The proliferation of Non-Fungible Tokens or NFTs is generating heated debate, but also confusion. We see people spending hundreds of thousands of dollars on a piece of digital art, and brands like Dolce & Gabbana, Reebok and Gucci are making headlines with their NFT investments.
Which begs the question, how do NFTs help drive brand engagement and customer loyalty?
NFTs: The new loyalty lever?
The movement of NFTs is essentially a kind of digital contract. It could be art, or something like a specialty Starbucks cup. Suppose the brand releases 100 NFT badges of specially designed coffee cups, and people who are part of its loyalty program can purchase these NFTs, thus receiving certain benefits like a lifetime supply of free coffee.
This is where NFTs become a smart contract between the consumer and the brand. It’s something a brand can add at any time, and more so, it has that added allure of exclusivity. It makes people feel like they are part of a special community.
Recently at the Australian Open (AO), Tennis Australia launched nearly 7,000 3D NFT tennis balls that can be purchased with digital cryptocurrency at a rate of 0.067 ETH, equivalent to 310 Australian dollars . Each tennis ball was bespoke and featured its own metadata related to a small 19cm X 19cm tennis court surface.
If the winning shot from one of over 400 AO matches landed on the plot, the NFT metadata was updated in real time to highlight match information while providing the ball owner with rewards ranging from from limited-edition clothing to access to metaverse events or future perks.
Basically, at any time, anyone who has purchased one of these tennis balls can access things they don’t even know yet. Tennis Australia could turn around tomorrow and give them a signed tennis racket from their favorite tennis player. There are no rules.
NFTs are simply a contract between the consumer and the brand.
It’s varied and it’s complicated. But it’s also up to the most creative minds to figure out who to use this technology to build brand loyalty. I think we’re going to see a number of brands start leveraging NFTs. And I believe that to escape the hype around NFTs, we will have to give them a lifetime value, give them a form of utility.
Brands need to think about what they will unlock for the consumer. They need to think about what kind of rewards they can tie to NFTs to get people not only to buy them, but also to buy into their idea and adopt this new style of loyalty. There are a lot of opportunities to exploit here.
A cookie-free future calls for the resurgence of loyalty
As marketers, our day-to-day job of staying on top of execution is hard enough. Now we have to do it and stay on top of the data and the regulations, the challenges and the privacy. It’s a lot. And marketers are wondering how to connect with customers in a cookieless age.
Merchants love cookies. Brands have been using them for years to track website visitors, improve user experience, and collect data to effectively target the right ads to the right audiences. Cookies also help determine where customers are searching online when they are not on our websites.
But as we’ve all seen, the death of the third-party cookie is imminent, with Google announcing its eradication in 2023. Google is changing its privacy laws. Apple is too.
So, if third-party advertising is driving the most attribution to your marketing efforts, you need to find a new way to connect with the end consumer. And that’s where loyalty comes in — perhaps the most important tool for marketers in this new era of privacy.
Loyalty is key to fostering this connection. If you can come up with a great value proposition, whether it’s a membership program, subscription, or punch cards, customers will give you their insights. As Paula says, “fidelity must be increasingly respected and invested in to compensate for the loss of third-party cookies”.
In fact, our 2022 Digital Consumer Trends Index found that 50% of consumers are comfortable sharing data about themselves for better service. And 52% are ready to exchange personal data and preferences to feel part of a brand’s community.
Loyalty is no longer an “afterthought” as marketers get back to basics
With all these new privacy changes, it’s time for marketers to get back to marketing basics. Build a value proposition, find a reason to get people to engage, then acquire them. Create your own customer database from which you can get information. It’s Marketing 101. But it’s almost so simple and so basic, you lose sight of the fundamentals.
Previously, loyalty was an afterthought. Marketers would talk about testing virtual reality, launching NFTs, doing big TV campaigns with a big star actor, etc. Now loyalty is going to have to be front and center as it is one of the most important things that will help position your business for the future.
I think this new era of privacy and the disappearance of the cookie is great. Personally, I’m happy to see it. It makes people think; they offer a better way. I mean, when our customers choose a provider like Cheetah Digital as their solution, we develop the creativity, the proposal and the launch. A lot of thought goes into it. And every department of the company must adhere to it. You have to market it and activate it. It takes time, but if you start your loyalty program now, it’s not too late.
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ABOUT THE AUTHOR
Billy Loizou Vice President, Go To Market APAC at Cheetah Digital
Billy Loizou has over 10 years of experience in design, technology and marketing. He has worked with some of the most renowned and respected brands in the world, helping them improve their customer experience and increase their profitability.