Customer Engagement on the New Internet

October 5, 2023

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The Future of Loyalty and Affinity Programs

In the realm of Web3, often referred to as the new internet, loyalty and affinity programs are undergoing significant transformation, and thus becoming potent assets for businesses. By leveraging the advantages of blockchain technology along with Web3 IDs, these programs have the potential to offer tailored and effortless customer interactions. Utilizing blockchain for services like analytics and automation, as well as for offering rewards, elevates customer satisfaction, encourages repeat business, and catalyzes revenue expansion.

Today’s Loyalty May Not Be What You Think

According to a 2023 PwC Customer Loyalty Survey[1], executives significantly overvalue the loyalty of their customers based on loyalty behavior metrics. The areas that showed the most congruence between what executives think their loyalty programs do and what customers say they do include the following: participate in the loyalty program, recommend a brand, and “mostly buy from or use that brand.”

However, many other areas used to measure loyalty showed gaps of over 50% between executive thinking and customer action, such as sharing personal information with a brand (customers 19%), subscribing to brand marketing communications (15%), and engaging with a brand on social media (12%). Since the pandemic, customer participation in loyalty and affinity programs has decreased Other recent negative impacts on loyalty include inflation, supply chain disruptions, and talent shortages.

How can the new internet help to build, or rebuild, strong loyalty and affinity programs for brands?

Explore Different Loyalty Programs

Leveraging the right type of loyalty and affinity programs, such as points-based systems, tiered rewards structures, and referral programs, helps brands appeal to their customers’ desired outcomes and provides feedback, analytics, and insights at a personal level.

To initiate a successful loyalty and affinity program in the new internet, businesses must work through the following steps: understand their audience, choose the right type of program, design the reward structure, implement the program using Web3 technology, tie it in with existing programs, promote the program, and measure its success regularly to make the necessary adjustments for success.

A flow diagram

Unlock Customer Lifetime Value

Loyalty and affinity programs on the new internet bring a multitude of benefits. Notably, they allow for a more interactive relationship with customers, which in turn, supplies businesses with an intimate understanding of customer behavior.

Customer engagement in Web3 does not require the customer to supply personal information, which builds trust with the brand. However, the analytics captured from Web3 interactions enable brands to tailor products and services, resulting in highly personalized experiences by recognizing individual and aggregated engagement and purchasing behavior. Consequently, a more engaged community is built within the brand’s ecosystem, enhancing customer lifetime value and, ultimately, revenue.

Understand Your Audience

Understanding your customers and the rewards that they want is important in building an effective loyalty program. In a blog from Ebbo[2], a loyalty solutions provider, 90% of customers believe that personalization is an area for improving reward programs.

With so many customers wanting more personalized offers and less generic or mass-targeted ones, using Web3 Identity protocols allow businesses to fine-tune their offerings based on individual customer behavior, as described above. This allows businesses to provide real value to their customers and tap into customer lifetime value.

Differentiate the Program

When it comes to retaining customers with loyalty and affinity programs, it is crucial to provide real value that goes above and beyond their expectations. This can be achieved by offering exclusive discounts, personalized recommendations, and tailored rewards based on their preferences and purchase history. Simplifying the enrollment and redemption process is equally important, ensuring a seamless and hassle-free experience for customers.

In the Ebbo blog, 91% of consumers feel that loyalty programs are too similar to one another, and many consumers feel that the benefits and rewards are not interesting to them, or that using their loyalty program requires too much effort. 82% noted that they want discounts, coupons, or cash-back on purchases, and other areas of value included free shipping, surprise rewards, members-only experiences, and express check-out for members. The number one reward that consumers want is discounts on purchases.

In providing value to these customers, making rewards more attainable is an opportunity for improvement. Rather than saving up points over time, customers want to be able to redeem smaller amounts for smaller rewards, and the ability to share points with friends and families or to give them to charities. Customers also want to be rewarded more for engaging with the brand beyond purchases, such as online reviews or responding to surveys.

These activities are easily achieved in a Web3 system, which can tokenize rewards beyond points systems and discounts, and enables customers to share their rewards with new customers. Recognizing and rewarding loyalty through tiered programs or surprise gifts further enhances the customer experience and incentivizes continued engagement.

Monitor the Success of Programs

Monitoring the success of your program is critical for its continued growth and improvement. To effectively measure progress, it is important to establish Key Performance Indicators (KPIs) that align with your program’s goals. Measuring customer engagement and monitoring customer retention rates can give you insights into the satisfaction and loyalty of your target audience.

Web3 technologies enhance the measurement of these programs by providing immutable and transparent tracking of user data without the need to store personal information, such as passwords or addresses. The record of transactions is easily auditable, secure, and enables user privacy. Web3 also allows for interoperability between different loyalty programs, particularly when brands form alliances to share rewards. Furthermore, Web3 has opportunities for automation, which ensures that customers receive rewards promptly and accurately, all while providing real-time reporting on customer engagement and rewards issuance.

Examples of Web3 Loyalty Programs

Several businesses have been successful in implementing loyalty and affinity programs in Web3. By leveraging the power of blockchain technology and code contracts (also called smart contracts), brands have created innovative programs that not only drive customer engagement and loyalty but also transform the way that customers interact with a brand’s physical and digital assets. For example, NikePlus Membership allows members to earn and redeem digital assets called Nike Swoosh NFTs for exclusive rewards and experiences, such as early access to new products and invitations to special events.

Starbucks Odyssey, L’Oréal Beautyverse, and American Express Experiences further demonstrate how brands are building Web3 programs into their overall rewards systems. For instance, L’Oréal Beautyverse provides exclusive rewards and experiences, such as personalized beauty recommendations and access to exclusive content, to its members.

These programs offer unique incentives, rewards, and opportunities for users to participate in the decentralized ecosystem, fostering a sense of community and ownership. Through these initiatives, these platforms are paving the way for the future of loyalty programs in the digital age.

The Future of Web3 Loyalty & Affinity Programs

Looking ahead, decentralized models, real and virtual experiences, and the use of digital and phygital assets are likely to shape the future of loyalty and affinity programs on the new internet. These technology enhancements empower users, foster a sense of ownership, increase transparency, and promote organic growth. The use of digital or tokenized assets in loyalty programs can also lead to residual revenue for the business if they are set up to be redeemable or transferrable.

Leveraging Web3 technologies in loyalty and affinity programs offers immense potential for enhancing customer engagement and retention. By staying ahead of emerging trends, businesses can cultivate stronger relationships with their customers, drive growth, and achieve sustainable success.


[1] PwC Customer Loyalty Executive Survey 2023

[2] Ebbo. “54 Loyalty program Statistics You Need to Know in 2023.”