The Most Loyal
Fayre TL'DR:
What's New This Week?
Loyalty-chain
The goal of loyalty programs is to incentivise target customers to shop or purchase services within a closed-loop of businesses that are part of that same program. Perhaps the most well-known example is the one of “Air Miles”, whereby points are earned on purchases at participating merchants and can be redeemed against flights with specific airlines and other related merchants.
It’s seen as a way to drive business growth in a predictable way, while keeping customers engaged: customers need to keep up the pace of spending (to avoid losing points) and the program managers need to enable products, services and experiences that are relevant to those customers and that can be swapped for points.
From an economic standpoint, they are a form of virtual currency with the particularity of being able to be exchanged solely for goods or services (in full or as a discount). Hence, they cannot be redeemed for cash.
The reason why we are talking about this is because businesses are starting to tokenise their loyalty programmes, as a way to attract new demographics, while increasing the level of transparency and safety of these rewards (loyalty points). Other benefits of having data stored on a blockchain include the ability to instantly gather information regarding outstanding balances and processed transactions without the need to reconcile them or request access to information. As a result, loyalty points are fully traceable.
Recently, Starbucks was one of the big consumer brands to announce their Web3-based strategy that will eventually distribute loyalty rewards. They have a history of experimenting with cutting edge technology and using innovation to advance their business. With their approach to the blockchain, Starbucks is aiming to grow their digital communities. Moreover, they are building on top of a very successful rewards program that has approximately 27 million in the US alone. Clearly, it’s a strategy to engage with the new generations and on their own terms. Although no specifics have been advanced, it seems like Starbucks are aiming to use NFTs as an extension of their existing loyalty programs and offer access to unique experiences and benefits. Apparently, we’ll know more details in the coming months.
Another very interesting initiative is one being developed by Reddit. They are creating Community Points as a way to measure reputation within digital communities with the goal of using blockchain so that the points (and the reputation) can be transferable anywhere on the internet. It’s a way to empower communities.
On one hand, these initiatives help drive awareness for solutions solved by blockchain technology and, on the other, it’s great to see businesses finding ways to interact with their buyer personas and enhance their business models.
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That's it for this week's full scoop! Please feel free to comment, share and discuss NFTs with us, we're here to help. Stay crypto-curious!!??
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