So you’ve got a great brand in development, the business model is spanking, and your users are hyped about rollout. But you know that hype only lasts a short while — you’re going to need a killer customer retention plan, one that boosts brand engagement.
Many loyalty program models have already been tested in Web3. Some of the early campaigns are still effective today; others flopped so hard they became crypto lore. That’s probably not what you want for your business, so let’s dive into the dos and don’ts for successful Web3 loyalty programs.
Challengers, on your mark
We all want brand loyalty like that of Apple, Nike, and Ford. The kind of customers who spend their lives and money without wavering from their favorite brands. A passion akin to that of sports, and anyone using opposing products are met with a sneer.
One of the biggest mistakes a founder can make is thinking they can manufacture this kind of loyalty through gimmicks. Especially in today’s market, which is saturated with brands all working to steal patrons from each other.
Add to that customers know when they’re being pandered to (and you do, too). Sharing brand experiences has never been easier with social media instantly broadcasting an individual’s personal takeaways. Add to that privacy concerns: Countries around the world are working to protect their citizens’ data, and customers are making purchases with security in mind.
What’s more, customers are growing tired of loyalty silos. The modern smartphone typically includes a folder dedicated to all one’s loyalty apps. Password managers burst at the seams with forgotten credentials to such programs. It’s too much to keep track of.
Finally, business owners need to consider the cost to them. Loyalty programs are worth it when they work, but when they don’t, they are a major money suck.
So how can you make a plan that won’t tank the bank? First, let’s have a look at how Web3 has adapted to these challenges.
What are Web3 loyalty programmes?
Since we’re in Web3, your plan will have to adapt traditional loyalty programs to Web3 principles. That includes ensuring transferability of points or tokens rewarded, interoperability (including cross-chain operability — your customers will love you for that), and serious transparency. So what happens when they fail?
Web3 loyalty program examples that flopped
The programs that fall flat try to stretch from Web2 to Web3 without adaptation. Lessons learned by others are lessons you can apply for your Web3 loyalty program. Let’s have a look at some of the famous ones that failed so you can build a ‘donts’ list.
- Burger King’s “Royal Perks” — BK tried to partner with Robinhood to provide crypto as rewards. A cool idea, but the friction created by requiring users to register with Robinhood, which involved KYC steps, alienated would-be participants. There were too many hoops to jump through and privacy concerns were not effectively assuaged.
- Starbucks “Odyssey” program — Would you like an NFT with your coffee? Starbucks thought so. The failure of their program is credited to unnecessary complexity caused by their NFT ecosystem being separate from existing Starbucks loyalty profiles. Beyond this, the value of the program didn’t exceed typical loyalty programs, ultimately lagging in customer enthusiasm.
Web3 loyalty program success stories
Let’s not stay gloomy. Loyalty programs in Web3 do work! Let’s check out a few that are rocking their customer’s socks off so you can jot down some ‘dos.’
- Blackbird — this yummy restaurant loyalty program encourages the hungry to dine at participating venues in exchange for $FLY tokens (yes, the blackbird flies). The token is on layer-3 Flynet, with another $F2 token airdropped to loyalists to cover gas fees. The $FLY token isn’t just a reward: it can be used to pay for meals. That creates real utility for customers and businesses alike.
- ShopNEXT — a loyalty program emulating the traditional credit card reward programs, but with crypto. Users pick a deal then shop as usual at the participating vendor (in the ShopNEXT app). Customers are rewarded $NEXT tokens which they can redeem for prepaid cards, vouchers, NFTs, or cash out. This is one to watch because it feels familiar to the Web2 community, making adoption comfortable for novice Web3 loyalists. However, the app is clunky and requires regular interaction; if customers don’t build a habit of looking at deal notifications, or regularly buy new, they may forget it.
- StormX — similar to ShopNEXT, one can earn crypto from shopping. However, StormX corners the online shopping experience with a Chrome extension. This again feels familiar to Web2 users. The extra edge StormX has is their internal referral program. Users earn 10% off any purchases from referred customers, forever. That’s a compelling generator of brand loyalty! Unfortunately, the app is not yet available in all countries.
Building a smashing Web3 loyalty program
By now you probably have a sense of the “dos” and “donts” for Web3 loyalty programs. When they work they woooork, they give you an edge over competition, and they provide lots of room for innovation. But there are several pitfalls you must avoid to ensure a positive launch and long-term success in Web3. Let’s dig in.
The positives
- They’re fun! — Web3 provides a vast ecosystem for innovation. You can easily gamify your loyalty program, bridge it to a Web2 combo, and expand it over time via sprints and unique features. Innovate to your heart’s content.
- Borderless — Since blockchain can span borders, so can your loyalty program. You won’t be limited by currency or jurisdiction, and your users will love you for it (for example, I personally had to abandon my Starbucks points when I moved countries).
- Collaboration — Remember, strategic partnerships are critical to the health of a business. Since your Web3 loyalty program will be borderless, your partnerships can be, too. How can you leverage that philosophy in your plan?
- Futureproof — Long live the chain, amirite? It’s important to consider the long-term strategy for your loyalty program. This is not a one-and-done opportunity. What rollouts are planned in your company that can tie into the program? Can you introduce easter eggs or a VIP status? Think hard about what your loyalty program will look like in ten years and your users will thank you with brand loyalty.
Challenges to dodge
- Buy in — Consider how to reassure your customers that your rewards are evergreen. If they are tokenized, speak to the benefits of riding the market with their rewards. You’ll especially need to clarify benefits to potential Web2 adoptees (we know blockchain rewards are cool, but newcomers might need a boost).
- Complexity — Don’t be the Pontiac Aztek. Developed by engineers, the car had tons of cool features but it was not user friendly. I see this a lot in Web3. Developers generate excellent ideas, but the UX is alienating. Conduct extensive user testing when planning your program to ensure easy (and mass) adoption is possible.
- Needs a motivated customer base — The successful programs mentioned above have one thing in common: they found ways to motivate their customer base (or capitalize on existing motivation). Don’t rely on blockchain being the selling point.
That’s a wrap
Loyalty programs rock. They can make huge waves in differentiating your business from the competition. But a loyalty program for the sake of a loyalty program won’t hack it.
Think hard about the unique value proposition of your business and how a Web3 loyalty program can amplify retention. The perks should work hand in hand with your brand, creating a seamless experience for your customers.
There’s more to consider on this topic, so we did a deep dive into consumer apps to give you a detailed roadmap on building the right product-market fit for your program. Read Crypto Apps for Consumers Are Here to Stay.