NFT loyalty programs: A new twist on customer engagement

The longer brands explore the NFT market, the more smart use cases for these digital assets are emerging. One of the latest trends among retailers is using NFTs to engage customers and reward loyal ones.

Let’s see why brands are experimenting with NFT loyalty programs, and look at examples of brands diving into the marketing trend.

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Using NFTs to boost brand loyalty

Loyalty programs are an effective marketing tool for building long-term relationships with customers and giving them an incentive to keep coming back for more.

According to the 2022 Loyalty Barometer Report, loyalty programs have a huge impact on customer retention: almost 8 in 10 consumers are more likely to continue to do business with a brand because of its loyalty program.

However, in today’s highly-competitive and oversaturated market, it’s getting more and more difficult to create an effective loyalty program. With thousands of offers and products, it’s easy to lose customers’ attention and interest.

What’s more, modern loyalty strategies lack differentiation — they’re often easily imitated. Considering that consumers are flooded with similar offers from competitors, brands are revamping their rewards programs in order to keep their customers and lure new ones.

To create one-of-a-kind loyalty programs, many retailers are experimenting with NFTs. Benefits of investing in NFT-based loyalty programs include:

1. Incorporate bespoke elements into the customer experience to stand out from the crowd
2. Provide personalized offers for more effective engagement
3. Build a strong and enriching community around a brand

Research shows brands that test and learn early will be better equipped for when crypto and NFTs are at scale in the next blockchain-fueled iteration of the internet, Web3.

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How retailers build loyalty with NFTs

Many well-known brands are already testing out NFT-based loyalty programs.

In December, Starbucks launched a beta version of its blockchain-based loyalty program called Starbucks Odyssey. Through interactive activities and gamification, the program aims to expand the rewards customers can earn beyond the usual free drink such as access to special events.

Last fall at Paris Fashion Week, high-end fashion brand Balmain launched their NFT project “The Balmain Thread.” It’s an NFT-based membership program that will be available to 10,000 of the house’s most loyal customers and fans.

Members of the Balmain Thread community will get access to special house collections, exclusive events, and distinctive NFT products that tie its members together in a constant, unified thread.

This is a great example of how a brand can use an NFT-based loyalty program to retain brand fans and engage with them in a new memorable way.

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Prada pairs NFTs with high fashion

Loyalty and rewards also play a major role in Prada’s NFT strategy. The Italian luxury house has successfully introduced NFTs to their Timecapsule collection.

Launched in 2019, Timecapsule is a monthly, limited-edition drop of a ready-to-wear product, which is available to purchase only on the brand’s website for just 24 hours. Beginning last June, each physical product from the Timecapsule collection comes with a free NFT, giving access to exclusive benefits and experiences.

On top of this, the brand promised to gift anyone who previously bought Prada’s physical Timecapsule pieces with corresponding NFTs.

Linking physical pieces with NFTs not only adds extra value to the brand’s high-end fashion pieces, but also helps to build stronger bonds with its community.

Besides regular photos and videos, NFTs can contain immersive content, including 3D/AR and virtual try-on experiences, which allow brands to add extra value and use NFTs as a new customer communication channel.

An NFT-based loyalty program is a new way for brands to make their products more valuable, engage with consumers, build brand loyalty and awareness, and, as a result, get a leg up against competitors.