It’s not uncommon to read announcements of new brands and companies dipping their toes into web3. But in this steady stream of news reports, some stories just stand out.
Enter Starbucks and Soapy Joe’s.
One is a behemoth coffee company with a globally recognized brand. The other is a chain of car washes around San Diego. At first glance, they have little in common. But Starbucks and Soapy Joe’s provide fresh examples of how NFTs can be incorporated into a customer rewards program.
Initiatives by both companies show how NFTs and web3 tools can bring value to brick-and-mortar businesses. Even further, their novel approaches shine a light on how web3 growth tactics can spur a new paradigm in cultivating customer loyalty.
In mid-September, news reports described promising returns from an NFT-driven promotion by Soapy Joe’s, a chain of 17 car washes in Southern California. As part of its membership program, Soapy Joe’s offered special rewards, including specially designed NFTs, for people who went to multiple locations over the summer.
Each time customers visited four distinct locations, they unlocked a new tier of rewards, including NFTs for those specific locations. Participation required joining Soapy Joe’s membership program and providing a valid email address to receive instructions for claiming rewards.
NFTs with artwork reflecting the company’s existing branding were dropped into digital wallets created by the company on behalf of customers. For this promotion, NFTs were not able to be sold or transferred to other wallets.
From July to September, Soapy Joe’s distributed more than 10,000 NFTs to over 2,000 wallets. Emails about claiming NFTs had a 71% open rate, far outpacing the company’s typical marketing campaigns. Soapy Joe’s also reported a 10% increase in membership and an all-time high in the number of customers visiting multiple locations.
On September 12, Starbucks formally introduced Starbucks Odyssey, its blockchain-based customer loyalty program that will launch in late 2022. Odyssey is intended to complement the existing Starbucks Rewards program by expanding Rewards offerings and building community among Rewards members.
Starbucks Odyssey is being developed to appeal to customers with no familiarity with web3 but is housed on the Polygon blockchain. Users will be able to log in with their existing Starbucks Rewards information and will be provided with a digital wallet.
Rebranded as “journey stamps,” NFTs on Starbucks Odyssey will be earned by completing challenges or games. They will also be available for purchase with a debit or credit card for a bundled price, eliminating the need to have a crypto wallet or understand gas fees.
Journey stamps will be transferable between members, allowing for a secondary market to develop with all transactions recorded on-chain. Rarity points associated with NFTs will unlock not just in-store discounts but also unique IRL experiences and activities.
The Starbucks Rewards program currently has around 27.4 million members who are responsible for over 50% of revenue in the U.S. While the exact details and launch date for Starbucks Odyssey are yet to be announced, this program has the potential to immediately build upon an enormous and extremely active customer loyalty program.
Although news about Soapy Joe’s and Starbucks may have gotten lost among the headlines describing macroeconomic problems and weak NFT markets, there are multiple reasons why it’s worth taking note of these initiatives.
This news isn’t about buying a coffee or a car wash in the metaverse. Both Starbucks and Soapy Joe’s are driven by sales at brick-and-mortar locations. Their campaigns show how web3 tools can reach far beyond web3-native projects and provide a meaningful growth lever even for companies that are far removed from the tech industry.
Starbucks is a publicly traded international coffee goliath with one of the most recognized brands in the world. In contrast, Soapy Joe’s is a regional car wash company whose signature branding involves a kitschy air freshener.
That these very distinct companies are both revving up their customer loyalty programs with NFTs is just further evidence that web3 adoption isn’t coming, it’s already here. And it’s unfolding simultaneously across dramatically different operational scales.
Even further, it can be targeted to all types of customers. The fact that car wash customers—who are rarely thought of as tech-savvy early adopters—were so engaged by the NFT promotion speaks volumes about the potential for web3 tools to reach large and diverse audiences.
These are still early examples of web3 use cases, but they are likely to open the door to both imitators and innovators. In constant battles for customer attention and brand loyalty, we expect an increasingly broad range of companies to turn to NFTs and web3.
Tired: Punch cards.
Wired: NFTs.
But it’s not about novelty or a meme. It’s about ownership.
Ownership gives web3-based customer loyalty programs unique sources of value.
Beyond these immediate benefits, on-chain ownership facilitates interoperability that can turbocharge rewards programs. Traditional rewards programs depend on silos of custom internal databases. On-chain rewards provide an entirely new paradigm through instant and permissionless data integration.
For example, on-chain data makes it easy to partner with various third-party perks providers who can offer novel customer rewards to certain tiers of customers. Because data is visible on-chain, rewards holders could even receive airdrops, IRL event invitations, or other benefits independent of the company, like Starbucks or Soapy Joe’s, that actually coordinates the rewards program. As a result, moving rewards on-chain opens a whole economy of benefits for customers.
Finding ways to reinvigorate and expand rewards programs can help businesses of all kinds develop customer commitment to their brand. In competitive industries, brand loyalty can act as a sustainable moat against competitors. At the same time, better rewards can motivate interaction and spending, increasing customer lifetime value.
Web3 remains in largely uncharted territory, so there are limited priors on which to base a strategy for a web3 loyalty campaign. Companies will need to refine their approaches on the fly, and the most successful initiatives will learn to deploy data to maximize the value of their customer loyalty programs.
While many companies already use software like CRMs or CDPs to manage customer data, effective web3-driven campaigns will involve collecting, integrating, and analyzing varied types of information, such as:
Accurately gathering and managing these diverse kinds of data enables the creation of unified customer profiles that are detailed and well-rounded. Companies can see what other rewards programs their users engage with on-chain, which can identify potential partners and competitors. Companies can deploy all of this information within both their retention-focused loyalty programs and their targeted marketing for new customer acquisition.
Incorporating a wider array of data can drive more meaningful analytics to optimize the ROI from marketing and loyalty initiatives. For example, if an NFT-based campaign coincides with increased revenue, questions may remain about correlation and causation. Integrating data from on-chain transactions and social media activity within unified customer profiles can provide insight into cause and effect that can inform future campaigns.
In a landscape of dynamic web3 adoption and growth, customer rewards are an exciting use case with practical benefits for both companies and consumers. The initiatives of companies like Starbucks and Soapy Joe’s offer early examples of the power that web3 is bringing to customer loyalty programs.
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