People enjoy the benefits of being loyal to a brand, as well as feeling part of a brand community or even a cult, if you want to go to the extreme. According to a recent Digital Cheetah report, 21% of customers have left a favored brand because they didn’t feel valued as a customer. Feeling valued equals being loyal, and according to the White House Office of Consumer Affairs, a loyal customer is worth up to 10 times their initial spending.
Yet, surprisingly, the majority of brands are still heavily invested in acquisition strategies only.
Recently Tennis Australia showed how creative forward thinking masters do it when speaking of NFTs and building loyalty.
“We work closely with some of the world’s best developers to ensure we stay ahead of consumer trends and continue to expand into new sectors in ways never before seen in tennis.”
- Australian open press release
They created almost 7,000 3D NFT tennis balls at the last Australian Open. Fans were able to buy the NFT balls and enjoy rewards as the games went on. As each tennis ball was unique and held its own metadata, it was possible to link it to a small 19cm X 19cm plot on the tennis court.
If any winning shot landed on the plot, the NFT metadata updated in real-time and the ball’s owner was rewarded.
In just a couple of years, the NFTs market is about to explode to $800bn, says Bloomberg intelligence. Most of the major brands, like Coca-Cola, Adidas, Nike, McDonalds, to just name a few, are already invested in NFTs. So, even if you are still not fully sure what they are and what are the mechanics behind them, you probably sense that they are a big deal. And you’d be absolutely right. NFTs are a big deal, especially when it comes to building brand loyalty!
What are NFTs?
As with any early stage tech NFTs might be difficult to understand, simply because their utility keeps evolving. In essence, NFTs are digital assets, recorded on a blockchain database. Each NFT is unique and exclusive, which is exactly why it appeals to so many people, and why brands are rethinking their loyalty programs.
Just as is the case with advertising, loyalty needs to become part of the user experience (remember the Australian Open example). Most brands still rely on things like loyalty cards, coupons, and discounts to drive customer loyalty. Customers, however, want something that seems and feels special, made just for them. In fact, McKinsey research finds that over 80% of consumers want and expect from brands a much more personalized experience. Here come NFTs with the promise to do just that and move their utility way beyond ownership of some collectible digital art.
Take for example the Bored Ape NFT collection. It quickly transformed from just owning a unique digital image of a cool ape to an entrance pass to the Bored Ape Yacht Club, with exclusive benefits and offerings, such as a private discord channel, and access to exclusive offline and online events. The next move of the apes is a strategic partnership with Adidas to launch their own mobile game.
Why are NFTs the future of loyalty
So, why are so many big brands integrating such a wild-wild West as NFTs into their loyalty-building strategies? Obviously, they see a potential worth exploring, so I will try to outline in the following section some of the reasons behind this trend.
1. Strong brand identity
In the last decade brands heavily relied on social media to create and establish brand identities. It is the norm for businesses to be on social media and to have well-developed channels and communities. Not being on major platforms like Facebook, Twitter, etc. is even seen as creepy and untrustworthy, this is how important your social media presence is for your brand identity in the digital era.
In the next decade, NFTs will do the same, helping brands communicate their identity, tell their stories and prove their commitments through unique NFT pieces, incentives, unlockable content, metaverse wearables, etc.
2. Shared interest
The main reason customers participate in loyalty programs is the rewards. To be honest, most of the “rewards” go back to the brand, not the customer. Of course, people get some minimalistic discount or some sort of a gift BUT the financial benefit mostly stays with the company. Probably this is the reason why the average consumer, according to Forbes, belongs to about 15 loyalty programs but is only active in less than half.
Plugging NFTs into your loyalty strategy creates a whole new story of shared interest or the so-called - branded economy. If the company grows, so does the value of the NFT, hence customers who are NFT-holders become more invested with the brand.
3. Built-in exclusivity
It is a no-brainer that limited editions and exclusive items have had stronger appeal to people, historically. Exclusivity is at the core of NFTs, so it is only up to your creativity how to deploy them into your loyalty strategy, and we are here to do just that!
A good example is the Binance NFT mystery boxes game. It also adds the elements of surprise and anticipation to the mix. The strategy is very simple: buy a mystery box and find an NFT inside. Each NFT is with a different rarity score, meaning the rarer it is, the more expensive it could get on the NFT marketplace. For retail brands, mystery boxes could be loaded with perks and offerings, unique to each NFT inside.
4. Engaged community
NFTs seem to have found a solution to one of the greatest marketing problems of all times - maintaining a strong and engaged community. One way to do it is by taking the philanthropic route with NFTs. This way your community engagement does not end with the buy button. Donating a portion of your NFT drop proceeds takes charity and cause marketing to the next level. Consider Budweiser’s who sponsored 22 emerging artists anticipated by the community to become the next superstars. And guess what - Budweiser’s NFT collection sold out in an hour!
The NFT game is still in its very early stages. Yet, many insiders believe that it holds the same potential as the beginning of the internet in 1995. For the first time in the internet evolution, people could own and prove ownership of unique digital assets. The myriad of possibilities this fact creates is probably beyond our understanding at the moment, as was the case with Steve Job’s claim that the iPhone will hold our life in our pocket.
So, whether you’d be at the frontline kicking your brand into the future or you’d choose to sit in your comfort zone, it is your call. If you decide to go with the stars, we are here to help! Contact our creative team today and explore what the brave new world of NFTs hides up in its sleeves for your brand.