Hailed as the next iteration of the internet as we know it, Web3 has recently taken a bruising in the public eye due to the sudden and rapid decline of the cryptocurrency trading market, one of the most publicly recognized aspects of blockchain technology. Boston Consulting Group (BCG) is making the case that Web3 technology is not over yet, and that the concept of tokenization could still lend tremendous value to businesses by boosting consumer engagement through customized loyalty offerings.
Research shows that today’s consumers are more open than ever to loyalty relationships, readily signing on to rewards programs that offer them discounts, personalized offers, and a fresh look at new products and services tailored to their unique tastes and habits. The average U.S. consumer is a member of 16 loyalty programs, but engagement has been stagnant in recent years. In spite of a highly fragmented loyalty market, Web3’s ability to support use cases linked to loyalty revenue streams, identity management, and wholesale payments could help bring businesses and consumers closer together, sparking new interactions.
Backed by decentralized, blockchain-based applications that empower users to directly own and monetize identity and content through the use of digital tokens, Web3 allows participants and creators to benefit economically without intermediary platforms. The use of tokenization could replace or complement traditional points-based systems, gamify interactions, track brand engagement, and reward loyalty with real-world benefits. Tokens could also allow businesses to easily plug partners and merchants into interoperable systems, and smart contracts could help automate the management of those relationships.
BCG recommends a framework for Web3 loyalty offerings grounded in making thorough use of the technology’s ability to tokenize, aligning a brand’s partner ecosystem with its loyalty partnership strategy, pairing utility to issued tokens to deliver value to consumers, and driving engagement by empowering loyal customers to help make select brand decisions. Companies will also have to be thoughtful in their choices of technology partners and digital infrastructure to make the most of Web3.
Though cryptocurrency trading is notably less popular than it was only a short time ago, its underlying technology still has a strong value proposition to businesses looking to deepen their relationships with their customers. There is no one-size-fits-all solution, but with top-down commitment from leadership, brands can use Web3 to complement or entirely reshape their loyalty programs for increased profitability.