Web3 and loyalty marketing | Will Starbucks’ NFT use case become a standard approach for companies to use NFT: HashHub Research | coindesk JAPAN
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*This article is an excerpt from the report of “HashHub Research”.

premise

In this report, we will examine the theme of loyalty marketing in the Web3 area.

* In addition, the loyalty described in this article is not the loyalty of the consideration paid to a specific right holder, but the loyalty (attachment, loyalty) that customers and consumers have to a specific brand.

[Exective Summary]

  • Review the main features of NFTs issued by branded companies deployed from summer to the end of 2021
  • “Starbucks Odyssey” announced by Starbucks is not a side project, but a “loyalty program” that strengthens existing businesses
  • Has Starbucks’ planned loyalty marketing changed or stayed the same?
  • UX Research Leveraging Public Blockchain May Change Previous UX Research
  • Aside: The Loyalty Marketing Dilemma (Innovation)
Looking back on Web3-based measures that existing brands have been working on

Over the past few years, companies have continued to search for new customer experiences, as well as business and product/service sales using smart contracts and NFTs.

In the summer of 2021, early NFT utilization cases became a hot topic, such as Coca-Cola, Budweiser, etc. issuing NFTs.

These initial use cases were nothing more than a transient recognition of existing brands using the hot topic tool called NFT, but from around the end of 2021 things will start to change a little, and the Web3 native community and major brands There have been cases of collaboration between

For example, major brand companies such as Nike, Tiffany & Co., and Adidas have implemented examples in the Web3 neighborhood, all of which can be said to explore the “relationship between companies and communities,” and consciously create a consumer experience called “Internet community.” It can be said that it is a model to capture.

It can be said that the efforts of Nike, Tiffany, Adidas, etc. have paved the way for new audiences and new user experiences through NFT.In other words“Identifying New Personas”and frontier exploration named virtual space (or metaverse)“Side Project”is.

Needless to say, these are new market developments based on innovation thinking, and can be said to be strategies that expand existing brands into new markets.

That said, innovation does not only mean “acquisition of new customers and market development”; strengthening existing businesses targeting existing customers is also a type of innovation. In this article, we will mainly focus on the latter case.

Launch of Starbucks Odyssey to strengthen existing business and expand loyalty program

“Starbucks Odyssey” announced by Starbucks in September 2022 is attracting attention as a case aimed at strengthening existing businesses and expanding loyalty programs, rather than so-called “side projects.”

Apart from the previous cases, Starbucks will operate with a customer loyalty program that incorporates NFT as an element of a continuous program for customers. Named Starbacks Odyssey, the service is scheduled to be released in the United States first.

Source: Trends in NFT (Non-Fungible-Token) September 2010

Starbucks Odyssey is an extension of the existing loyalty program and aims to enhance the existing Starbucks consumer experience and loyalty marketing methodologies by leveraging NFTs. Louis Vuitton is exploring the approach of learning its own brand and increasing customer engagement using games and NFTs, but Starbucks’ method this time is the same, but this is another company. I feel that is an approach that presents a scenario for using NFT.

The consumption experience itself is believed to be one that allows users to log into the web app and experience Starbacks Odyssey using their existing loyalty program credentials. In other words, this measure includes existing users as targets. (Reference: Starbucks details its blockchain-based loyalty platform and NFT community, Starbucks Odyssey)

The underlying blockchain uses Polygon, which has a low transaction cost. In addition, the experience itself when purchasing NFT can be purchased with a credit card, and a bundle price (price including gas) is used to eliminate the complexity of gas charges. , is designed with the experience of existing customers who are not Web3 native users in mind.

The essential consumption experience itself seems to be conceived as something like a stamp (NFT) rally through participation in various activities called “journeys” (learning knowledge about brands and coffee, interactive games, etc.).

NFTs (stamps) are like points but not points | From purchase history-based to experience-based loyalty

The user experience itself will be in the form of adding NFTs (called stamps) to the existing point system.

Some may say, “So what, is that just a point that can be redeemed for cash?”

