2.8.2024
In the digital age, customer loyalty programs are becoming increasingly important. Companies across all industries are constantly looking for innovative ways to engage their customers and provide them with unique experiences. The introduction of a Web3-based customer loyalty program offers exciting new opportunities here. In this blog post, we'll take an in-depth look at how to implement such a program and explain how it can help your business improve customer engagement and compete in the digital landscape. We also take into account market analysis with a focus on platforms such as Uptrip, Mooncourt und Journ3ys.
Blockchain technology and Web3 applications have expanded the way we can use the internet. While Web1 introduced static pages and Web2 introduced user-generated content and social media, Web3 offers decentralized applications that put control and ownership in the hands of users. This decentralization not only brings increased security and transparency, but also opens up new opportunities for interaction between companies and their customers.
A Web3-based customer loyalty program uses these innovative technologies to create a reward system that is beneficial to customers and the company alike. The use of blockchain technology ensures transparency and trust, while smartcontracts ensure automated processes. This new way of retaining customers often uses utility tokens instead of loyalty tokens that customers can receive, use, and trade freely for specific actions.
Studies show that 84% of customers prefer vendors with a loyalty program. Participants in these programs buy on average 3.5 times more than non-participants. Generation Z in particular, which will make up around 40% of consumers by 2026, expects sophisticated and individual experiences. These figures underscore the importance of well-designed customer loyalty programs for long-term business success.
Customer acquisition costs (CAC) are constantly increasing, while customer engagement is often below 20%. Traditional methods such as discount promotions and email floods are increasingly proving ineffective and straining margins. Traditional concepts such as loyalty points often offer no practical value, neither for the provider nor for the customer. A study by Deloitte shows that 46% of consumers are dissatisfied with the rewards of their loyalty programs. In addition, discount customers tend to change providers at the next cheap offer, which makes long-term customer loyalty more difficult.
Establishing partnerships for customer loyalty programs often requires significant resources and time. An effective alignment of interests usually requires a lot of leadtime and diplomatic skills. A study by Accenture shows that 71% of companies struggle to establish effective partnerships for their loyalty programs. In addition, many companies lack a 360° view of their customers, which makes it difficult to select profitable partners, personalize offers and target customers. According to a McKinsey-study only15% of companies effectively use customer data for personalized experiences.
Today's customers want simple, exclusive, and more inclusive processes. A study by KPMG shows that 75% of consumers have a preference for personalized offers and experiences. Limited and individualized products, VIP experiences, participation in decisions and a personal connection to the company are decisive factors for strong customer loyalty. According to a study by Salesforce, 84% of customers expect companies to treat them as individuals and not just numbers.
A Web3-based customer loyalty program can address many of these challenges. By leveraging blockchain technology and smartcontracts, companies can offer more transparent, secure, and efficient loyalty programs. NFTs (Non-Fungible Tokens) allow for the creation of unique digital assets that can serve as exclusive rewards. Decentralized systems facilitate partnerships and data exchange while increasing data security. A study by Deloitte shows that 80% of executives believe that digital assets such as NFTs will be important for their industry in the next 24 months.
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As part of our market analysis, we look at three current platforms in the Web3-based customer engagement space: Uptrip, Mooncourt, and Journ3ys. These platforms are operated by Lufthansa, Kickz and Kiddinx, the publisher behind Bibi Blocksberg, offer interesting insights and can serve as a model for the implementation of your own program.
Uptrip has made a name for itself by combining a traditionally successful loyalty program (Miles& More) with blockchain technology. Uptrip places a strong emphasis on security and compliance, providing in-depth training and support to ensure that businesses and customers can effectively leverage the new technologies. The system makes it easier to get started with an app that only requires a valid email address to use. The connection to an existing Miles & More account and controlling a crypto wallet are optional to its usage. With the app, after scanning your boardingpass, you can choose 2 from 4 collectible cards and get certain rewards for fully collected sets, such as free Wi-Fi during the next flight or access to the Business Lounge. With more than 30,000 users, over 100,000 scanned boarding passes, and soon to be 1,000,000 digital trading cards, Uptrip already has a significant user base and partners for redeeming card sets. After connecting your crypto wallet to the app, you can mint the trading cards as NFTs (you can think of it as the trading card being minted into a unique digital coin) and trade freely on the public and decentralized Polygon network. The sekondäry market, enabled by the technology has a volume of ~3,500 cards. A dedicated central marketplacefor exchanging cards without a crypto wallet has already been announced.
