Web3 has experienced a rollercoaster of a year. We started 2022 riding the wave of excitement from 2021, with interest in NFTs at an all time high. But then came the crypto crash, which inevitably saw a lot of projects go to zero and a lot of voices who were bullish about the space suddenly went quiet. As if that wasn’t enough drama, the recent crash of FTX gave crypto naysayers even more ammunition to criticise the space.
That’s not to say 2022 was all bad news. We saw a significant amount of Web2 companies start to utilise the technology.
Twitter, Instagram and Reddit all integrated Web3 functionality into their platforms. Twitter allowed users to verify NFTs as profile pictures in January, Reddit onboarded over 3 million new Web3 users with the launch of its Avatars digital collectibles program and Reddit Vault digital wallet in October. In November, Instagram started allowing users to showcase their NFTs on the platform and started beta testing allowing users to mint on the platform.
Tiffany & Co sold out their first NFT drop in 20 minutes, netting the company $12.5 million. They leveraged off the hyper-engaged CryptoPunks community to do this to great success. Gucci started accepting crypto in its US stores and Tag Heuer started accepting crypto online.
As we head into 2023 we aren’t seeing any slowdown of companies entering the space Web3, in fact, we are seeing an increase in momentum. While it might be tempting for Web2 companies to do a traditional NFT drop to enter the space, there is so much potential to really utilise the technology to elevate the customer experience.
Starbucks are writing the playbook for integrating Web3 technology into their loyalty program. The retail giant announced their intentions to introduce NFTs into their Starbucks Rewards membership program at the end of 2021. In November this year, they finally began beta testing for their new program called Odyssey, which offers members the ability to earn and buy NFTs that will unlock access to new, immersive coffee experiences.
Brady Brewer, Starbucks Executive Vice President and Chief Marketing Officer said of the Web3 integration into their membership program:
“For the first time we are connecting our Starbucks Rewards loyalty program members not just to Starbucks, but to each other. Leveraging Web3 technology will allow our members to access experiences and ownership that was not possible before.”Brady Brewer, Starbucks Executive Vice President and CMO
“Starbucks Odyssey will transcend the foundational benefits that our Starbucks Rewards members have come to love, and unlock digital, physical and experiential benefits that are uniquely Starbucks,” Brewer said.
Through the program, Starbucks is driving further engagement in the brand while unlocking gamified features for content consumption. Rare NFTs unlock special privileges or purchases, or allowing members to skip to the rewards.
Companies can use tokens to gate content and experiences, i.e. only token holders will have access to exclusive behind the scenes content or discounts on products. Brands can also use them to influence consumer behaviour by rewarding customers with tokens for undertaking certain activities e.g. spending or engaging with the community. These tokens can then be redeemed within the brand’s ecosystem or for exclusive products or services.
Companies can also allow holders to trade tokens with other members of the community. This allows for interaction between their customers/fans which doesn’t generally happen with traditional loyalty programs. This will help build a sense of community and encourage brand advocacy inside and outside the brand’s existing customer base.
Eventually as the Web3 ecosystem expands, Web3 technologies can enable loyalty programs to be more interoperable, allowing customers to redeem rewards across different brands and platforms. This will enable even more value to be given to customers.
Consumer and Brand Co-Creation
In November this year, Nike launched its own standalone Web3 platform, .SWOOSH which promises to be a new, inclusive digital community and experience and a home for Nike virtual creations. .SWOOSH will allow Nike Members to learn about, buy, sell, trade and eventually help co-create virtual creations such as shoes or jerseys.
This concept of co-creation is a successful consumer principle to come out of Web3. We’ve seen Web3 native brands such as Bored Ape Yacht Club and CryptoPunks give holders commercial rights to holders to monetise the artwork on their NFTs. This has seen the brand equity of those brands grow exponentially. People care more about things they are invested in and feel like they have a level of ownership of, which is why Web3 brands have been able to build such hardcore fans so quickly.
Web2 brands have traditionally been the only ones who have been able to monetise their IP, so while they have complete control of how it’s creatively applied, it means that brand growth has been slower.
It has also meant it’s harder to grow fanatical consumers. It’s very rare for someone to set their PFP as a picture of a shoe from a seasonal campaign, where as if you go onto crypto Twitter, you will barely see an actual face, rather people are identifying themselves as NFTs from their favourite project.
By opening up their IP to co-creation, brands have an opportunity to take consumer engagement to a whole new level. There will obviously be limitations to this and brands can control what the boundaries are, but brands like Nike are already showing they are open to involving their communities in what they are building in the future.
If you are a brand exploring the space, the key thing to note is that Web3 is still in its early stages, and many of these potential benefits are still being explored and developed.
If you are wanting to see how you can elevate your customer experience I would look at what other brands in the space are doing, learn from their mistakes and look at where the consumer trends are.
Keep on top of developing tech in the space. It’s a great opportunity to be the first to pioneer emerging technology.
You also need to be willing to explore a space where there is no roadmap. You need to be ok with making mistakes and be open to constantly be pivoting as the space as the technology continues to evolve. While this might seem scary, Web3 is your opportunity to not just live history, but to actually write it.