This is only my personal opinion, but I feel that the point so far has been mainly transaction-based loyalty programs. For example, as seen in RFM (Recency Frequency Monetary) analysis, conventional customer understanding aims to improve engagement by evaluating customers based on their purchase history of “purchasing a product.”

In contrast, Starbucks’ new loyalty program“experience base”It is an approach to evaluate customers and increase engagement.

by token incentive“Encourage behavior (experience) expected of customers”This has been done in DeFi, GameFi, 〇〇to Earn, etc., but Starbucks has adopted a similar approach.

What exactly will be possible? Let me give you a few examples.

  • Identifying new personas (shifted persona)
    You can expect to bring in users (new personas) who don’t pay you much, but who promote your brand. For example, if you advertise your company’s products on social media x times, you can get an NFT (stamp). It will be possible to shift to someone who will learn a lot.
  • Building programs around new personas
    Using a method like Starbacks Odyssey will not only use drink purchases, but also user data such as brand-related episodes watched, number of times advertised on social media, and so on. what does that mean? The value that a company gives to its customers does not necessarily have to be monetary or physical value (coupons). For example, in the case of influencers, the experience that they are specially given for advertising is more valuable than drink coupons, so it is possible to restructure the program to provide value that is different from the personas that have been used so far. You can. As a result, we can expect the realization of hyper-personalization (the possibility of taking measures based on a better understanding of customers).
Public blockchain-based UX research changes the conventional

In addition to the above expectations in the application layer, there is another possibility that I am hoping for.

It is that the traditional UX research can be greatly changed by enabling public blockchain-based transactions.

Originally, a loyalty program is a measure aimed at retaining existing customers, and UX research is conducted for the purpose of better understanding these existing customers. Based on the data obtained as a result, one purpose is to improve the consumption experience itself and, as a result, improve LTV (customer lifetime value).

In other words, loyalty marketing is developed based on customer understanding.

However, traditional UX research has basically tried to identify who the customer is based on their application layer (using their own database, Google Analytics, etc.). In other words, that’s the limit, we don’t really know what they’re doing outside of the application layer, and we don’t really know what other services they like to touch. Of course, you can feel like you’ve figured it out through surveys and “voice of the customer” via social media. However, it is an arbitrary “customer’s voice”, and the cost of collecting and quantifying it will be incurred separately.

The behavior visualized on the public blockchain cannot include all the data that can be obtained from the above questionnaires and social media, but what they (specific addresses) prefer to use outside their own service At least part of it could be something that can be collected as quantitative data.

We anticipate that this point will become an area that will develop in the future by SBT alone, VC alone, or a combination of them.

However, using on-chain history is not always a good thing. Here are some things to watch out for.

First of all, directly linking customer information held by the company with on-chain data is nothing more than managing PII (information linked to individuals) that has more value than before. From the perspective of security costs, there may be options such as not linking them intentionally, or anonymizing them and linking them yourself.

In addition, brand NFTs published on-chain lead to visualization of the on-chain behavior of fan users of competitors. It also leads to being published on If fans are visualized on-chain, it can make it easier to steal users strategically, like the vampire attacks that occurred in the DeFi area, so how to deal with this point should be considered in advance. You may need to consider it.

Digression: Is Web3-based measures taken by existing brands loyalty marketing, or is it a new business born from innovation thinking? What is Marketing 4.0 in the first place?

Marketing 4.0 advocated by Kotler is a marketing method that embodies the concept of 3.0.Hunting marketing aimed at acquiring new customersand after thatAgricultural marketing that nurtures fans (existing customers)is set to 4.0.

These differences also appear as differences in the length of itineraries drawn on customer journey maps. Before that, the customer’s journey (how to sell) until selling the product/service to the customer was mainly drawn, and in 4.0, the journey after selling the product/service (how to maintain it) was mainly drawn. increase.

One of the reasons why such methods have come to be emphasized is the change in consumer purchasing styles. Examples include subscriptions that allow you to experience and use a product or service for a specific period of time.

