The adoption of non-fungible tokens has become a practical entry point for users to join the crypto economy, mainly driven by their respective fans and the interest-centric nature of the tokens.For example, if you are a big fan of LeBron James, you can understand why “The Block” of the 2016 NBA Finals was Valuable on NBA Top Shot Don’t understand blockchain. But when it comes to brands, stablecoins are likely to be the biggest entry point.
Reimagine bonus points
The cost of selling a brand to existing customers is lower than the cost of acquiring new customers, which is the main reason for more than 90% of companies Have Some type of customer loyalty program. Rewarding points is one of the most effective ways to increase customer loyalty and revenue. For example, Starbucks Rewards is one of the most successful reward programs.With more than 19 million members, redeem points responsible It accounts for nearly 50% of the company’s revenue. Starbucks uses the Starbucks Rewards Program to align with its business goals in a way that adds value through fun gamification and increases customer engagement.
Starbucks’ approach to the public is completely different from that of Neiman Marcus, who, through its VIP tiered reward program InCircle, pays more attention to status and exclusivity. As the level of InCircle members rises, they can unlock access to concierge services to help customers plan extravagant holidays or participate in popular events. An effective loyalty program is not a one-size-fits-all solution, but a well-customized program can work wonders for revenue, participation, and retention. The development of digital assets now allows brands of any category to provide their consumers with unique and memorable experiences.
Limitations of loyalty and reward programs
Although it is undeniable that loyalty and reward programs are an important part of the relationship between consumers and brands, they also have their limitations. Complexity, lack of liquidity, and interoperability are some of the main obstacles to extending loyalty and reward programs to more customers. The lack of clarity in planning rules has left a lot of value on the table.
According to a report According to a report published by Clarus Commerce, 75% of consumers expect to be rewarded for their engagement after purchase. This alone shows the need for innovation and creates a huge opportunity for brands to revolutionize the loyalty business.
In terms of liquidity, the use of most points and rewards is limited to the respective brand ecosystem; consumers cannot redeem them in another company.Hotel brands such as Hilton, Hyatt and Marriott allow points used For example, cash within a certain threshold. However, this is only allowed during hotel stays-in most cases, the value of points is different from U.S. dollars. Not to mention the limited dates or the limited number of rooms available for points. Due to the lack of interoperability of these programs, the dots are trapped behind a walled garden, restricting the flow of value. Obstructed value transfer and lack of cross-project communication can lead to reduced customer engagement and, in some cases, invalidate points.
If point systems are closer to cash in terms of spending power, they will be more successful. Although the degree of liquidity varies, it is obvious that brands that accept this change want to attract the attention of consumers by introducing as much flexibility as possible in the use of point currency.
Input: Branded stablecoin
Brand stablecoin is a digital asset with stable price, issued and supported by a specific or a group of brands, companies or institutions. Brand stablecoins can be directly embedded in consumer-facing applications, providing brands with a novel way to directly connect with customers and gain insights to regain market share from competitors. Since blockchain and cryptocurrency are still unfamiliar concepts to most consumers, it is essential to have a seamless experience, and users may not even realize that blockchain technology is powering the system.
Supported by secure and transparent decentralized ledger technology, brand stablecoins provide brands with marketing intelligence about their biggest fans. At the same time, brand stablecoins incentivize and reward customer loyalty. Brands can store the user’s purchase history on the blockchain, and then use the relevant savings for future purchases. It is similar to loyalty points, but less complicated, more fluid, and ultimately more useful. Other functions may include eliminating the need for credit cards and even providing interest in branded stablecoin savings to incentivize customers to hold.
A more bumpy ramp before takeoff
Although branded stablecoins are a step in the right direction, the tokenized reward system is still a centralized form. Third parties—in the form of brands, banks, or both—may emerge to achieve one-to-one stability and bridge the gap between traditional finance and cryptocurrencies. The benefit of this centralization is that it may provide users with a more intuitive experience, and they don’t have to download different applications or adapt to new processes. However, brands may find themselves having to make difficult decisions between a frictionless, concentrated user experience or a more bumpy, scattered entrance.
There is also a bottom line for brands to consider: due to expensive gasoline fees, coinage and redemption costs can be high. Coupled with the brand’s operating, auditing and compliance costs—plus interoperability with traditional banking systems—this can create expensive barriers to entry.this Uncertainty of regulations Make the water more turbid. Brands may need to decide to assume losses upfront for delayed future earnings. These are nuanced, mission-critical decisions that brands must make.
When receiving currency in their app instead of earning points, consumers will feel empowered and feel greater value. For many people, a brand is a status symbol. Suppose Gucci identifies you as an ambassador and airdrops Gucci tokens to you to thank you for using your “GucciCoin” public label to post positive information about the brand on social media. If you have a certain amount of “GucciCoin”, you can enter the elite community, whether it is physical space (exclusive events, concerts, in-store showrooms, etc.) or online communities.
Maybe you can even get premium or limited-edition merchandise drops that no one else can get, and you can show your status through NFT. Brand stablecoins are a win-win situation for brands and customers, enabling consumers to express their support, while brands increase participation and loyalty.
Branded stablecoins provide a gateway to an interoperable, liquid and frictionless future. One day, maybe soon, customers will have a digital wallet full of all their favorite brands, and a global ecosystem will open the floodgates for mass adoption.
This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should research on their own when making a decision.
The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Michael Gold He is the managing director of DigitalBits Foundation and the founder of GDA Capital. He has contributed to a number of blockchain ecosystems, including TRX, LRC and ONT. He also served as the first corporate blockchain developer at TD Bank Group, one of Canada’s largest banks.