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Web3 Loyalty Programs: The Secret Ingredient for Success in F&B

Web3 technology enables brands to more effectively target and segment their audience so as to provide specialized benefits/offers to holders of specific digital collectibles.
10/13/2023
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Loyalty programs are nothing new for major brands and chains. Incentivizing customers to bring repeat business to a company is a powerful way to expand and retain a user base. This has been implemented in various industries, and it has proven to be wildly effective in the field of restaurants and food services. However, loyalty programs are about to change, thanks to the advent of Web3 technology, which enables program members to have their contributions recognized and rewarded and to own their loyalty in ways not previously possible. Few industries are better positioned to launch these types of campaigns than that of food and beverages, and it’s time they start taking notice. 

How Digital Collectibles Are Already Redefining Loyalty

Digital Collectibles (also called NFTs) have only been around for a few years, but they are already being used to overhaul how businesses interact with, engage, and understand their customers. Existing loyalty programs often live in walled gardens and revolve around accruing points, requiring users to jump through certain hoops to obtain enough points to exchange for a discount on their next purchase. While recent studies have shown that 84% of customers are likelier to stick with brands offering loyalty rewards, only around 16% of these benefits are ever redeemed. Given this low redemption rate, it’s clear that the benefits offered and redemption options provided are not that compelling. This then begs the question of whether these programs will be impactful going forward without a fundamental change in how they are designed.

The benefits enabled by Web3-powered programs go beyond the classic “captive benefits” of points and discounts. They can include access to exclusive merchandise, “token gated” content or events, unique digital assets, better customer segmentation, and the ability for users to truly own everything they earn. Programs such as these give their participants new levels of control and autonomy, and businesses better engagement tactics and customer insights. 

NFT Promotions in Practice

Take fashion, for example, which has quickly embraced the benefits that digital collectibles and Web3 can bring. Companies like Gucci, who first entered the metaverse last year, are now rewarding digital collectible holders with exclusive physical products. Prada announced its first NFT foray in 2022 in collaboration with Adidas, which makes Prada’s release of its 42nd NFT collection in June all the more impressive. The digital assets are sold alongside their physical counterparts and have seen notable attention since their launch. Beauty brand KIKI World is building its entire business enabled by Web3 technology, allowing its community to vote on every product that is launched and be rewarded with digital collectibles that recognize and reward their creative input. If digital collectibles and web3-powered experiences can make such a splash in these industries, what’s stopping the food and beverage industry?

Bringing These Perks to the Food Industry

For years, various restaurant chains have offered unique benefits to customers who agree to sign up for their rewards programs. Names like Dunkin Donuts, Papa John’s, and Outback Steakhouse all offer loyalty services. Existing offerings have been met with considerable success, but these companies can go even further and offer so much more with Web3.

Promotions from food vendors can work much like they do in other industries. Web3 technology enables brands to more effectively target and segment their audience so as to provide specialized benefits/offers to holders of specific digital collectibles. Utilizing a Web3 wallet on a mobile device also makes these benefits much easier to redeem across multiple storefronts, regions that may have different operating systems, and even other brands in the case of cross-brand collaborations. For all of these reasons, industry experts project Web3 technology within the food & beverage industry will grow to more than $2 billion USD within the next decade.

There are, in fact, already some big food industry names getting involved. For one, McDonald’s has been jumping on the Web3 bandwagon with the launch of their McNuggets Land in the Sandbox and a drop of Grimace-themed digital collectibles that will unlock “exclusive treats in the future.” There’s also the fact that Yum! Brands, which owns Taco Bell, KFC, and Pizza Hut, has filed trademark applications surrounding digital collectibles, a virtual store, entertainment services, and even a digital restaurant. Precisely how these will convert into real-life promotions remains to be seen, but it looks like the campaigns launched so far are just the beginning. 

Loyalty programs are seeping into the beverage industry as well. Take GLASS, a groundbreaking, compliant Web3 community and loyalty platform for alcoholic beverage brands and enthusiasts, which offers loyalty rewards programs that provide an opportunity for customers to redeem tokens and unlock exciting brand experiences and gifts while remaining compliant with alcohol promotion laws.

Then there’s the fact that American chef Jeremy Fall has added “Probably Pizza” to his multi-layered “Probably a Label” brand, which has been built in collaboration with ALTS by Adidas. Probably Pizza’s goal was to create an exciting physical activation experience, where fans were rewarded with a rare collectible just for showing up, buying pizza, and engaging with this new brand. The campaign saw more than 1,000 rare collectibles minted in just a matter of hours and was regarded as a fantastic success.

The major takeaway is that it’s no surprise that these companies are beginning to get involved and roll out Web3-powered initiatives. The possibilities this technology can bring to all industries are only starting to be explored, and there’s no reason food service should be left out. In time, we’ll likely see a myriad of creative new ways that Web3 will be used in loyalty campaigns. Right now, we stand at the precipice of a much larger paradigm shift that will change the relationship between consumers and brands forever. 

 

About the Author

Tara Fung is the Co-Founder and CEO of Co:Create, an API-first community activation & rewards platform (powered by Web3) that enables brands to unlock the power of their community through true ownership. She previously served as chief revenue officer of Alto, a digital asset IRA custodian, and chief commercial officer of CommonBond. She is a graduate of Harvard Business School and the University of South Carolina.

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