Loyalty programs play an important role in all areas of life, especially in the era of Web3 development. In this article, let’s learn about Web3 loyalty programs.
Learn about Web3 Loyalty
What is Web3?
Let’s talk about Web3 before learning about Web3 loyalty. Web 3.0 (or Web 3) is the third generation of the Internet. Web 3.0 promises to be more optimized by applying artificial intelligence (AI) and machine learning to bring users a faster and more personalized experience. Web 3.0 also uses a blockchain security system and moves to the metaverse to bring the Internet closer to real life.
What is loyalty?
Loyalty is a description of the relationship between the business and the customer through the level of interaction, satisfaction, and willingness to use the product or service of the business many times more than competitors.
Loyalty programs are activities sponsored by businesses and retailers to provide special gifts, discounts, incentives, and discounts to customers.
Benefits for businesses when using Web3 loyalty app
- Increase customer loyalty: The loyalty app increases customer retention rates by encouraging customers to return next time by providing rewards and incentives for subsequent purchases.
- Enhance interaction with customers: The loyalty application provides a platform for businesses to communicate with customers. In addition, the app also provides personalized promotions and gets product and service feedback.
- Improved data collection: Loyalty apps can help businesses collect valuable data about customer behavior and preferences. This data can inform sales and marketing strategies.
- Increase sales: by providing rewards and incentives through the loyalty app, businesses can motivate customers to buy and spend more money.
- Create a competitive advantage in the market and help your business stand out from the competition.
- Reduce ineffective advertising costs.
- Increase revenue from old customers, introduce new customers, and increase the customer lifecycle.
By offering consumers the chance to truly own something as part of a loyalty program—such as an NFT, for example—they may be more likely to become fully invested in the company, which could translate into higher brand loyalty. This is just one of the reasons many brands—like Gap, Starbucks, and Clinique—have started to explore Web3 for driving value through loyalty programs.
Challenges With Web2 Loyalty Programs
The current design of Web3 Loyalty Programs is unlikely to be one of the main reasons why customers are loyal to a brand.
One of the shortcomings of these Web2 programs is that customers do not feel that they are actually being rewarded. For example, many Web2 companies claim they offer the portability of loyalty points. But if you have rewards credit cards, you can usually only redeem them for hotel or airline rewards.
These programs can also be challenging to manage on the company’s end. Since they are point-to-point partnerships rather than open ecosystems, they can be challenging to set up, maintain, and scale due to corporate baggage, legacy operating methods, technology incompatibility, and a number of other reasons.
Unlocking Value With Web3 Loyalty Programs
Web3—powered by technologies like blockchain—can add unique and lasting value for consumers and brands. With Web3, customers can earn, own, trade and redeem rewards instantly, such as special experiences, higher status or exclusive access. (See the Starbucks and Clinique examples mentioned above.) These things are more opaque and more expensive to track and administer in Web2, but blockchain technology and smart contract automation can make the process immutable and more streamlined.
Here are a few other ways Web3 loyalty programs are differentiated from traditional programs.
Liquidity of Web3 loyalty programs
Account calculation is a term in finance to express how flexible an asset is when it comes to trading, buying, and selling in the market with almost no effect on the market price of that asset.
Tokenized loyalty points create liquidity through a new asset class, and it can allow consumers to trade loyalty points through a more open ecosystem.
>> Tween Chain – The first loyalty platform based on Web3 & Blockchain
In Web3, a user’s wallet-based login verifies the identity and ascertains proof-of-loyalty of a customer through an NFT issued by a brand. They then share information in return for perks such as early access or an invite to a launch event. This unique data can be moved across platforms. If a consumer is no longer interested in the loyalty program, they can send it to another customer who wants to join the program or build their rewards.
Granularity Of Insights
Given the granular consumer views enabled by NFTs, brands can also reciprocate rewarding individual consumer behaviors without the traditional tiering process. The enhanced sense of exclusivity and ownership is likely to motivate customers.