Mooncourt ist he name of the Web3-based customer loyalty program of the online shop for streetwear, sneakers and basketball Kickz. By incorporating NFTs (Non-Fungible Tokens) and playful elements, Mooncourt creates immersive customer experiences. NFT owners get MVP status in the"Ballers Club" and associated benefits in Kickz's complete webshop. By acquiring several NFTs and participating in exclusive events andcompetitions, reward tokens "Moonpoints" can be collected. The Moonpoints can be redeemed in a separate shop, which can only be used by members. The core product is raffle tickets, which entitle the winners to purchase limited edition sneakers at the issue price. Due to the very limited access to the shop, the chance of winning for the participants is much higher than if they participate in a publicly accessible raffle, such as via Kickz or Nike.
In addition to sneakers, sports and streetwear,another area of interest of typical Mooncourt members is video games, which will also be used by future generations as a meeting place for social exchange. As a consequence, there is a separate level in the game Fortnite, which is freely accessible. To make it easy for customers who are not yet Web3 savvy, Mooncourt also temporarily sells membership via an MVP Pass. This is basically a physical card that gives access to a crypto wallet that already has NFTs on it. Mooncourt attaches particular importance to community building and promotes active exchange among users on its own Discord Server, where over 6,000 users are already registered.
Journ3ys ist he customer loyalty and co-creation program of the popular radio play series about the little witch Bibi Blocksberg and offers a unique solution by interactively integrating not only customer loyalty programs, but also experiences and adventures. Customers can collect tokens by completing various tasks and challenges related to Bibi Blocksberg. These tokens are used to determine the setting and course of the current episode during votes within the platform. In addition, you can take part in the raffle of unique fan collector's items, such as hand-signed cassettes. Journ3ys puts the experiential character and interactivity of the narrative in the foreground to engage fans on an even deeper level. Further information can be found in a separate blog post.
Your company should formulate clear goals for the Web3-based customer loyalty program. Increasing sales, increasing CLV (Customer Lifetime Value) and increasing the average shopping basket are not such goals, but rather the consequence of achieving them. Primary goals include, for example.:
Accurate audience analysis is important to ensure that the program meets the needs and expectations of customers. Target groups could include existing customers, tech-savvy consumers, as well as millennials and Gen Z, who are particularly open to new technologies and have different demands. It is important to note that Gen-Z will already own 40% of purchasing power by 2026.
Choosing the right technological infrastructure is crucial. Here are some important aspects:
The next step is to develop a reward system based on utility tokens. These correspond to the loyalty points in digital form. These could be used for purchases, recommendations or participation in exclusive events, for example. A robust tokenomics model is crucial to achieve the lawful and effective circulation of tokens. Smart contracts enable the automation and security of token transactions.
A user-friendly interface is crucial for the success of the program. Customers should be able to easily access the program and manage their rewards, for example via a mobile app and a web platform. Integration with existing CRM systems and POS terminals ensures that information flows seamlessly and the program works effectively.
If the aim is to make the reward tokens publicly tradable, special requirements apply as soon as the token is listed on one or more central trading platforms (CEX) and is tradable, i.e. has a market value. It is highly recommended to consult an experienced lawyer before taking this step, as compliance with legal requirements is of course a must. Companies must ensure that all actions comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations. In addition, comprehensive terms of use and data protection measures should be developed in accordance with the GDPR and other applicable laws. The customer wallets in which the digital collectibles and tokens are stored are now controllable and their central management now requires a license for custodial wallets, a custody license similar to a banking license.
A clear brand identity and strong messaging help to communicate the Web3-based customer loyalty program effectively. Training of the internal team is also important to ensure that all employees can understand and explain the benefits and features of the program.
Create simple training materials and FAQs to educate customers. Webinars and tutorials can also help to explain the functionality and benefits of the program in an understandable way. In Web3 projects, so-called AMA Talks (Ask Me Anything) have proven their worth, in which the project managers answer questions issued by the community. If possible, enable customers without Web3 knowledge to participate in the program, even if only with limited functionality.
Plan a comprehensive launch campaign with press releases, social media activities,and influencer partnerships if necessary. Incentives for early adopters, such as exclusive offers and bonus tokens, can help spread the program quickly. Don't forget your existing customers and also use the channels you have used to reach them in the past.
Measure the success of your program with specific KPIs, such as customer retention rates, revenue and profit development, and token usage. Continuous monitoring of the token economy and adjustments as needed are crucial to ensure long-term effectiveness. Stay agile!
Continuously collect and analyze customer feedback to continuously improve the user experience. Regular updates to the platform based on this feedback and technological developments keep the program relevant and attractive. Experience has shown that customers lose interest in a community very quickly as the cadence of interactions decreases.
The introduction of a Web3-based customer loyalty program opens up new horizons forcustomer loyalty. By combining the benefits of blockchain technology with innovative reward systems, companies can deliver unique experiences to their customers, build trust, and foster long-term relationships. By leveraging the blueprint and insights from market analysis, you can ensure that your programis successfully launched and your business thrives in the digital landscape of the future. Just as important as the long-term moderated support of the customer journey is the thorough and targeted planning at the beginning of the project.
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