Building an NFT customer loyalty programme: what brands need to know

Changing consumer behaviours and the need to transform digitally are steering more brands away from traditional customer loyalty membership programmes towards adopting new digital-enabled incentives, such as leveraging non-fungible tokens (NFTs). 

Coffee giant Starbucks announced its Odyssey experience in September. This loyalty program will allow its members to earn and buy NFTs through activities, such as playing interactive games or taking on fun challenges related to their knowledge of coffee and Starbucks.  

Starbucks members can also purchase limited edition NFTs through a built-in marketplace within the Odyssey app directly with a credit card without needing a crypto wallet or cryptocurrency. Each collectable digital stamp is assigned a point value based on how rare it is. The stamps can be bought or sold among members, with ownership secured on a blockchain.  

As stamps are collected through the programme, members' points increase, unlocking access to benefits and experiences from a virtual espresso martini-making class to access to merchandise and artist collaborations. Members can also be invited to exclusive events at places like Starbucks Reserve Roasteries or even rewarded with trips to Starbucks Hacienda Alsacia coffee farm in Costa Rica. 

The case for virtual incentives

According to market research company GWI, half of the consumers surveyed prefer to spend their time online than in the real world, with nearly six in 10 global consumers choosing shopping online to in-store, rising to seven in 10 for those interested in participating in the metaverse.  

Southeast Asia also ranks among the highest globally for NFT ownership, as one in two consumers in the region are under 30 and are very tech-savvy. These consumers also see NFTs as an asset class for them to invest and earn versus other asset classes like property, stocks, bonds, and watches that are out of reach of those who do not have a bank account. 

Brands need to know such 'online-first' consumers and create virtual spaces to drive consumer engagement, satisfaction, and loyalty, says Chase Buckle, vice president of trends at GWI.

"In Asia Pacific, there is a chance for the metaverse to be a key growth market. In these markets, the appeal to the space creates authenticity," he tells Campaign Asia-Pacific.

"People report their online behaviour as less reserved and are more able to express themselves online than in real life. The arrival of the metaverse could enable them to take this approach to a new level."

(L-R) Avery Akkineni, Indy Khabra, Rollen Gomes, Samantha Shuttleworth, Mi Li, Chase Buckle

Samantha Shuttleworth, product strategy director at RGA Singapore, notes while NFTs are still an emerging trend, the agency is seeing more brands seeking out NFT programmes as a means to add to, rather than displace, established customer loyalty programmes.  

However, she points out there is a new level of caution, too, thanks to the sharp fall in cryptocurrencies back in May that led to a slide in NFT values and buyers.  

"Many brands are questioning if the hype is worth it and, given the recent volatility, if it is the right time to launch their own NFTs. However, brands that continue to trudge ahead embrace NFTs with an experimental, test-and-learn approach," Shuttleworth tells Campaign Asia-Pacific.

Building new connections with customers through NFTs

There are several key advantages to virtual rewards that brands can tap to build new connections with their customers. The metaverse and use of NFTs can provide more robust storytelling capabilities than other less engaging means. 

NFTs also provide the potential and hope for appreciation, allowing customers to feel the brand is delivering long-term value. Brands can further encourage this using mechanisms like lower tier, free NFTs that can fuse into higher tier NFTs by using a mystery box, a method that also democratises rewards for their user community.  

"NFTs are helping brands create new strategies to engage their customers, from new monetisation opportunities to money-can't-buy products and experiences or building communities of fans and collectors," Shuttleworth says. 

For example, Hong Kong-based women's lingerie brand 6IXTY8IGHT worked with AX Studio to launch the Bold Bunny NFT collection for its 20th anniversary. The brand wanted to grow engagement with the younger generation, especially Gen Zs. So it introduced three bunny personalities in the form of NFTs that catered to their different types of customers. 

The collection aims to address the needs of young female teenagers coming into adulthood who want to feel empowered and self-confident. 

"NFTs can be perceived as a special pass to gain exclusive access to perks and benefits from a particular brand. It is a new way of interacting with a younger generation of consumers, with 57% of Gen Z feeling the need to self-express more openly in the metaverse than in real life," Mi Li, head of AX Studio, tells Campaign Asia-Pacific.

"Utility value is fundamental for a sustainable NFT program. The NFT-based membership can unlock benefits for traditional brands, including discounts, special product releases, limited editions, exclusive events and giveaways." 

