How Web3 Technology Can Enhance Web2 Loyalty Programs

How Web3 Technology Can Enhance Web2 Loyalty Programs

6 months ago

Op-Ed: Implementing web3 technology into loyalty programs can offer interoperability, value creation, and provide support and access to brands in new ways.

How Web3 Technology Can Enhance Web2 Loyalty Programs
Consumers are moving away from their favorite brand. In fact, 71% of consumers admit they’ve switched brands in search of better deals. In this challenging and oversaturated market, brands are unable to maintain, nevertheless grow, their customer base.

The future lies in community-powered initiatives that foster mutual commitments and create a culture of customers with shared values. Implementing web3 technology into loyalty programs can offer interoperability, value creation, and provide support and access to brands in new ways.

A few key improvements that web3 technology and blockchain-based loyalty programs can provide include:

1. Interoperability: Currently, loyalty points or rewards are often restricted to specific platforms, limiting their usefulness. With web3, loyalty tokens can be standardized and easily transferred between different loyalty programs, allowing users to accumulate and redeem rewards easier.
In late 2022, VISA announced a partnership with ShopNEXT, a web3-specific loyalty program for Visa card holders to earn rewards on top of payment transactions which can then be used for digital shopping through a multitude of verticals.
2. Tokenization and Ownership: Web3 allows loyalty tokens to be tokenized, meaning they can exist as unique digital assets on the blockchain. This allows users to truly own and control their loyalty rewards which opens up possibilities for fractional ownership, enabling users to trade or sell their loyalty tokens on decentralized marketplaces.

Tiffany & Co provided token-gated access for CryptoPunks holders, tapping into their existing strong community. In August 2022, Tiffany partnered with Crypto Punks in August 2022 allowing existing CryptoPunk owners to have their own CryptoPunk Tiffany & Co pendant for 30 ETH.

3. Gamification and engagement: Web3 can enhance user engagement by introducing gamification elements into loyalty programs. By leveraging smart contracts and decentralized applications (dApps), loyalty programs can create interactive and immersive experiences, such as loyalty-based games, challenges, or competitions.
In 2021, Nike launched NIKELAND, a free sports immersion in the metaverse where users can earn tokens that translate to currency for digital apparel.
4. Community Engagement and Governance: Web3 supports the creation of loyalty program communities where users can actively participate in the program's governance and decision-making processes. Users within this loyalty program can propose and vote on program changes, influencing the direction of the program and fostering a sense of community ownership.
Many web3 projects have implemented decentralized autonomous organizations (DAOs) to further the development of projects and to put the power of decision-making directly into the hands of the users and consumers. For example, Decentraland, one of the largest browser-based metaverses, uses a DAO structure as the decision-making tool for MANA, NAMES and LAND holders. The DAO controls decisions such as harmful or offensive names not allowed in Decentraland, lists of notable locations to be promoted to users in the virtual world, the list of community run servers that host the world and more.
5. Programmable and Automated Rewards: With web3, loyalty programs can leverage smart contracts to automate reward distribution based on predefined conditions and rules. For example, loyalty tokens can be automatically issued when a user completes a specific action or reaches a predetermined milestone. This programmability reduces administrative overhead and ensures timely and accurate reward distribution.
Starbucks launched Starbucks Odyssey in September 2022 providing the opportunity for users to earn and purchase digital collectible assets that will unlock access to new benefits and immersive coffee experiences including special events and immersive Starbucks Reserve stores.

The future of web3 loyalty programs will be shaped by ongoing developments in web3 technologies, regulatory considerations, and market dynamics. As adoption and understanding of web3 grow, companies have the opportunity to reimagine loyalty programs, opening up more value to customers and fostering stronger brand loyalty.


Craig DeWitt, is the co-founder and Head of Product for Supermojo, an NFT payment solution. Prior to Supermojo, Craig was Product Director at Ripple, where he started the RippleNet payments business in 2015 and grew that product into the world’s first and largest cryptocurrency payment network for financial institutions. Craig has built wallet and custody experiences, enterprise payment protocols, and established rulesets powering billions of dollars in annual volume. While at Ripple, Craig was the Vice Chair on the Faster Payment Council, where he worked on faster payment steering, creating new payment networks separate from ACH from scratch.  Before Ripple, Craig earned an MBA from Stanford and worked on financial technology at Bloomberg.

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