Measure Engagement, Not Purchases
Because Web3 loyalty program members are not fungible, each has unique behavioral and spending attributes, activity levels and redemption data. Research suggests that higher engagement loyalty program members spend 25% more than dormant members. Measuring granular engagement data through Web3 technology can offer more insights into who is active and who is not than traditional metrics like spend and member numbers.
Transparency And Efficiency
With Blockchain technology, Web3-enabled tokenization can offer secure and transparent transactions and automated agreements. These benefits could, like with other Blockchain-based transactions, reduce intermediaries as well as fraud and counterfeiting risk.
Interoperability And Portability
Porting tokenized loyalty points from one program to another and across blockchains is possible with Web3. To do so, brands can consider Ethereum Virtual Machine (EVM) compatible chains.
Operational Considerations To Implement Web3 Loyalty Programs
In order to successfully implement a Web3 loyalty program, brands must weigh operational issues and trade-offs between the challenges of Web2 and the benefits of Web3. Here are a few key considerations.
Decentralized applications are complex to develop and maintain.
Companies must overcome barriers to entry such as understanding Web3 identities, private keys, and programming language complexities. Using low-code, no-code platforms can help to mitigate technical risk and enhance speed to market, but Web3 is still a new and complex space.
Web3 is about network effects. Finding a critical mass of users is crucial to ensure success.
These users must be incentivized, onboarded, and retained. Good UX and low gas fees are a must, or else users could migrate to platforms that offer these features.
It’s an evolving regulatory environment.
Some brands may need help to begin working in the Web3 space due to the volatility of consumer interest and regulatory uncertainty.
While it is up to each particular organization to decide what is best for their company, brands should become educated on disruptive technologies and trends like blockchain and Web3 loyalty programs. Major companies are already thinking about how these programs can change the way loyalty programs will work.
Regardless of the direction your company goes in, remember that many consumers are not looking for lock-in, pure purchases, and boring old tiers of loyalty. They are looking to be part of a digital journey and to make the brand a part of their identity.
5 easy steps to building a Web3 loyalty program
Step 1: Get to know your existing customers
This is the first and most important step in the process of building a Web3 loyalty program. At this step, to have a basis for the next steps, companies and businesses need to be able to answer some of the questions below. This is also an opportunity to help businesses better understand their customers.
- How many times a year does this customer buy?
- What kind of products do they usually buy, and how often do they buy them?
- How long have they been a customer?
- Can we sell them other products?
- Do they use other providers, and if so, who are they?
- How do they pay quickly?
- How satisfied are they with our company?
- How can we improve our business relationship?
Step 2: Prepare for a Web3 loyalty program
Before implementing a Web3 loyalty program, you need to assess the current level of customer satisfaction through techniques such as surveys, interviews, and follow-up customer reviews.
Based on the data collected in Step 1 and the level of customer satisfaction in Step 2, businesses should determine for themselves which target customer group will join and which type will be suitable for the group. objects, thereby helping businesses have an overview of the program as well as the direction of activities in the near future.
Step 3: Set goals and evaluation indicators with customer care solutions
Setting program goals and metrics will help you reduce some of the risks in your implementation and determine where your Web3 loyalty program’s success or failure lies.
For example, the number of customers registering to become loyal customers increased by 30% compared to the time before the program was launched.
The metric is an indicator of the number of new customers joining the program.
In addition, businesses can consider using customer care solutions such as the Loyalty App or Social Loyalty to increase the effectiveness of attracting users to participate, building programs on purchasing points, exchanging goods, etc.
Step 4: Budget for each program item
Depending on the type of program, businesses will have a different financial figure appropriate to ensure the effectiveness of the loyalty program.
No matter how low a program budget may be, it is imperative for businesses to ensure that the loyalty card is always built and designed to work with the way the program works.
Step 5: Choose a strategy to attract customers to participate
In order to be effective in terms of the number of participants, businesses need to build a marketing campaign targeting the right customer groups identified in the above steps.
An effective loyalty program is sometimes the right program to reach the right target group of businesses. Therefore, a marketing plan plays a very important role in helping the program achieve its initial goals.
Twendee hopes that through this article, you will understand some of the things your company needs to know about Web3 Loyalty. From there, you can choose the right direction for your company.