According to Statista, the worldwide loyalty management market was worth approximately $4.43 billion in 2021, and is expected surpass to $18 billion by 2028.
Traditional loyalty programs and rewards strategies revolve around attracting and retaining new customers. However, with the recent digitisation of customer loyalty, the desire for consumers to solely interact with brands via digital platforms has only been heightened.
A perfect example of such a digital platform is NFT rewards. As a relatively uncharted and emerging technology, NFT rewards may forever disrupt customer engagement and loyalty strategies. So without further ado, let’s find out how, shall we?
What is an NFT?
NFTs are essentially distinctive tokenised representations of digital files exchanged on public blockchains. Fundamentally, NFTs can’t be replicated, replaced or interchanged.
Because of this immutable character, NFTs propagate a sense of exclusivity that makes them widely desirable and popular. Additionally, NFT ownership delivers a feeling of status as its scarcity drives engagement using the psychological ‘fear of missing out (FOMO)’.
What is an NFT Reward?
An NFT reward is essentially a ‘reward’ in digital asset form underpinned by NFT characteristics that are totally distinct, un-replicable, and irreplaceable.
Traditional loyalty rewards are slowly losing their public appeal because of a lack of uniqueness, innovation or value-added to consumers. However, NFT rewards offer a new dimension that offers more engagement, exclusivity and triggers FOMO.
In contrast to NFT rewards, traditional loyalty programs are restricted to point redemption in exchange for brand-specific rewards with expiration dates, and thus, have limited flexibility. Furthermore, loyalty programs that still rely on physical cards cannot be seamlessly integrated into the digital world.
On the other hand, NFT rewards programs enable brands to create unique experiences without the restrictions of traditional formats. Businesses can turn anything into a digital token, with different types of immutable rewards or experiences attached to them.
As a result, an exclusive community of proud NFT owners is built. Examples of famous companies that have jumped onto the NFT rewards bandwagon early are Coca-Cola, Taco Bell, and Quartz.
Why use NFT rewards?
Scarcity and FOMO
NFTs are underpinned by exclusivity and limited capacity. This is helpful especially if an asset is highly unique. This quality can be exploited by brands to stand out and create a cult following for their brand with a unique community on the internet.
Programmability
NFTs are highly programmable as they are anchored by an immutable and time-stamped distributed database that records every single transaction ever made, making it traceable.
This, in turn, also renders them irreversible, which helps prevent fraud, abuse or any other type of manipulation that plagues traditional reward programs. Overall, NFT reward programs are inherently tough to hack.
Budding Community
NFT rewards can enable brands to build unique communities. Or better yet, tap into large and loyal existing fan communities within the music, sports, film industries etc. These communities are typically fuelled by famous personalities like Snoop Dogg, Ellen Degeneres, Eminem, and Tony Hawk.
Smart contract application
Because NFTs constitute smart contracts, brands can attach features which they can expand for different purposes. For instance, they can program royalties into their NFTs so that every time a digital token changes hands, a portion of its resale value is returned to any charity, or a cause they choose to reward a percentage of the value.
Opportunities to innovate
NFTs rewards offer innovation opportunities underpinned by blockchain technology to make loyalty programs safer. Since consumers can have control over creating permanent records and building trust, businesses can deliver reward programs that are fraud-free, cost-effective, and empower consumers.
Fraud free
Because NFT rewards are based on peer-to-peer systems, there are fewer chances of fraudulent activities or system breaches. This is because all important information is stored on an immutable blockchain ledger with time-stamped database entries that are irreversible and free from transaction manipulation.
Benefits of NFT rewards
Uniqueness
Considering their immutable and non-fungible nature, NFTs are unique and limited. This means they exuberate an aura of exclusivity because of their rarity, especially when extra benefits like concert access are granted by token ownership.
Low costs
NFT rewards have a low barrier of entry as they are relatively easy to digitally create. Because digital assets can be algorithmically programmed at scale to reduce costs whilst leveraging brand value, NFTs rewards offer a long-term cost-efficient strategy which suits many brands.
Hype and excitement
As a nascent technology, there is a lot of buzz around NFTs, which creates opportunities to stand out for any brand. Though the hype train might later subside, brands who invest and execute early can reap benefits in the long run.
