize their content through decentralized applications, free from intermediaries.
Brands offering their customers web3 loyalty will be able to offer new and exciting rewards well beyond the reach of traditional loyalty programs, including personalized rewards and access to exclusive privileges that would have been impossible in the web2 era.
How web2 and web3 loyalty compare
When used well, web3 loyalty can showcase the very best of your brand, put you ahead of rivals lagging behind with outdated loyalty rewards, and become a huge earning mechanism for your program.
If you’re new to the world of web3 loyalty, also known as loyalty 3.0, then read on to find out how this major new trend is set to transform customer rewards as we know it and the immense long-term benefits it can bring to your brand.
5 Web3 Loyalty Program features that will transform your rewards ecosystem
We can more easily understand the many benefits that a web3 loyalty program can bring if we break them down into the following five parts.
1. Loyalty that keeps on giving: Tokenized and tradeable rewards
Points-based loyalty has been with us for decades but web3 is set to take this system to new heights.
Customers earn loyalty points for brand interactions (including simple social media likes and follows as well as purchases and referrals), which they then convert to tokens, cryptocurrency, and other web3-based rewards.
Instant payment service Venmo has already used this to great effect with its crypto rewards credit card, for example.
These tokenized rewards become digital assets on the blockchain, which makes them transferable to other users. Customers thus see them as desirable assets, which increases their value, and they feel like they own a piece of your brand.
This creates a cyclical effect: you see a spike in engagement as customers compete to earn these rewards, which gives you more revenue to upgrade your loyalty offerings.
2. Unlock exclusivity: NFTs as timeless rewards
NFTs offer exciting new possibilities in the loyalty 3.0 era.
A new raft of loyalty platforms will give you the tools to create special NFT collectibles with practical uses beyond just being digital tokens.
An e-commerce platform might create NFTs that offer its most loyal customers limited edition products. Nike, for example, recently built its “virtual sneakers” NFT on this very concept.
Other brands choose to encapsulate a platinum tier of lifetime benefits into their NFT collection, something that any business can do.
Integrating NFTs into your loyalty adds scarcity to your product range, driving up interest among consumers. They engage and spend with your brand more as they bid to qualify for these privileges.
Digital collectibles can also add a playful element to your program, allowing you to use gamification to engage and motivate customers, particularly the tech-savvy younger audience we mentioned earlier.
3. Expand the network: The power of cross-brand engagement
Interoperability is a term that gets thrown around a lot in business circles, but all it means is for different systems to work together and share information smoothly.
This is exactly what web3 loyalty will offer brands, particularly those with multiple partnerships. Token holders will get the chance to spend their rewards with associated companies, with blockchain making it easier to carry out cross-party transactions.
How will this look? Let’s take the example of an online clothing store. Loyal customers will be able to transfer their on-chain rewards to buy from a partnered electronics brand: useful if they want a certain type of headphones to go with their new sneakers, for example.
This opens up a world of new possibilities for your brand. Suddenly, you can benefit from customer loyalty programs in other industries, particularly those closely related to yours, like a car rental company to an airline, for example.
You’ll also find that this has a knock-on effect on customer acquisition costs as you’ll simply take on new customers from other brands, rather than expensive advertising.
4. Fraud-proof loyalty: Fortify transactions with smart contracts for life
Enhanced security is one of the biggest positives of blockchain which offers impenetrable and transparent transactions to users, with the help of automation.
Smart contracts embody this security. These are self-executing agreements with pre-defined rules that eliminate the risk of human error and fraud, which costs the loyalty industry over $1 billion annually.
For loyalty purposes, smart contracts automate program processes such as verifying and distributing rewards, while users can consult them to check points, transactions, and rules at any time.
Smart contracts will also play a big part in ‘future-proofing’ loyalty programs. Their flexible nature means they can self-adjust according to evolving membership needs.
It’s the ultimate personalization tool and ensures your customer gets a lifetime of benefits.
5. Crafting experiences
Recent research into why loyalty users leave a program reveals a startling disconnect between companies and their customer bases.
While many executives put departures down to price increases, a more pressing reason was customers feeling like they were getting a poor experience.