She shares another example of Iugia a Singapore-based home and living brand that recently launched its JellyVerse NFT collection. The jellyfish design represents the brand's message of price transparency, quality, and harmony around the home with their target audience of young homeowners and homemakers. 

Customers who buy a certain amount of goods qualify for a tier-one NFT. After receiving three of these, they will get a tier-two NFT that unlocks discounts, giveaways, and other member loyalty benefits. 

Li claims that Iuiga saw orders going up nearly three times and furniture sales up 130%, extending the campaign to 11.11 Singles Day. 

Avery Akkineni, president of Vayner3, explains that any brand act should be faithful to the brand identity and purpose, noting how successful brands have hit the sweet spot of tapping into web3 through authentic entries tied to brand moments or existing passion point alignment.  

She points to Nike's acquisition of RTFKT and Budweiser's purchase of Beer.Eth and Tiffany'sTiffany's exclusive Punks pendants as examples. 

"Savvy brands are always looking for the following exciting way to engage their consumers, and as traditional email marketing campaign performance wanes year over year, new models are emerging," Akkineni tells Campaign Asia-Pacific.

"Just as old-school coupons gave way to digital membership programs, we are seeing loyalty re-invented again, leveraging Web3 technology. However, it is important to note that from my perspective, this new technology is more of an evolution than a revolution of a proven consumer touchpoint." 

Haider Rafique, chief marketing officer at crypto exchange OKX, says It is essential that the offering to customers becomes a more two-way street. Whilst tokenisation will provide additional revenue streams for businesses, this must not be the only reason for it.

For example, through its work with McLaren Racing in Formula One, OKX will provide the team with additional revenue through fan tokens. Supporters and owners will also get access to the team.

“It’s about using those tokens or digital assets to create new connection points to a platform. In the case of OKX and McLaren Racing, it’s about how we can utilise OKX products and services to bring fans closer to the team and give them access," Lindsey Eckhouse, director of licensing, ecommerce and esports at McLaren Racing tells Campaign Asia-Pacific.

"By providing these new solutions and technologies, you can create more virtual experiences, so it’s less relevant where you are based in the world and more about utilising a digital asset and the tokenomics behind it.”

Designing an NFT strategy

Verticals well known for existing reward programs like travel, hospitality, retail and live entertainment are bouncing back from post-pandemic engagement. However, ensuring the sustainability of this recovery requires clear lineation from consumer to brand, defining the value exchange and what an NFT strategy can deliver to consumers.  

Indy Khabra, co-founder and chief executive officer at Livewire, says there has never been more emphasis on consumer insights as brands remain focused on the effectiveness of investment and measurement.  

"Research is a great starting point to get those insights into consumer behaviours, likes, and dislikes. Authenticity is a strong brand identity which remains true when adopting an NFT strategy," he explains to Campaign Asia-Pacific.

It is also essential to identify a clear business goal for launching NFTs, says Shuttleworth. For example, marketers should identify what outcome or specific benefits are relevant to the brand and its customers. For example, does the brand want to monetise products or experiences or simply create a reward for its customers or employees? Quantifiable metrics support that business goal. How will the brand measure and evaluate success? 

"Marketers need to identify which customers to target. Is it to acquire new customers or reward existing ones? Do these customers understand blockchain and digital wallets, or will a level of education and onboarding be required? Does the NFT offer benefits these customers value or can't find through other means?" asks Shuttleworth. 

6IXTY8IGHT's Bold Bunny NFT collection

Brands also need the ability to recognise and respond to NFTs in a user's wallet to use this tool fully.  

Rollen Gomes, technology director at RGA Singapore, says brands could use a protocol like unlock to allow users with NFTs access exclusive spaces and content in their wallets.  

"What that content is, is up to the marketer; some suggestions could be access to particular areas in a metaverse or even e-stores," he adds. 

Li explains customer education is critical because NFTs are web3 technologies, which means brands need to educate their consumers on things like how to use a crypto wallet, how to sync their purse on the NFT safelist and on understanding the minting process. 

 "Another key example is offline exposure: for instance, with 6IXTY8IGHT, the channel with the greatest engagement was in-store, where many customers scanned QR codes to register for the safelist," Li says. 

 "Security is another key priority for brands, so they need to think about how to ensure they don't expose their customers' wallets to bad actors, as well as detect fraudulent or fake websites." 

Campaign Asia-Pacific is producing Game Changers 2022, a conference on gaming that will explore how brands are gaining experience and crucial insights to authentically connect, interact, and engage with gaming audiences. Find out more about the event here.