In sales forms such as subscriptions, it is not the end after selling the product, but it is necessary to focus on how to continue after selling, and whether the product or service will continue to be a product or service that you want to repeat in your daily life.

In other words, conventional hunting-type marketing aims to acquire customers regardless of whether they are new or existing, whereas the method advocated in Marketing 4.0 is based on maintaining existing customers, and then adding new customers on top of that, farming-type marketing. It is characterized by being

The dilemma of “loyalty” and “innovation”

Loyalty is a term that has become frequently used in relation to Marketing 4.0.

Loyalty, which is used in the context of marketing, is used in the sense of attachment to a certain brand, and is a concept that is emphasized in loyalty marketing following Marketing 4.0.

While the word “royalty” has become popular in the world, the word “innovation” based on Schumpeter’s theory of innovation has also become popular in the world.

Both words can be developed around “existing business”, but as I mentioned earlier,The word “loyalty” is developed based on the retention of existing customerswhileThe word “innovation” tends to be used in the name of acquisition of new customers (development of new markets, creation of new products and services)There is a difference. *Innovation described by Schumpeter does not necessarily refer only to the creation of new products and services and the development of new markets, but here it is expressed in terms of the nuances that tend to be “talked about”.

It is possible to create a design that combines these two words, but we must be careful that these two words may erode each other’s advantages. Let’s look at the dilemma that each word raises.

  • The innovation dilemma
    I think it’s a preaching to Buddha, but the dilemma of innovation is that as a result of focusing on the advancement of our own products and services to meet the needs of existing customers, we fail to notice customer needs in newly growing markets, It is a dilemma that shows the danger of reducing the company’s share in the future. Loyalty marketing is carried out with missions such as “making customers fans,” “customer first,” and “customer orientation.” , you will fall into the dilemma of innovation without noticing the new needs of non-existing customers. This can be said to be a dilemma that even small and medium-sized subscription-based businesses, regardless of large companies, may fall into if they think too much of existing customers.
  • Loyalty dilemma
    On the other hand, being caught up in the word “innovation” and focusing only on acquiring new markets and new customers can also become a medium- to long-term risk in business management. Although it is an extreme example, measures implemented under the pretext of “innovation” may sometimes become new customer acquisition measures that are developed on a temporary boom for the purpose of short-term profit. In some cases, this is nothing more than acquiring enthusiastic customers riding a boom rather than acquiring new fans of existing businesses (brands). An “enthusiast” and a “brand fan” are two very different things.Aside from the case where it is recorded as an already included cost incurred in developing new markets, in other cases, “enthusiastic customers” acquired by a temporary boom can be hot and cold. Therefore, from a medium- to long-term perspective, it can be said that these customers are highly likely to depart from existing brands. Marketing 4.0, which is based on customer retention, can be said to be a method aimed at accumulating water in a bucket, but on the other hand, acquiring new customers based on the premise of a boom (in the name of innovation) leaves a hole in the bucket. It’s like pouring water in the name of new customer acquisition. It also makes the water in the bucket temporarily cloudy, so the analysis results of just extracting a part of the bucket can confuse your own UX research. Loyalty marketing will need to pay attention to this pitfall.

Neither “innovation” nor “loyalty” is a value that can be said to be absolutely correct. It will be necessary to have a sense of balance to properly use both in the context according to the purpose.

For those who want to know more detailed NFT information

At HashHub, which has a track record of working with over 90 companies on Web3, archived videos of webinars explaining the history and latest trends of corporate NFTs for companies considering Web3 business can be downloaded for free. It is. We would appreciate it if you could use it as a material for your company’s NFT business consideration.

▼Click here to download archived videos
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HashHub Research: A subscription-type media service that provides high-quality and highly specialized research reports on Web3. In addition to report subscriptions for corporations, we also provide services such as Q&A and spot consulting using chat tools, and about 70 companies, mainly major domestic companies, have contracted for corporate plans. Learn more about corporate plans here.
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|Text: HashHub Research
|Editing: Coindesk JAPAN Editorial Department
| Top image: Shutterstock



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