NFTs Enhance Customer Loyalty: 6 Key Advantages of Loyalty in Web3

More and more frequently, we come across concepts related to the cryptocurrency universe, including the world of NFTs and digital art. How much do we know about NFTs and Web3? Understanding their functioning can be a challenge, but it is not unattainable.


In this article, we explain what NFTs and Web 3 are and how we can use them to enhance customer loyalty. Understanding these concepts is crucial as we delve into a world that may seem distant but is approaching us faster and faster.


What are NFTs?

NFTs, or Non-Fungible Tokens, are unique digital assets that represent the ownership or authenticity of a digital or physical item through a record on blockchain technology. What makes them special is that they are indivisible and cannot be exchanged for one another on an equivalent basis, unlike cryptocurrencies like Bitcoin or Ethereum, which are fungible and can be exchanged with the same value.


NFTs are used in various fields such as digital art, video games, entertainment, digital collectibles, and more, to ensure the authenticity and ownership of unique digital items. Each NFT has a value and uniqueness that sets it apart from others, making it an important tool for tracking the ownership and origin of online digital assets.


What is blockchain technology?


Blockchain is a distributed ledger technology used to securely and decentralize the public record of transactions. It functions as a digital ledger that records all transactions in sequentially linked data blocks, creating a chain of blocks. Each block contains a set of transactions and a reference to the previous block.


Key features of blockchain include:


  • Decentralization: Information is stored and verified on multiple nodes or computers rather than a central server. This enhances security and resistance to censorship.


  • Security: Data on the blockchain is protected through cryptographic algorithms, making it extremely difficult to alter or counterfeit records.


  • Transparency: The blockchain is typically public, allowing anyone to view the complete transaction history.


  • Immutability: Once a transaction is recorded on the blockchain, it is virtually impossible to delete or modify, ensuring data integrity.


  • Trust: Blockchain technology reduces the need for intermediaries as transactions can be transparently and securely verified, saving time and costs.


What is Web3?

“Web3” is a term used to describe a vision and evolution of the current World Wide Web (Web2) towards a more decentralized, interoperable internet based on technologies like blockchain and smart contracts. Web3 focuses on empowering users and giving them greater control over their data and online activity while aiming to eliminate dependence on centralized platforms.


According to an article published by PWC, “Web3 fundamentally changes the way businesses are developed and how we connect with each other on a personal level. In fact, it is expected to transform the way we think about our online presence in the coming years.”


6 Key Advantages of Loyalty in Web

Now, having understood these concepts, we can link them to EX and CX to discuss Web3-enabled loyalty programs. This is an area of business innovation that promises to reignite customer loyalty and engagement, powered by NFTs.

As explained by Anna Noakes Schulze, Head of Community Experience at TheNTWK: ‘Web3 loyalty programs, backed by NFTs, offer a revolutionary approach to driving customer loyalty, enabling the creation of unique digital assets that can be used to represent various types of rewards, perks, and benefits.’



In TheNTW Summit 23 Report, they mention the following key advantages of Web3 loyalty programs:


1. Increased engagement

NFT holders are typically 3x more engaged than customers participating in traditional loyalty programs, leading to higher customer retention.

When it’s said that NFT holders are ‘three times more engaged,’ it refers to these customers demonstrating a significantly higher level of interaction and commitment to the brand or company compared to those participating in traditional loyalty programs.


2. Personalized rewards

NFTs allow to create highly personalized rewards and unique experiences that cater to individual preferences and make feel more valued.

This means that instead of offering generic rewards that may not be relevant to everyone, companies can tailor rewards based on purchase history, product preferences, online behavior, and other individual metrics. For example, a customer who frequently buys sportswear could receive an NFT that grants exclusive discounts on sports-related products.


3. Ownership and asset liquidity

NFTs give customers true ownership of their rewards, so they can trade, sell, or exchange them, adding a new layer of utility and value to the rewards.

When a customer receives a reward in the form of an NFT, they gain authentic digital ownership. This means they have exclusive control over that particular asset. Unlike traditional loyalty programs where rewards are often tied to specific accounts or platforms, NFTs are owned by the customer and backed by a blockchain, ensuring their authenticity.


4. Interoperability and portability

NFTs can be used as universal multi-brand loyalty cards enabling seamless cross-brand interactions and collaborations.

This means a customer can accumulate NFT-based rewards from one brand and then use those same rewards at another brand within the same NFT ecosystem. For example, a customer could earn loyalty points at a clothing store and then redeem those points at a café or an electronics store that participates in the same NFT system.


5. Improved security

NFTs provide transparency via the blockchain, reducing the risk of fraud while ensuring that rewards are accurately tracked and managed.

Each NFT-related transaction, such as issuing, transferring, or redeeming a reward, is immutably recorded on the blockchain. This means that once a transaction is recorded, it cannot be deleted or altered, ensuring the integrity of the reward history.


6. Granularity of data & insights

NFTs allow brands to interact with NFT holders on an ongoing basis and develop deeper insights into engagement with customers and brand fans.

NFTs provide a direct and ongoing communication channel between brands and their customers through digital assets. This allows brands to stay in touch with NFT holders long after the initial reward has been granted. They can send updates, special offers, event invitations, and more, which keeps the relationship between the brand and the customer alive.

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