S01E05: Loyalty and engagement: the new web3 and blockchain paradigm

The Focus
The Focus
S01E05: Loyalty and engagement: the new web3 and blockchain paradigm
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Excerpt from episode S01E05 of the "Disruptive Talks" podcast: to see the complete program of the episode, visit this page. 
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This week, on our social media LinkedIn And Twitter, and through this episode, we dedicated ourselves to examining the Web3 world and loyalty, analyzing how this paradigm is reformulating the interaction between companies and consumers. While Gabriele offered us an insight into Web3 custody and NFTs with Starbucks' Odyssey program, we will receive this focus next Miro Radenovic, creator of uCollect.me and true architect of the Italian Web3.

In this focus, to stay on topic, I will try to tell you the general context in a few minutes: I will be concise, and I am aware that I will go quickly on some technicalities or mechanisms, so we are always available in case some of you need further information. You can contact us directly on social media or through the page contacts on this site.

HISTORY AND LIMITS OF TRADITIONAL LOYALTY PROGRAMS

They have their roots in commercial history, dating back to the S&H Green Stamps of the late 19th century and continuing with airline mileage programs in the 1980s. Despite their success, traditional loyalty programs have primarily focused on repeat transactions from existing customers, with the goal of maintaining a steady flow of purchases.

In reality, such programs did not focus on loyalty in the strict sense; rather, they have created a system in which the benefits “earned” by clients are contingent on their remaining in the program. A customer's decision to end the relationship with the brand results in the loss of all accumulated benefits. Additionally, traditional loyalty programs often fail to recognize the overall value that customers can bring to a brand, simply incentivizing purchases and fostering a purely transactional relationship that does not reflect authentic loyalty.

As the options available to consumers increase and their attention spans decrease, the need for true loyalty is more pressing than ever. Without focused attention on transformative technologies, new mental models and strategies that drive social change, the lifespan and effectiveness of traditional loyalty programs will decline.

INTRODUCTION TO WEB3 AND ITS ADVANTAGES

In this context, Web3 emerges as an effective alternative. This new way of consuming and interacting on the internet, which replaces credentials with a decentralized wallet and a private key, which uses blockchain, digital assets and virtual environments to offer greater decentralization, transparency and security; it definitely represents a fundamental change in the way users interact with the web, moving from simple consumers of content to owners and managers of their data.

The advantages of Web3 on the user side are multiple and significant: at the center we find the points that you always hear when talking about blockchain: trust, guaranteed by the immutable nature of the blockchain, which allows you to trace and verify every transaction without the need for intermediaries. Transparency, which ensures that every action is visible and verifiable by anyone, thus establishing an environment of greater fairness and honesty. Ownership of personal data returns to the hands of users, who can exercise direct control over their information and how it is used.

THE EVOLUTION TOWARDS WEB3 LOYALTY PROGRAMS

The move to Web3 loyalty programs marks a revolution in the industry, integrating the benefits of Web3 into customer loyalty strategies.

These programs, exploiting tokenization and smart contracts, allow the creation of a completely new system of rewards and incentives, based on the creation of on-chain value and the active participation of consumers.

Customers are no longer tied to a single brand or platform; they can carry and use their tokens and rewards in a much broader ecosystem, promoting a richer and more personalized user experience. Furthermore, the interoperability between different platforms and services amplifies the possibilities of using loyalty points, transforming them into digital assets with a tangible and exchangeable value.
Gamification, which Gabriele had anticipated, becomes a key element, encouraging users to actively participate and interact with the brand in ever new and creative ways. This not only increases engagement and involvement, but also creates a feeling of belonging and co-creation between the brand and its community.

The evolution towards Web3 loyalty programs therefore represents a significant step forward, which promises to strengthen the bond between companies and customers, creating a virtuous circle of loyalty and shared value.

Web3 Customer, created with Adobe Firefly

The power of community and co-creation

I previously spoke about communities: they too are experiencing a renaissance, these technologies allowing individuals with common interests and aspirations to be connected with an ease never seen before, a true tangible value for brands.
The focus shifts from a profit-oriented digital marketing logic, typical of Web2, towards an authentic and genuine exchange between people, recalling the pioneering spirit of the early days of the web.

In this context, communities are not simply recipients of advertising messages, but become active partners in the co-creation of value.

In Web3, and we will focus on this shortly, well-structured tokenomics (or Token Economics) lays the foundations for ambitious projects, allowing brands to collaborate directly with their community without the need for advertising intermediaries. This approach not only reduces customer acquisition costs, but also strengthens control over consumer relationships. Blockchain provides the platform for trust, transparency and ownership, essential elements for unlocking authentic loyalty that cannot be achieved through traditional frameworks alone.

Practical applications and case studies

  1. NFT program by Nike (.SWOOSH)
    With a strategy that aims to involve the community in the co-creation and trade of digital collectibles, with royalties redistributed to the creators
  2. NFT program by Starbucks (Odyssey Points)
    Starbucks Odyssey generated 172.5k in royalties from its NFTs, with secondary trading volume of 2.3M.
  3. AirBaltic, the Latvian airline, introduced Planies, a collection of NFTs that serves as a loyalty program.
  4. Warner Bros is experimenting with NFT programs tied to popular movies and TV shows. It generated significant buzz and interest with the release of NFT bundles for the movie “The Batman,” with 2,000 NFTs selling for between $30 and $100 in just a short time.
  5. Bleacher Report Rewards (B/R W2E)
    Bleacher Report launched B/R W2E (Watch to Earn), a tokenized community activation program that elevates the sports spectator experience. Participants can earn tokens by interacting with real-time trivia, which can then be used to access premium content and exclusive events or traded in the Bleacher Report marketplace. This rewards model, powered by Web3 technology, uses smart contracts to create and distribute native tokens that can be earned and redeemed, demonstrating the potential for gamification and interaction in loyalty.
    Bleacher Report launched B/R W2E, a tokenized community activation program, which saw high participation from users. With the aim of elevating the sports spectator experience, the program demonstrated the potential of gamification and interaction in strengthening customer engagement and loyalty.

These projects illustrate how Web3 loyalty programs can take different forms and how they can improve the brand experience, encouraging customer loyalty and engagement through the use of innovative technologies.

The future of Web3 loyalty programs

All this represents not only a technological transition, but also a cultural and economic paradigm shift.
The adoption of models based on blockchain and tokenization opens up new scenarios for the creation of value and the active participation of consumers. It is expected that these Web3 loyalty programs can offer a democratization of engagement, where loyalty is no longer one-way, but a two-way street.

In the future, we may see an evolution where loyalty is no longer solely about transactions, but also about digital identity, shared governance and greater user control over their data.

This could translate into greater bargaining power for consumers and a more balanced relationship with brands. Furthermore, the ability to transfer and exchange tokens between different platforms could generate a more fluid and interconnected loyalty ecosystem, with significant impacts on retention and new customer acquisition.

To conclude, I would say that the evolution of loyalty programs in the Web3 context leads us to reflect not only on the economic implications, but also on the philosophical and social ones. The transition towards Web3 invites us to reconsider our relationship with the consumer, in the right continuation of the growing digital transformation that is taking place in all sectors.

This reflection opens up new questions: how will the concept of value change in the context of loyalty based on community and co-creation?
How can decentralization influence the power dynamic between consumers and brands?
And again, how will marketing strategies evolve in response to these new forms of loyalty?

As we explore these questions, I invite you to listen this interesting discussion on today's issues with Miro Radenovic, an expert who is shaping the future of Italian Web3. His vision and experiences will provide us with further insights into how loyalty programs are evolving and how we can be an active part of this revolution.


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