Staying relevant in this virtual world has always been the key to a brand's success. And in the blockchain world, with relevancy moving swiftly, NFTs are making their way, and attracting brands to build integral customer engagement and community is integral. One particular use case of blockchain technology that is seeing a surge in popularity: Non-Fungible Tokens, or NFTs.
NFTs/Non-fungible tokens are the new talk of the town. With a lot of hype about them, NFTs are leading brands to many smart decisions. Brands are experimenting with NFTs with the main goal was to garnering press for being innovative.
In the past year, the cryptocurrency market cap surpassed $2.8 trillion. With people’s interest in blockchain and digital assets continuing to grow, NFTs are undergoing rapid evolution. Like any technology in its relative infancy, digital assets and NFTs are enjoying their share of hype.
With strategic use cases for NFTs emerging, certain brands are employing NFTs to develop loyalty communities. These communities can be leveraged to revamp and modernize their customer loyalty programs. By offering NFTs, marketers are embarking on a new way to identify high-value customers who are passionate and eager to spend money on their brand.
The NFT market has grown from nothing to a multi-billion-dollar industry in just one year. With NFTs flourishing and major stock market listing crypto exchange platforms, companies are pouring billions of dollars into investing in the future of payment and loyalty programs.
With digital transformation continuing at an exponential speed, brands are jumping on the bandwagon by highlighting the importance of technology and what it enables.
Read more: Thinking of Crypto Investments? Watch out for the Ten Common Mistakes
NFTs: The Future of Payments and Brand Loyalty Rewards
Today NFTs (non-fungible tokens) are everywhere on the internet. Top searches are all about NFTs of digital art being auctioned for millions of dollars and pixelated profile pictures being acknowledged for thousands. However, there is a significant amount of speculation and FOMO (Fear of Missing Out) that is propelling the NFT revolution.
For a brand's loyalty program, rewards play an imperative role in driving member acquisition and engagement. With brands now considering implementing NFTs into their loyalty program or overall member engagement strategy, several unique benefits and challenges await them. For brands, NFTs are those golden opportunities that will enable them to redefine how they engage with their most loyal customers.
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Deepen customer loyalty with emotional engagement
With the boom in NFTs, brands are launching new online contests to encourage their customers to share stories of joy and optimism. These contest winners are then rewarded with a branded digital collectible NFT that provides access to fan-favorite out-of-stock products. In October 2021, the beauty brand Clinique undertook this activity.
With smart rewards member programs, brands are modernizing the way loyalty programs function. By opening up NFT access only to their loyalty program members, brands are both rewarding as well as and incentivizing their members to join. Representing brand-inspired digital art as an NFT will not only allow the contest winners to publicly display their achievement of winning the contest, but it will also enable them to make the brand they are supporting a part of their virtual identity.
NFTs are now becoming a way for customers to display their love and loyalty towards a brand, the causes they support, and the art they appreciate.
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Gamifying the brand's engagement with the consumers
Brands are moving from physical collectibles to digital ones, an acknowledgment of the virtual lives we are living more and more. For consumers, these digital collectibles are as valuable as physical collectibles. Unlike physical collectibles, which require a supply chain and distribution network, digital collectibles are easy to manage, faster to implement, and allow the brand to engage with its most loyal customers on a digital platform.
Brands are initiating new strategies to engage with their consumers. In September 2021, Burger King came with a QR code on each meal box. Customers who bought these meals would scan the QR code to collect digital collectible NFTs, simulating a treasure hunt. Based on the number of digital collectibles, the customers could win rewards like a one-year supply of Burger King Whopper sandwiches or autographed exclusive merchandise.
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Use digital tokens to represent physical products
With the rising popularity of NFTs, brands are now launching their traditionally physical products as NFTs. But why?
The big idea behind this is that this NFT is a digital token that represents the physical product. Consumers can purchase an NFT that serves as an authentication token for the brand. The NFT holder can redeem or trade their NFT.
By offering these physical tokens for sale, brands are continuing to hold the bottle as a service. These physical products, like NFTs, are a great way for brands to pass on the value to their brand's connoisseurs and create a long-term relationship with their customers.
Read more: "Speed, Data…Crypto?": Fintech Trends to Watch Out for in 2022
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Engage with the creator community & economy
Brands are partnering to use NFTs and engage with the creator community by inviting creators to submit their artworks. These crowdsourced artworks are then sold as digital collectibles. In January 2022, Adidas and Prada partnered to undertake marketing campaigns that bring creators together. With such a brand engagement campaign, brands are setting great examples of the second-order impact of NFTs.
With NFT digital art garnering popularity and becoming valuable in its own rights, brands are co-creating NFT art in collaboration with their customers. They are also using the proceeds from the NFT art collection to support many causes that their customers believe in. The ownership and connection between the brand and the consumer are leading to the generation of a strong emotional engagement. This attachment is indeed much more powerful than a transactional loyalty program.
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Extend their product portfolio into the metaverse
With the rise in digital assets and NFTs, brands are extending their product portfolio and selling digital assets in the metaverse. From fashion to cars, bikes, and real estate, brands are launching products in the metaverse. With NFTs being the backbone and the only universal way to record ownership in the virtual world, in the future, NFTs are expected to transform e-commerce into the metaverse.
While there are many effective approaches to cultivating brand loyalty, a blockchain-based NFT loyalty program offers brands additional interactive capabilities. Brands can now engage with their consumers organically instead of relying on interruptive in-feed ads. They are also uncovering ways to use look-alike modeling to identify other customers.
Key Takeaway
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NFTs are a foundational technology.
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Marketing leaders are unveiling innovative campaigns to engage with their customers.
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With specialized NFT platforms, brands are optimizing their brand loyalty programs and rewards.
Read more: $1.4T Vanishes in Market Cap as Cryptocurrency Prices Plunge. What Gave?
NFTs & Digital assets: The Future of Customer Loyalty Programs
NFTs are exploding as they are on the radar of many forward-thinking organizations. NFTs, digital assets, and new applications of the technology are continuing to flow into the loyalty space, and the adoption is likely to grow in the coming years.
They are being used to encourage advocacy, engagement, and long-term customer loyalty programs. NFTs are becoming a social currency that is enabling people to connect with their brands. Since NFTs offer a more interesting creative canvas, brands are making them a more potent touchpoint.
From making a collectible piece of brand history to rewarding specific consumer behaviors and programming exclusive perks & access rights, NFTs are presenting brands with many opportunities to build their loyalty programs. The key here for brands is patience. While NFTs are still in the early adoption phase, major brands are already showing great interest.
Adoption of NFTs will be primarily to drive and appeal to younger generations; this is what forward-thinking companies are predicting. They are now investing the time to understand what makes an NFT project successful. With NFTs still in their infancy, the future will likely bring a huge amount of innovation and creativity for their true potential to shine through.
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