The tokenized art market, known as non-fungible tokens (NFTs), has recently gained immense popularity. For instance, a pop-tart cat meme sold for $590,000, and the first tweet of 2006 was purchased for nearly $3 million. In Indonesia, Ghozali earned approximately 1.5 billion for his selfies on OpenSea, the largest NFT marketplace. Beyond selling images and videos at inflated prices, this trend provides unique ownership privileges to digital art, thereby offering modern customers the rewards they desire.
As strategic uses for NFTs emerge, it is fascinating to consider how brands will use them to engage their loyal community, which can ultimately modernize loyalty programs. By offering NFTs, businesses have a novel approach to identify the most dedicated customers and attract them to spend money on their brand.
NFTs are unique digital assets stored on a blockchain, which serves as a certificate utilizing blockchain technology. As non-fungible tokens, they cannot be replaced by something else. Once confirmed by a consensus network of servers, the data is permanent, and the token cannot be imitated. Essentially, NFTs are a digital fingerprint.
The NFT market has grown from "nothing" to a multi-billion dollar industry, with even the largest NFT marketplace raking in around $20 billion. NFT hype increased as technology was used to sell digital art. When Beeple's "EVERYDAY: THE FIRST 5000 DAYS" sold for $69,346,250, people began to pay attention to this phenomenon. Established brands like Coca-Cola, Taco Bell, and Quartz, as well as celebrities like William Shatner, Grimes, and Steve Aoki, have jumped on the trend.
NFTs provide a sense of exclusivity and ownership, similar to sports memorabilia, artwork, comic books, or rare trading cards. Thanks to blockchain technology, we can now verify the authenticity and ownership of everything digital. This leads to scarcity and fear of missing out (FOMO) in the digital world. As with anything rare and exclusive, a sense of ownership often gives a person the greatest value. Some people even use NFTs as a representation of their digital selves.
So, NFTs have proven to be a hot commodity with numerous strategic uses emerging. Brands can leverage them to modernize their loyalty programs and engage their most dedicated customers. With the ability to verify authenticity and ownership, NFTs provide a sense of exclusivity and ownership that people crave in the digital world.
NFT's Role in Loyalty Rewards: Perks and Examples
NFTs have unique benefits as a loyalty rewards program. Their non-interchangeability makes them inherently distinct and finite, which gives them an air of exclusivity. The rarity of NFTs and additional benefits that come with owning them can heighten that sense of exclusivity.
Moreover, NFTs are relatively easy and cost-effective to produce, and their collections can be algorithmically programmed to increase brand value while reducing costs. However, the real investment lies in a long-term strategy that aligns with the brand's identity.
As NFT technology evolves, companies are exploring more complex use cases, and the line between physical and digital experiences is blurring. NFTs offer a unique way to provide both monetary and social value to customers, building long-term customer relationships, and brand equity. These elements can promote customer engagement and loyalty.
Loyalty programs are evolving to offer customers more than just points, and NFTs can fill that void. They provide more options for customers to use and collaborate across a variety of industries. Additionally, NFTs use smart contracts on the blockchain, which ensures secure transactions.
Here are a few examples of NFT use in loyalty programs:
Collectible NFT Promotions
Brands can create digital collections of collectible toys via NFTs. Customers can obtain these toys with codes or QR codes, adding a new level of digitization to traditional loyalty programs.
The Digital Twin
NFTs can increase brand trust and transparency in transactions by serving as unique IDs linked to individual items. For example, virtual assets can be tokenized and delivered digitally before physical production, giving customers a glimpse of what they will receive.
Paid Loyalty Program Benefits
Paid loyalty programs can benefit from NFTs as they can act as membership cards for users to access loyalty benefits and NFT products.
NFT Integration in Airline Loyalty Programs
NFTs offer exclusive experiences, such as access to unique flight destinations, and gift experiences such as special NFT owner access to Chanel's new perfume, Nike's latest sneaker, or limited edition in-flight entertainment movies. As passengers move up to the frequent flyer program tier, they can unlock more exclusive NFTs, encouraging customer loyalty.
In summary, NFTs are a new and innovative way for brands to build long-term relationships with customers while offering unique rewards and experiences. They also provide a cost-effective way to increase brand value while reducing costs. As NFT technology continues to evolve, more exciting and creative use cases will emerge, which can further enhance the customer experience.
Brands Using NFT to Drive Acquisition and Engagement
Here are some ways to get brands to apply NFT, including inspiring brands with loyalty programs using NFT to drive their customer acquisition and engagement.
1. Taco Bell
Taco Bell uses NFT by auctioning off limited edition NFT called NFTacoBells. 25 NFT artworks sold out within 30 minutes. Each GIF starts with an offering price of $1 and quickly sells for thousands of dollars each.
This NFT includes real-world rewards in a $500 electronic Taco Bell gift card for native token holders. The campaign is also a social action. All proceeds from the sale are donated to the Live Más Scholarship through the Taco Bell Foundation.
2. Louis Vuitton
Louis Vuitton is celebrating its 200th anniversary with the launch of Louis: The Game. Players have the opportunity to receive one of 30 limited edition NFTs.
Louis Vuitton chose to lock up tokens (not for sale) for a while, focusing on educating customers about the brand value and capitalizing on the general hype surrounding technology trends.
Clinique holds a competition for members of the Smart Rewards program. Three winning Smart Rewards members are awarded a limited edition NFT, early access to new physical products, and token holders will receive various Clinique products once a year for the next decade.
4. Burger King
As part of launching the Royal Perks loyalty program and continuing investment into the digital platform, Burger King is partnering with NFT Sweet marketplace on a set-completion game. Customers can scan the QR code on each food box to receive one of three collective NFT game chips. Upon completion of the set, subscribers programmatically receive a fourth NFT reward.
Such as a digital collectible, a year's free Whopper sandwich, merchandise, or the opportunity to chat with one of the collaborating artists. Burger King is also trying out more straightforward cryptocurrency rewards to encourage customer engagement.
AMC partnered with Sony Pictures ahead of the release of 'Spider-Man: No Way Home' by offering approximately 86,000 NFT to select loyalty members, including those who subscribe to the Stubs Premiere and A-List programs.
AMC plans to provide discounts and other benefits to holders of the new NFT cinema chain – and AMC will collect a small royalty on all transactions made from trading NFT.
NFT Could be The Future of Loyalty Rewards
The concept of NFT is an exciting prospect as our technology-driven lives become increasingly integrated. What's happening now is still primarily a gimmick.
Still, NFT is promising enough to move beyond the current 'interesting' collectibles phase and play more broadly in loyalty programs. NFTs can offer intelligent contracts, which can play an essential role in increasing customer engagement.
NFT token rewards and digital experiences can ultimately be used to drive long-term engagement and loyalty and grow your brand equity. From knowing your brand's history to gaining access to other exclusive experiences, brands have many opportunities to give customers something memorable.
If a brand is to utilize this technology, they need to invest time in understanding what makes a successful NFT project – execution is one thing. Still, a focus on building engagement and community is integral.
Keeping up with the times and being a trendsetter is a risky first step, but the results can be excellent if done right and adopted by a larger audience. As this new technology stream rolls in, it would be best to look at possible opportunities to integrate this new medium into existing business practices, including loyalty programs.