NFTs will bring mass adoption to loyalty, memberships, and ticketing.

Due to new challenges and a market downturn in the crypto market, many are turning to non-fungible tokens (NFTs) to see what the future of decentralization and blockchain technology will hold. NFTs, especially in the form of profile picture (PFP) collections, experienced a boom in sales in 2021 as people adopted them as a reflection of their digital identities and built communities as Web3, the next iteration of the internet, began to take shape. However, as trading NFTs has slowed down, the conversation has shifted to the long-term utility of holding on to these tokens.

Many brands are now exploring the creative use cases of NFTs and how these digital tokens can be utilized for more than just quick investment opportunities. Companies are looking at NFTs as a way to build stronger relationships between brands, creators, and consumers by tying rewards to long-term ownership. For example, GQ released an NFT-linked magazine subscription, while Sports Illustrated released an NFT ticketing program. Starbucks also launched its Odyssey Web3 loyalty program in beta in October, rewarding its most loyal coffee drinkers for digital engagement.

For some thought leaders, loyalty programs, memberships, and ticketing opportunities are the clearest use cases for NFTs and present a path forward for onboarding the most new users into Web3.

NFTs have found a place in loyalty programs, or points-based systems, such as Delta Airlines’ Skymiles or makeup retailer Sephora’s Beauty Insider program, which reward customers for purchasing a brand’s goods and services. According to a July 2022 survey by LendingTree, at least 8 in 10 Americans are members of at least one loyalty program. NFTs are helping reshape the incentive-driven, transactional nature of Web2 loyalty programs by bringing digital identity and ownership to the table – new components of loyalty programs enabled by blockchain technology.

Tara Fung, CEO and co-founder of Web3 infrastructure company Co:Create, believes that NFT loyalty gives users opportunities to more closely connect with the brands they love. In building out new blockchain loyalty programs, Fung noted that there needs to be a careful balance between providing services to people already engrossed in Web3, often referred to as Web3-natives, without turning off potential new users.

For companies seeking to add Web3 loyalty benefits to existing goods and services, onboarding is often a pain point. It’s at the forefront for Blackbird, a restaurant loyalty program builder that offers benefits to frequent diners of restaurants. Blackbird’s NFT loyalty program is simple: when a diner eats at a restaurant supported by Blackbird, they immediately receive an NFT minted into a unique backend wallet marking their “proof of dining.” Each time they return to that restaurant, the NFT morphs into a new token with added rarity traits.

This is one of three pieces in a series about the path to Web3 mass adoption. Check out the case for entertainment and gaming.

According to Leventhal, the focus of Blackbird is on loyalty, connectivity, and creating a magical and exciting restaurant experience that builds long-term engagement and relationships with guests. Blackbird, along with other blockchain projects, aims to make Web3 technology more accessible to new users by removing the associated jargon. Companies such as Nike and Starbucks have also chosen to use terms like “digital collectibles” and “tokenized assets” instead of NFT in their marketing materials. Leventhal’s goal is to abstract the blockchain technology and terminology from the user experience in order to prioritize engagement in Blackbird’s branding. Leventhal stated that 99% of restaurant goers engage with Blackbird because they want to engage with a restaurant, not a Web3 company.

Non-fungible tickets

NFT ticketing provides a solution to some of the issues currently plaguing the events industry, such as faulty platforms, duplicate tickets, and exorbitant resale prices. David Marcus, EVP of music at Ticketmaster, explained that token-gated ticketing can help artists better control how their tickets get to fans. For example, metal band Avenged Sevenfold offered exclusive tickets to their live show for holders of its Deathbats Club NFT collection. Marcus added that NFTs are also being used as “mementos to commemorate and relive live experiences.” However, for NFT ticketing to evolve and grow, it requires activated communities in Web3, which are still growing in wider scale adoption.

Alfonso Olvera, CEO of NFT-gated experience company Tokenproof, explained that NFT tickets can provide benefits to holders, such as on-chain verification of ownership, rewards for attendance, artist royalties for secondary resale, and benefits from sponsors of events. While Web3 ticketing is still in its early development stages, Olvera is confident about the future of the industry, though he sees it as necessary to start with smaller-scale events in order to garner attention before the tech goes mainstream. However, notable players, such as Sports Illustrated, have already stepped into the Web3 ticketing space. The launch of SI Box Office, a self-service event management and blockchain ticketing platform that helps events create and sell NFT tickets, partnered with blockchain-software company ConsenSys, with the tickets all minted on the Ethereum sidechain Polygon.

SI Box Office aims to help traditional entertainment and media brands enter the Web3 community, while also bringing their audience along for the journey. Lane, a representative of SI Box Office, said that they are waiting for a global, iconic brand to come into the Web3 community and create something that everyone can use. They aim to help partners, strategic vendors, community events, artists, and teams onboard into the Web3 community and show all the amazing things that an on-chain experience can do for it.

Web3 Memberships and Community Engagement

Aside from loyalty programs, some brands are using NFTs as a membership for entry into an entire ecosystem. These ecosystems not only provide users with unique experiences or perks, but also create pathways for communities to flourish.

Web3 memberships vary in structure and execution across brands and platforms, whether it grants holders access to a decentralized autonomous organization (DAO) or a real-world social club. These memberships are powered by smart contracts that act as a “digital deed” to signify one’s affiliation to an ecosystem. When a consumer owns a membership NFT, they can feel like they own a piece of the brand, community, or ecosystem that the NFT represents. As a result, consumers feel more emotionally and/or financially incentivized to drive value to that ecosystem by purchasing more products, interacting on social media, or evangelizing to friends.

Tokenized memberships can also reward members for long-term participation in the ecosystem. Dynamic NFTs are tokens that develop over time as holders engage with a brand. Membership NFTs can enhance already existing loyalty infrastructure without scaring away mainstream users with technical language. KIKI World, a Web3 beauty company, has built a brand around a burgeoning community of makeup lovers who want to connect with the makers behind their favorite products. The KIKI World Membership Pass is an NFT that grants holders access to a DAO where they can pitch ideas for products, vote on upcoming releases, and attend exclusive events and experiences.

Bringing Brands to Fans with Web3

Tools like NFT loyalty programs, membership rewards, or token-gated ticketing provide a robust framework for brands and consumers to ease into Web3. Using NFTs, brands can build a community around their products and connect and reward their most loyal fans for long-term engagement. Brands can utilize these tools stealthily without turning off new users by focusing on finding the right fit for the technology rather than hopping on a short-term trend. NFTs don’t need to be marketed as the focus of a brand campaign or Web3 strategy, but instead can be used as a tool to enhance existing programs, inviting mainstream users into the fold in a meaningful and sustainable way.

Edited by Rosie Perper.

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