Are NFT's and the Metaverse the next step for loyalty programs?
Is the Metaverse the New Loyalty Frontier?
Part 1: An Introduction to the Metaverse
Ko de Ruyter, Debbie Keeling and David Cox
Facebook’s latest re-branding to Meta has created both excitement and puzzlement in the global world of business. The metaverse has made it to the list of top 10 words for the year 2021 according to the Collins Dictionary.
We are hearing that loyalty marketers are also asking themselves and each other whether this is an ecosystem that holds a strategic promise for their brands. At the same time, there is confusion around what the metaverse actually is and how it can realistically add value to business relationships and loyalty programs. To date, no common understanding exists as to what the metaverse actually is or, more importantly, could be.
Some pundits limit the metaverse to a shared online space with 3D graphics, while others emphasise that it is a network of virtual worlds that is inter-operable and can be experienced synchronously. Others view the metaverse as the next version of the internet or the spatial web that users experience as ‘living within it’ rather accessing it. This lack of a shared understanding among business strategists prevents plotting a course forward.
Reframing the metaverse
However, reframing the metaverse as a ‘place’ or ‘space’ where people socialise, work, shop, and participate in activities offers a very different potential for, what could be termed, as a synthetic loyalty experience that seamlessly combines physical and technology-enhanced realities. This definition implies that in the metaverse, physical and digital worlds seamlessly converge to form a new reality. This new reality is predicated on synthetic customer experiences, where natural/physical experience is extended through technology.
Crucially this new reality can also uniquely engage customers and address their diverse needs:
· cognitive needs (how can we challenge customers to think about us differently?)
· emotional needs (how can we excite customers in different ways),
· behavioural needs (how can we get customers to act in different ways)
· sensorial (how can we fundamentally change the way in which customers perceive their experience of our brands)
· social needs (how can multi-way exchanges between firms, customers and other customers be better harnessed in a metaverse)
Now that we have set the scene, we will revert back to the title of this piece, one that perhaps caught your interest in the first place: Is the Metaverse the new loyalty frontier?
There are three reasons why we are mildly optimistic and would tend to answer this question with ‘possibly yes’:
1. The emergence of interesting loyalty marketing use cases
as we gather initial evidence that the metaverse is a channel that loyalty marketers should consider embracing, some interesting examples keep popping up. In particular, the metaverse offers novel ways of customers and program members experiencing exclusivity.
2. Key cornerstones of the current metaverse are very real today
this includes cryptocurrencies, digital collectibles (such as NFTs), blockchain and reality enhancing technologies (augmented, virtual and neuro reality). This will help in demystifying the concept of the metaverse and to separate the reality from the hype.
3. Awareness that virtual and physical experiences are sensorily similar
what is crucial to the successful development of the metaverse is that people have become largely aware that we are reaching a level where virtual and physical are sensorily similar. The metaverse’s value-add is rooted in the acceptance that that it represents a genuine reality in which users can socialize, work, and play. A new generation of customers is growing up spending a large portion of time ‘being in’ and even ‘building’ hybrid worlds like Fortnite.
Part 2 - Trailblazing Examples of loyalty programs in the Metaverse
As mentioned in Part 1 of this blog series, we are increasingly seeing a number of companies start to experiment with the metaverse as an environment to support their loyalty marketing strategy. These use cases could be a rich source of inspiration for loyalty marketers
Here are four such trailblazing examples of how to explore the metaverse to boost loyalty
1. Memorable Member Experiences: Snoop Dogg’s Crib
Perhaps the most obvious use case lies in creating memorable member experiences. The famous, or perhaps infamous, rapper Snoop Dogg has invested in building his crib in what is already referred to as the ‘Snoopverse’ on fan pages. He has been personally getting involved in designing the mansion, which apparently is a replica of his LA property. In this virtual space loyal fans are able to get an ‘early access pass’ so that they can check in to the star’s mansion, play online games, get access to early releases of the music, attend exclusive concerts and perhaps even interact with the recording artist himself if he is present in his virtual hangout. A sense of belonging is created by a welcome-to-the-hood, ticketed pool party, which is positioned as “a once-in-a-lifetime opportunity to party with the Dogg”. This exemplifies that there are plenty of opportunities for companies to create those experiences that cement the loyalty of their members.
2. Providing Unique Rewards: Double 11 Metaverse Art Exhibition
With an eye on providing unique rewards in your programme, the Double 11 Metaverse Art Exhibition offers an example of a brand-new point redemption experience. In this particular exhibition, famous luxury brands, such as Burberry, Coach, and Longines are offering first-time limited edition NFTs (non-fungible tokens or digital collectables) that people can acquire. For instance, Burberry has designed an interactive digital deer to showcase a limited-edition physical edition of the scarf, created just for the exhibition. All 1,000 scarfs were sold within the first day of the event. So there seems real potential for tapping into an engaged audience of members who are looking for unique experiences for which they are happy to convert points. Allowing your members to experience rewards online, using virtual trials, and getting virtual brand items offers a new way of looking at your brand and opens up opportunities of engaging your members in an innovative way.
