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Embracing Blockchain Loyalty Programs

December 12, 2023
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In the ever-evolving landscape of marketing, staying ahead of the curve is essential to retaining customers and driving business growth. As marketing leaders, you're constantly on the lookout for innovative strategies to keep customers engaged and loyal. In recent years, Web3 technology, particularly blockchain, has emerged as a game-changer for loyalty programs.

Join us as we get the low-down from Steve Walker, CEO of The Blue Marble, a carbon-neutral NFT marketplace. He’ll help us understand the benefits of using blockchain for loyalty programs, explain how brands can implement this type of loyalty system, and provide examples of loyalty programs built using Web3 technology.

Q: Can you explain the fundamental concept of using blockchain technology in loyalty programs?

A: Blockchain technology offers a decentralized and transparent way to record transactions. In loyalty programs, this means every point earned and redeemed is recorded on a ledger that's virtually impossible to alter or cheat. Customers can see their points in real-time, and there's less room for errors or fraud.

Q: What are the key benefits of using blockchain technology for loyalty programs compared to traditional loyalty systems?

A: In traditional loyalty programs, customers often face a maze of conditions and restrictions, with points scattered across platforms that don't communicate with each other. It's a fragmented experience that can leave customers feeling annoyed and locked into one vendor with limited options.

Blockchain shifts this paradigm. Customers enjoy a seamless experience where they can earn and redeem rewards across a network of brands. This interconnectedness turns every transaction into an opportunity, whether they're buying coffee or booking a flight. Each action enriches their rewards ecosystem, and points never feel wasted or confined.  

That’s a massive focus for us when we talk to our customers - who are your partners you can cross-market with and scale your loyalty program around without increasing your marketing costs?

Web3 loyalty programs also recognize and respect customer autonomy, granting them control over their rewards and personal data. This marks a departure from the opaque practices of Web2, where the fine print often governs reward use. With blockchain, there are no hidden clauses; customers see the full picture, fostering trust and satisfaction.

Furthermore, blockchain empowers customers to take loyalty into their own hands, literally. They're no longer passive earners of points but active participants in a marketplace where loyalty can be traded or exchanged. This fluidity injects excitement into the loyalty landscape, allowing customers to leverage their rewards in ways that serve them best—be it trading points for a coveted service or accessing an exclusive experience.

For brands, this creates a dynamic new dimension in customer engagement. As loyalty points evolve into digital collectibles, they gain the potential to become more than just transactional tokens—they can become treasures. This transforms loyalty programs from a routine part of shopping to a potentially thrilling part of a brand's story.  

Customers, turned collectors, may fervently seek these digital assets, elevating their value and, by extension, the brand’s cachet. This brand-customer synergy isn't just transactional; it's relational, building a community of enthusiasts and advocates, all through the innovative use of blockchain in loyalty programs.

Q: Should all marketers be revamping their traditional loyalty system?

A: The decision to integrate this technology should be strategic and additive rather than a wholesale replacement of what already exists.

Businesses should view blockchain as an additional layer to their marketing strategies, one that complements and enhances rather than displaces their current systems. The integration of Web3 can be seen as opening a new channel of engagement. Just as social media did not eradicate the need for traditional advertising but rather augmented the overall marketing mix, blockchain's role should be similarly envisaged. It's about evolution, not revolution.

Traditional loyalty programs still have merit and comfort in their familiarity to many consumers. Thus, a hybrid approach can be particularly effective. It can cater to those who are not as tech-savvy or who prefer the existing rewards structures, while simultaneously offering a new, exciting avenue for those craving innovation, especially where brands seek to connect with younger generations.  

This allows businesses to meet their customers where they already are and guide them toward the new paradigms at a comfortable pace.

Q: How do tokens fit into blockchain-based loyalty programs, and what role do they play in incentivizing customer engagement?

A: In blockchain-based loyalty programs, tokens serve as the cornerstone of the reward ecosystem. They function as a digital currency, encapsulating value that customers can earn, collect, and utilize in various ways. While tokens in loyalty programs typically represent points or rewards, their true potential is unlocked when they are presented as digital collectibles, or Non-Fungible Tokens (NFTs).

Digital Collectibles represent a significant evolution in the token concept. Unlike standard tokens, which are interchangeable, each NFT is unique and can hold distinct value and significance. Brands can imbue these collectibles with rich media such as exclusive images, audio clips, videos, or even official documentation, all verifiably secured on the blockchain. This media is not just a static asset but a dynamic piece of the brand's story that customers can interact with, collect, and even showcase as part of their public profiles.

For the brand, this opens up a myriad of marketing possibilities. They can create limited-edition collectibles that drive excitement and exclusivity, or they can attach real-world benefits to these digital assets, such as VIP experiences or discounts. Moreover, as these digital collectibles can carry significant value and rarity, they can become sought-after items among customers, fostering secondary markets. The trading of these collectibles can amplify brand visibility and engagement, creating a self-sustaining marketing loop that leverages the enthusiasm of the customer base.

Q: Loyalty programs often involve partnerships with other businesses. How does blockchain facilitate interoperability and collaboration between different loyalty programs?