Experiential value
NFT rewards can be designed to be more about the experience rather than the actual product. Because NFTs are part of a growing digital movement, brands can tap into these rewards’ social value to deliver unique digital experiences to clients, based on a token’s future and monetary value.
Longevity
They offer the promise of longevity due to their immutable nature. This promise of long-term brand equity stems from the fact that NFTs will certainly withstand the test of time despite the wave of technology shifts.
As such, businesses will be able to maintain long-term relevance whilst still rewarding customers, collaborating with other brands, and building a thriving community.
How can you implement NFT rewards into your business?
The following are some techniques leading global brands have included within their NFT reward programs:
NFT loyalty program, membership or subscription
A prime example of a successful NFT loyalty program was the movie release of ‘Spider-Man: No Way Home’ which involved Sony and AMC dishing out approximately 86,000 NFTs as freebies to members who subscribed to AMC’s Stubs Premiere and A-List programs.
These NFTs came with airdrop discounts to holders as AMC plans to collect a small royalty on all transactions made trading the NFTs.
Also read our article on “NFT loyalty programs”
NFT rewards card
Since NFT rewards are programmable, they can be exploited to deliver additional utility to their holders over time. As such, they can be programmed to serve as loyalty membership cards. Cardholders can have access to exclusive communities, special discounts, or even time-based unlocks.
NFT reward token or event tickets
NFT rewards have the potential of increasing in value and utility. For instance, NFT rewards can be used as event tickets for special sports events and later sold off as memorabilia. Or better yet, give sporting brands the chance to offer holders voting rights to team decisions, and access to exclusive offers.
Gamification collection campaigns
NFT rewards offer an avenue for brands to gamify their products. For example, Burger King collaborated with NFT marketplace Sweet to create a set-completion game that enables Burger King customers to receive one of three collective NFT game pieces when they scan a QR code on a meal box.
NFT rewards gamification can be explored further by the offering of redeemable reward points, badges, milestones and avatars. They can lay the foundation for customers to become part of a new community, triggering more engagement.
NFT rewards with physical items
Because NFT rewards are hallmarked by digital scarcity, businesses can devise ways of combining physical goods with limited digital goods. These could include items like artwork, art pieces, apparel, antiques etc which can be tied to NFTs for easier trade.
Customers can hold on to the NFT which can then be traded with another user or withdraw the real product from the company.
This unique combination can constitute a smart contract that assigns a royalty percentage designated by the business.
NFT certificates
Educational institutes can use the blockchain to create NFT certificates for their students and members. Certificates will be more easily authenticated when coded into the blockchain, and thus makes it harder to be counterfeited
NFT art as rewards
NFT Art can be exploited as an NFT rewards avenue and form of engagement.
For instance, for White Castle’s century birthday, multimedia artist Che-Yu Wu reimagined White Castle’s menu by creating a unique generative art collection.
This unique algorithm-generated 5,001 NFT collectibles that could be purchased by White Castle customers.
If a brand chooses, they can take this NFT art approach a step further and permanently delete their NFT art collection, with no more being made. Such a one-time-only NFT can be further augmented to give owners access to unique benefits like discounts or exclusive access to events.
Conclusion: Are NFT rewards the future of customer loyalty?
While some sceptics see NFTs as over-hyped collectibles, they boast the potential to disrupt how modern customer loyalty works. The disruption is driven by the immutability and uniqueness of NFTs as they aren’t intended to be mass-produced.
Consequently, this limited character inherently drives the value of NFTs as rewards. It is recommended to gift them to customers who are at the highest tier in one’s loyalty program. This approach can drive engagement whilst ensuring a brand’s most loyal and profitable customers are rewarded.
Nonetheless, many brands are still far behind in the adoption of NFT rewards. However, with the advent of the Metaverse, it’s only a matter of time before brands catch up with the future.
We believe that NFT reward programs will continuously evolve with innovative and daring changes. Brands will explore potential unique use-cases to revolutionise how they connect with customers, and thus, herald a new form of brand loyalty.
In conclusion, NFT token rewards principally seek to spark engagement, long-term loyalty, and brand equity. This is all underpinned by experiential value and exclusivity. These principles will create unique opportunities for businesses to give their customers memories whilst maximising engagement.
However, brands should move quickly into this emerging space to reap early mover benefits, or risk playing catch up. Or worse, risk losing competitive advantages in a fast-paced business landscape that is dynamically evolving and unforgiving to those who are resistant to innovation!
