Thread by Ryan Kuhel

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1/ 🧵 The web3 loyalty rewards and membership opportunity 🧵
2/ First, what are loyalty rewards programs? A loyalty program is a marketing tool used to encourage customers to increase consumption of a service or product while building brand loyalty.
3/ This strategy is used in multiple industries including: banking, entertainment, hospitality, retail and travel. An operator of a loyalty program allows a customer to set up an account where the customer can earn points and status.
4/ It’s also not a new thing: Betty Crocker's loyalty points program was introduced as early as 1929.
5/ Loyalty programs work well when the incremental cost of giving away value to the customer doesn’t eat into the company’s margins.
6/ For example, the marginal cost of giving away an empty first class seat or providing an upgrade to an empty hotel room is low for the company, whereas the perceived value for the consumer is high.
7/ There is some overlap between membership programs, like Costco where customers pay $120 a year, and loyalty programs. However, a membership program typically generates revenue in exchange for a product or service, whereas a loyalty program is free. www.costco.com/join-costco.html
8/ Why loyalty? According to Nielsen’s research, 84% of customers are more willing to choose a retailer that runs a loyalty program. According to Comarch/Forrester research, running a loyalty program can result in 3.5x more transactions per member. www.comarch.com/trade-and-services/loyalty-marketing/resources/
9/ There are four big challenges for loyalty/membership programs today:
10/ PROBLEM 1 Lack of program engagement. People don’t redeem their rewards: redemption rates for rewards are below 20% blog.smile.io/improve-average-loyalty-redemption-rate/
11/ PROBLEM 2 Harder to personalize ads at scale to prospect customers into a loyalty program: deprecation of web cookies and changing iOS policies makes advertising more expensive. CAC is increasing and ROAS is decreasing for many advertisers.
12/ PROBLEM 3 Giving away free stuff creates more perceived value for customers but it can also eat into margins. Brands need to find ways to deliver customer value without losing money on the loyalty program. Margins matter! www.bcg.com/publications/2014/retail-transportation-travel-tourism-leveraging-loyalty-margin-rewards-...
13/ PROBLEM 4 Difficult to do proper attribution for Creator marketing and offers across multiple channels (Ex. how does Heineken calculate YouTube ads ROAS for beers sold at Costco?)
14/ How can blockchain/web3 solve these problems?
15/ A shared data layer for multi-company rewards! With NFT Ethereum/Polygon API standards, other brands can easily accept your loyalty reward status and points via token gated commerce. This unlocks the ability for other brands to stack value on your rewards program.
16/ EXAMPLE: Luggage company can provide a 20% discount by accepting an airline's Diamond Status NFT in a token gated Shopify store, without manually having to partner with the airline. Permissionless partnerships = more valuable loyalty program
17/ Secondary market enabled by blockchain: you can buy, sell stake and rent out your loyalty status and points. A brand can program royalties into the smart contract of a NFT and create a new revenue stream. This adds value to customers without eating into company margins!
18/ Brands can generate outsized earned media by adding utility to existing NFT projects to prospect new customers. For a small budget, you can add value to a NFT owned by your customer in exchange for them entering your program. Advertising that literally adds value w/ utility
19/ EXAMPLE: Burrito QSR chain can offer a free burrito to Reddit Cryptosnoos holders when they enter restaurant's loyalty program via token gated experience. nft.reddit.com/
20/ Unify customer touch points when customer data is siloed. Many brands have siloed customer data for their physical store, online e-commerce presence and social media, resulting in a lack of personalization.
21/ By accepting NFTs at each touchpoint in token gated commerce, you can personalize each customer touch point and have a unified experience across the entire customer journey.
22/ Three Future predictions
23/ Your phone will be your crypto wallet abstracting away private key management decrypt.co/104464/much-ado-about-nothing-why-polygon-is-making-a-web3-push-into-mobile
24/ Blockchain Digital identity will be how people around the world access government services and commerce polygon.technology/blog/introducing-polygon-id-zero-knowledge-own-your-identity-for-web3
25/ Companies will allow their most loyal customers to govern DAOs for corporate social responsibility and fun projects (EX. own a sports team). Customers will literally become owners of the brand or a subsidiary brand entity
26/ RECAP (1) a secondary market for points/status and opening up your program so partner brands can “stack value” are enabled by NFTs (2) Adding utility to a NFT project generates earned media (3) Companies will make the most loyal customers owners of a treasury via a DAO
27/ You can check out a deck on web3 loyalty rewards here: share.hsforms.com/1qYWFJSgnRQufALU1FcNkzgc8xid
28/ I hope you've found this thread helpful.

Follow me @RyanKuhel for more.

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