5 innovative ways NFTs are replacing traditional loyalty programs

With specialised NFT platforms—optimised for brand engagement—marketing leaders can use innovative campaigns to engage their customers and drive brand loyalty; Image: Shutterstock

Search the web for NFTs (non-fungible tokens) and you will see top results about NFTs of digital art being auctioned for millions of dollars and pixelated profile pictures being bought for thousands. It is hard to understand where the value stops and bubble starts. There is undoubtedly a significant amount of speculation and FOMO (Fear of Missing Out) driving the NFT revolution. Yet, there is something fundamentally new here. For brands, NFTs are an opportunity to redefine how they engage with their most loyal customers and fans.

1. Deepening customer loyalty with emotional engagement

In October 2021, the beauty brand Clinique launched an online contest encouraging its customers to share stories of joy and optimism. Three contest winners were rewarded with a Clinique branded digital collectible NFT that provided access to fan-favourite out-of-stock products. The three NFT holders will receive an assortment of brand products once every year over the next decade whilst claiming a piece of brand heritage.

One condition for participation was that consumers had to join Clinique’s Smart Rewards members program—modernising the way loyalty programs function. By opening up NFT access only to its loyalty program members, Clinique is both rewarding members and incentivising others to join via sign up.

Representing brand-inspired digital art as an NFT allowed the contest winners to publicly display their achievement of winning the contest. It also enabled them to make the Clinique brand a part of their identity. Think of it as the digital equivalent of wearing a branded t-Shirt.

Along similar lines, Spartan Poker in India launched digital trophies and awarded them to the top players in their online gaming community. As NFTs, these digital trophies can have wider visibility in the digital world than physical trophies that typically end up in the living room. Brands like MG Motor, MakeMyTrip, and PVR Cinemas have also launched NFTs for their brands.

NFTs are becoming a way for customers to display the brands they love, the causes they believe in, the stories they relate to, and the art they appreciate.

2. Gamifying brand engagement

In September 2021, Burger King collaborated with three musicians to create a new product offering called 'Keep It Real Meals'. Each meal box came with a QR code and customers who bought these meals could scan the QR code to collect digital collectible NFTs, simulating a treasure hunt. Each musician had nine unique digital collectibles. Based on how many one had collected, customers could win rewards like a one-year supply of Burger King Whopper sandwiches, autographed exclusive merchandise, and even a call with one of the partner musicians.

On the face of it, this campaign was the digital version of the McDonald’s Happy Meals which came with a small toy. So, what's new?

Moving from physical to digital collectibles is, first and foremost, an acknowledgement that we are living more and more of our lives online. Thus, digital collectibles are as valuable as physical collectibles, if not more.

Unlike physical collectibles, which require the supply chain and distribution network to be set up, digital collectibles are much easier to manage, faster to implement and most importantly, allow the brand to engage directly with their most loyal customers on a digital platform.

3. Phygital products

In October 2021, Glenfiddich sold a series of fifteen limited edition 48-year-old collections of whisky bottles as NFTs. What does that mean? Consumers could buy an NFT that serves as the authentication token for the liquor bottle stored with Glenfiddich until redeemed. The NFT holder can either redeem or trade the NFT.

But why launch a traditionally physical product as an NFT?

The big idea is that the NFT works as a digital token representing the physical product. By offering the token for sale, while continuing to hold the bottle as-a-service, Glenfiddich is effectively offering Aging-as-a-Service. Some products get better with age, and NFTs are a great way to pass on the value to brand connoisseurs and create a long term relationship with them.

4. Engaging the creator economy

In January 2022, Adidas and Prada partnered to use NFTs to engage the creator community by inviting creators to submit their artworks. Not a surprise, given that 50 million people around the world consider them to be creators across platforms like TikTok, Instagram, and YouTube. A world-renowned digital artist selected 3,000 artworks and compiled them to create a unique user-generated, crowdsourced artwork that was sold as a digital collectible. The revenues from the sale were shared with 15 percent going to fan creators, five percent to the curating artist, and 80 percent to a non-profit.

This brand engagement campaign is a great example of the second-order impact of NFTs for brands. With NFT digital art becoming valuable in its own rights, brands are co-creating NFT art in collaboration with their customers and using the proceeds to support causes that their customers believe in. The ownership and connection generated by such emotional engagement are perhaps much more powerful than a transactional point-based loyalty program.

5. Into the metaverse

In December 2021, Nike announced the acquisition of RTFKT Studios—a digital design studio specialising in the creation of digital sneakers. Nike has started selling digital sneakers that people can buy for their digital avatars. This is a great example of a brand extending its product portfolio to sell digital assets in the metaverse.

Expect everything from cars and bikes to fashion brands to launch products in the metaverse as it matures. Also, since the only universal way to record ownership in the digital world will be NFTs, expect them to be the backbone of commerce in the metaverse.

Key takeaway NFTs are a foundational technology. With specialised NFT platforms—optimised for brand engagement—marketing leaders can use innovative campaigns to engage their customers and drive brand loyalty.

The writer is the founder & CEO of KoineArth, the creator of ngageN NFT platform.

The thoughts and opinions shared here are of the author.