Loyalty 3.0 programs will use web3 composability to deal with this problem.
Brands will easily be able to customize programs to elevate user experience. They’ll do this by using open-source tools and DApps to integrate new loyalty features in line with technological advances.
This will include entering the upcoming metaverse, where your program can build its own virtual space and link to other virtual marketplaces.
While this may sound very sci-fi, there are already brands that are taking steps toward future proofing their loyalty programs in this way, to ensure that users get the best digital experiences for the long term.
Experienced loyalty providers with successful live use cases can help with this transition to a new world of Loyalty 3.0 benefits.
Preparing your loyalty program for the future may require effort and resources now but, with the right guidance, the long-term rewards for you and your customers will be huge.
How will Web3 revolutionize customer loyalty?
The world of web3 has a dizzying range of applications.
But when it comes to how it will benefit loyalty programs we can keep it as simple as what loyalty specialists Bond Pathways call the “three Rs”: relevant, rewarding, and reciprocal.
Relevant because it adapts to evolving customer trends, rewarding because it holds a huge variety of real-world benefits for customers, and reciprocal because it builds a mutually beneficial relationship between your brand and its clientele.
Let’s take a closer look.
1. It boosts engagement
Increasing customer engagement is the number one factor for companies offering a loyalty program, according to Antavo.
It makes sense. Disengaged customers don’t tend to buy things.
Web3 loyalty uses enhanced and secure data collection to offer customers personalized experiences that drive engagement.
82% of consumers say they’re willing to share data to get hold of these customized web3 offerings (PwC), which shows that they’re heavily interested in them.
2. It increases average spending (ARPU) and purchase frequency
Engaged customers spend more. The more time they spend on your loyalty platform the more likely they are to explore additional products or services, leading to an increase in average spending (ARPU).
Personalized Web3 incentives also encourage customers to interact more as they seek to earn the points and digital tokens that qualify them for these unique experiences.
3. It grows retention rates and creates brand advocates
Earning personalized rewards deepens emotional connections between your customers and your brand making them much more likely to stick around.
Many web3 programs also find that they can easily build a community of consumers who compete for and trade rewards between them. Users who feel like they belong to this community are far less likely to switch to rivals and instead become brand advocates as they encourage friends and family to sign up.
What’s more, built-in rewards mechanisms give out perks each time a customer shares a positive experience or a word-of-mouth referral on social media. This is particularly useful for the Gen Z market – that youthful segment that will be part of your customer base for decades to come – who are more likely to refer a brand to family and friends.
Gen Z consumers (born between 1999 and 2011) are more likely to refer to your brand
The beauty of this type of referral is that your customers effectively carry out marketing on your brand’s behalf at a much lower cost than traditional advertising.
Unlock a new universe of Web3 loyalty benefits with Fanprime
Understanding this new world of web3-based loyalty is one thing, but having the time and know-how to integrate them into your existing rewards system is another.
More brands than ever are turning to Loyalty 3.0 professionals like Fanprime to convert their existing rewards program into one fit for the digital era.
Plugging Fanprime into your business only takes a few minutes, but you’ll secure a lifetime of loyalty benefits for you and your customers, including:
- Support-to-earn capabilities: Users compete for points via gamified features and brand interactions that they can burn in exchange for rewards.
- Exclusive offers and experiences (including NFTs): You get to build brand scarcity and value with unique digital experiences at a low cost.
- Cross-brand engagement: Offer new digital activations to your partners and provide users premium exclusive access to their products.
- Invaluable data collection: Monitor your funnel metrics and collect data from your communities that they’ll willingly share.
- Composability fit for the digital age: Scale up your loyalty program into a new metaverse of web3 experiences.
Fanprime is designed to make integration easy, whether you’re a small business or a major international brand.
For small-to-medium-sized businesses: you sign up via a white-label consumer app and use a configuration model to create your loyalty program with your own branding and identity.
For large companies: As a Tier 1 community, Fanprime will enhance your existing consumer apps with our advanced loyalty features.
A new universe of fan loyalty revenue is out there waiting for your brand. Step into it with Fanprime at your side.
Ready to tap into a new long-term revenue stream? 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 you streets ahead of your rivals.