3. Driving Member Engagement: Louis Vuitton & Balenciaga
Another way in which explorations of the metaverse can help boost your loyalty lies in member engagement. On the occasion of the company’s 200th birthday, Louis Vuitton launched a virtual adventure game to celebrate the achievements of its founding father. They called it Louis the Game. It follows a main protagonist as she travels through a number of virtual worlds to collect candles for the virtual birthday cake. Players dress up their avatar in Louis Vuitton fashion wear and can collect specially designed digital treasures. It is interesting that these rewards cannot be traded in the blockchain marketplace, amplifying their intrinsic value. Another high-end fashion company, Balenciaga has also experimented by venturing into Fortnite with a game that allows players to acquire digital outfits based on the real-life collection. Players are able to hang out in virtual spaces, exchanging ideas and engaging in discussions around fashion. Engagement levels in these alternate realities are high and contribute to a stronger bond that customers have with the brands.
4. Exploring New Realities: Marriott International
Finally, as travel and hospitality came to a near standstill during the pandemic, the industry has been busy exploring new realities. Marriott’s senior VP of brand, loyalty and portfolio marketing at Marriott International, Brian Povinelli states that “We’ve all learned over the last two years how to relate and engage in a more virtual manner”. Their adventure started with designing its first NFT (non-fungible token) collection and presenting this at a real art fair in Switzerland.
Look out for our third and final blog in this series when we aim to unlock some of the learnings of the metaverse for loyalty marketers. We will also explore how NFTs and digital collectables can be used as tools for loyalty program member engagement.
Part 3 - Non-Fungible Tokens (NFT’s) as loyalty program rewards
Non-Fungible Tokens, or NFTs, are a metaverse landmark and something that program managers need to know about as they offer intriguing and real opportunities to future-proof loyalty programmes. Before we dive into the relevance for loyalty marketers, it is good to create some clarity around NFTs, just to make sure we are all on the same page.
What is an NFT?
Plainly put, an NFT is a digital asset that represents real-world objects like art, music, in-game items and, yes, even rewards. They are bought and sold (traded) online. This is commonly, but not exclusively done with cryptocurrencies. NFTs are also typically unique or part of a limited-edition series and are essentially as scarce as other valuable assets. We are not just talking about designer artwork, even tweets will do. Twitter co-founder Jack Dorsey sold his first-ever tweet as an NFT and raked in over $2.9 million. NFTs are designed to offer people the opportunity to get something special that cannot be copied. Anybody can buy a print of van Gogh’s famous sunflowers painting at IKEA, but only one person can take ownership of the original. That unique experience is what NFTs are all about.
What do NFTs mean for loyalty programs?
NFTs offer companies a whole new avenue for defining and creating exclusivity and this is stimulating program member engagement.
Here are three examples:
Hospitality: Marriott Bonvoy
Hospitality giant Marriott’s loyalty program, Marriott Bonvoy (‘Earn your way to amazing’), engaged three digital artists to design an NFT collection of artworks in the Metaverse. These were presented as NFTs at an art fair in Miami last year. Three attendees of the fair won the NFTs plus 200,000 Bonvoy points. In the wake of Marriott’s trail-blazing initiative, several other hotel chains are now announcing the launch of NFT rewards in their loyalty programs to create exclusive rewards that are valuable assets that can be traded by members. And these NFTs are not just limited to artwork. Companies are using NFTs as rewards that gain access to events, conferences, VIP lounges, essentially replacing digital invitations and tickets. Alternatively, NFTs are used to unlock exclusive tutorials in combination with guaranteed sales leads to enable members of re-seller programs to be more successful than their competitors.
Sport: American Football & Basketball
Sports organisations have discovered NFTs as key to strengthening fan communities. In the NFL American football league, limited commemorative tickets are offered to fans based on their past game attendance. For NBA basketball fans, a virtual marketplace has been created where unique footage of games can be bought and sold and NFT sweepstakes are offered for NBA finals seats.
Beauty Industry: Clinique
Estee Lauder’s brand Clinique is offering members of its loyalty program a chance of winning free products for a period of 10 years with an NFT called the Meta-Optimist. Members are invited to enter a competition by submitting “stories of optimism” on the brands social channels. As a result of offering NFT access to members only, the brand is promoting program membership and incentivizing customers to join and cement their relationship with the company through expressing personal stories. NFT rewards offer members a gateway to the metaverse.
Other advantages of NFTs
NFTs are registered on a secure blockchain - this makes them suitable for validating the authenticity of physical objects. For example, the Robert Mondavi Winery created a limited-edition series of exclusive porcelain wine bottles. Loyal customers were invited to purchase these in advance using NFTs. At the same time, the NFT was used as a certificate of ownership of the designer bottles.
Branded, special edition NFTs are a way of transferring physical property into a virtual world to articulate a customer’s affinity with a brand. Shoe brand Jimmy Choo organised the launch of its first NFT through an online auction. In addition to a digital sneaker created by the artist Eric Haze, the winning bid also covered a unique pair of actual sneakers. When program members start trading digital assets in secure blockchain-based programs they are literally investing in loyalty. NFTs have the potential to develop into a loyalty currency that lets members connect with brands and express their relationship with brands while moving seamlessly between physical and virtual realities.
The interoperability of NFTs allows the creation of scalable inter-connected loyalty ecosystems. This contributes to the potential of offering rewards that reach further; members can spend their points earned with one hotel chain with other hotels, retailers, cinemas and restaurants. This will certainly increase member satisfaction and brand value.
While there are many more examples of loyalty marketers’ maiden voyage into the metaverse, it’s still a case of scratching the virtual surface. At Motivforce, we will continue to monitor what the concept has to offer for loyalty programs beyond the technology hype. And we will approach it as a strategic learning journey, helping our clients to reach a loyalty frontier that offers innovative ways of inviting customers to engage with their brand.
