Opinion: Web3 adoption set to surge, empowering more brands in capturing market share by 2024
Disclaimer: The opinions expressed in this article are solely those of the author and do not represent the views and opinions of crypto.news’ editorial team.
The rise in consumer retail spending is evident, with online Black Friday sales reaching nearly $10 billion this year. Despite inflation, the demand for quality products remains strong, leading to increased competition among brands for consumer attention. Interestingly, web3 technology has emerged as an unexpected beneficiary in this battle for consumer dollars. In 2024, we can expect more brands and companies to leverage web3 to forge stronger connections with their customers.
The latest developments in web3 offer consumer brands a powerful tool to enhance their membership and loyalty programs. Customers can now own their interactions with brands as non-fungible tokens (NFTs), creating compelling incentives for engagement with valued brands. By using NFTs recorded on a public blockchain, loyalty points and status tiers become ownable assets, making them much more appealing as incentive mechanisms.
Unlike traditional loyalty programs, where rewards are non-transferable and difficult to value or sell, web3-powered loyalty programs allow customers to own and transfer their rewards like any other real-world asset. This ownership brings new dynamics to the consumer-business relationship. Customers now have more incentive to earn rewards, benefiting both the consumer and the brand.
Enabling this ownership model is straightforward, as brands can use NFTs on public blockchains to facilitate the transfer of digital assets between wallets or through marketplaces. Customers can use their own web3 wallets, or brands can provide integrated wallets within their membership apps or accounts. Brands can maintain control over the ownership model by using smart contract technology to determine the level of exclusivity or transferability of these assets. They can also track ownership changes and retain control over the redemption value of earned fees. Moreover, brands have the option to hide the use of NFTs or blockchain technology entirely, providing a familiar yet more powerful web3 experience. This best-of-both-worlds scenario allows for increased consumer incentives while allowing brands to curate the experience and collect additional data.
Web3 technology also benefits brands that don’t directly sell to customers by providing insights into their buyers. For instance, an apparel company can use web3 to incentivize customers to provide proof of purchase and earn NFTs. By doing so, they can gain a better understanding of their customer base and encourage consumers to sign up for membership accounts with embedded web3 wallets. Alternatively, brands can target new, qualified customers by leveraging the publicly visible contents of their wallets. For example, a home improvement store can identify wallets with loyalty rewards from a major competitor and target those customers with promotional offers to entice them to shop with their brand instead.
Web3 technology also opens up opportunities for brand partnerships. Through smart contracts, brands can program interactions between their web3-powered loyalty programs. For example, a coffee business could partner with an apparel brand and allow customers to exchange their rewards for discounts at the apparel chain. This joint engagement benefits both brands and expands their customer base, while also providing deeper insights into customer profiles and interests. With the emergence of cross-chain protocols that enable interoperability, brands can even use different blockchains for their partnerships.
Web3-powered membership and loyalty programs empower consumers to take ownership of their investments in time and money, creating additional incentives for engagement. Forward-thinking companies that adopt web3 can connect with their customers in innovative ways, form new partnerships easily, and ultimately increase profits by having a customer base that is financially invested in the brand. While adopting web3 may seem daunting, the rewards are immense.
Audentes Fortuna Iuvat. Fortune favors the bold.
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Frank Wang is the director of platform sales at BitGo, a financial services company specializing in institutional digital assets. He focuses on enabling blockchain adoption for consumer-facing technology platforms like payments and loyalty programs. With 19 years of experience in finance and technology, Frank graduated from the University of Pennsylvania with a B.A.S. in Systems Engineering and a B.A. in Economics and East Asian Studies.