A: Blockchain technology evolves loyalty programs by providing an open platform that enhances collaboration and interoperability between different businesses. Unlike traditional systems, which often operate in isolation, blockchain allows for a seamless transfer of loyalty points across various brands and partners. This means that customers can earn points with one brand and redeem them with another, offering a degree of freedom and utility that wasn't always possible before.

For businesses, this translates into a new realm of partnership opportunities without being confined to a single vendor's system or navigating complex integration processes. It empowers companies to either join forces with specialists like The Blue Marble to access Web3 loyalty program services or to craft their own unique loyalty integrations.

Q: How can gamification elements be integrated into blockchain-based loyalty programs to increase user engagement and participation?

A: A few gamification elements include: 

Collectibles for Physical Check-ins: Programs can reward customers for visiting physical store locations by offering digital collectibles unique to each place. This not only drives foot traffic but also adds an element of real-world exploration and collection that can appeal to the innate human love for treasure hunting and achievement.

Tiered Challenges: Implementing tiered challenges where customers must complete certain tasks to move up levels can be engaging. For instance, a coffee shop chain could offer a rare digital badge for customers who visit and purchase from multiple locations within a set timeframe, like a coffee "passport" program.

Interactive Experiences: By using augmented reality (AR) at store locations, customers could unlock virtual collectibles or tokens by interacting with digital objects or completing AR-based tasks. This not only gamifies the experience but also creates unique and shareable moments.

Event-Based Rewards: Customers could earn special tokens for attending events, such as new product launches or brand-sponsored activities. These tokens might then grant access to exclusive content or future discounts.

Social Sharing Incentives: Encouraging customers to share their experiences on social media to earn rewards gamifies the marketing process itself. For example, sharing a photo with a unique hashtag could earn customers a digital collectible, turning their social engagement into a fun and rewarding activity.

Community Competitions: Brands can host competitions where customers submit designs for new products or ideas for the brand. Winners could receive limited edition collectibles, encouraging community involvement and giving customers a sense of ownership in the brand's journey.

Seasonal Campaigns: Leveraging seasonal themes, brands could create limited-time collectibles that can only be earned during certain periods, encouraging customers to participate before time runs out.

Q: How should businesses design the tokenomics of their loyalty tokens, and what kinds of rewards or incentives tend to be the most effective?

A: It is critical to align the mechanics with the brand's core values and the unique preferences of its customer base, to ensure that the program resonates deeply and excites the participants. If you get this wrong, the program is unlikely to succeed.

Brands should ask themselves: What do our customers care about? What experiences are they seeking? How do our values align with those desires?

Brands need to understand their customers at a fundamental level—what motivates them, what they aspire to, and what they appreciate. For instance, a luxury brand's clientele might value exclusivity and status, while an eco-conscious brand's customers might be more motivated by sustainability efforts.

Some examples of incentives to consider:

Customized Rewards: Tailor rewards to specific customer behaviors; early adopters might receive first dibs on new products, while consistent shoppers could be rewarded with VIP treatment or recognition for their enduring loyalty.

Experiential Tokens: Beyond mere transactions, offer tokens that unlock special events or classes —a travel brand could provide a token for an immersive local adventure, and a fitness brand might give access to premium online training sessions.

Scarcity and Urgency: Introduce limited-edition tokens or time-sensitive rewards to leverage the fear of missing out, thus driving immediate engagement, and giving a sense of exclusivity.

Finally, actively involve the customer base in shaping the loyalty program. Not only will you ensure the program's offerings resonate with evolving customer interests, but you’ll have a foundational base of customers who’ll help you grow your programs.

Q: Can you provide examples of brands that have successfully implemented blockchain loyalty programs and describe the results they achieved?

A: A few examples of successful loyalty programs: 

  1. Singapore Airlines' KrisPay: As Asia's leading carrier, Singapore Airlines redefined the use of frequent flyer miles with KrisPay, allowing KrisFlyer members to convert miles into digital currency. This can be used with a wide array of retail partners, enhancing the flexibility and value of their miles, while also streamlining the payment process and customer experience.
  1. Starbucks Odyssey: Starbucks has integrated blockchain technology to transform its Starbucks Rewards loyalty program. By allowing customers to trace the journey of their coffee and earn rewards through the Starbucks app, the program not only educates customers about their coffee's origin but also incentivizes them with more personalized rewards.
  1. The Brave Browser's BAT Rewards Program: The Brave Browser offers a privacy-centric browsing experience that rewards users with Basic Attention Tokens (BAT) for viewing ads. The tokens can be used to tip content creators or held as an investment. Brave's approach transforms ad viewing into a rewarding activity, directly compensating users for their engagement.

Want to work with The Blue Marble? They are a micro agency on the Wripple platform and are experts in turning customers into passionate brand advocates using Web3 tools and Shopify. To get started, contact your Wripple Client Lead, log in to create a project, or click here to request access to the Wripple platform.

Read more from our series on Web3 applications in marketing.

The following posts have been published in this series:

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Search Engine Optimization
Zebbie Gillispie
Creative Direction & Designer
Andrew Golubock
Engagement Manager
Angie Vaughn
Marketing & Email Strategy
Evelyn Creekmore
Content Strategy & Writer

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