![]() Cryptocurrencies include tokens such as Bitcoin and Ethereum whose price is volatile, as well as stablecoins like USDC, which are pegged to a fiat currency. Cryptocurrency: A digital currency represented as a fungible token on a blockchain and secured by cryptography, protecting it from being counterfeited or double-spent.Nonfungible tokens (NFTs): Data on the blockchain that represents a title of ownership to a unique and nonreplicable asset (such as an art collectible).Fungible tokens: These tokens are made up of data on the blockchain representing assets that are non-unique and divisible (such as currency). ![]() Smart contracts: These programs run to complete transactions in response to several conditions agreements are free from manual input or manipulation of the program execution.Blockchain: The building block for Web3, blockchain operates as a distributed database or ledger across a set of nodes to maintain a secure and decentralized record of transactions.(See Exhibit 1.)Ī swirl of buzzwords and lingo follows any mention of Web3. The platforms however still controlled creators’ revenue streams in a centralized manner. Web 2.0 (2005–2020) was the platform economy, where networks and platforms enabled users to both read and create content. Web 1.0, which lasted from roughly 1990 to 2005, supported the information economy, where publishers controlled content and collected revenue and users consumed the content. Web3 brings together emerging technologies-blockchain most foundational among them-to offer users more control over their activity and interactions. Understanding Web3ĭiscussions of Web3 are often clouded by misunderstandings and hype, so it is helpful to clarify how this new technology follows past versions of the internet. This article explores challenges with existing loyalty paradigms, examines how Web3 technologies can be used in loyalty contexts, and offers a framework to help companies revive or boost loyalty offerings to energize customers. Businesses should avoid mimicking mainstream, short-sighted use cases, or worse, avoiding Web3 altogether out of caution. There is also meaningful utility in tokenizing transactions to strengthen cross-partner loyalty collaborations. Businesses can tokenize customer relationships via nonfungible tokens (NFTs) to boost engagement and activate communities. Utility-the services and features that a customer can access along with a digital asset-is vital to the success of Web3 loyalty offerings. Businesses must understand Web3 and the various options to boost engagement, because consumers will respond-but only to the right offerings. ![]() The activity across these memberships can be underwhelming, though active customer loyalty engagement has been stagnant at below 50% of enrolled programs in recent years. Customers are enrolled in more programs than ever before US consumers held upwards of 16 loyalty memberships on average in 2022, according to Bond’s Brand Loyalty Report. However, the answer is not always as simple as launching yet another loyalty program into an inundated market. As brands peer into a cookie-less future, they are eager to construct their own loyalty programs for first-party data collection to better engage customers-a function that Web3 serves with broad versatility. Regulators are steadily scrutinizing consumer privacy, and big tech platforms are limiting use of third-party cookies and setting up more stringent controls around data sharing. Web3 offers a range of ways for companies to revitalize their loyalty programs.Īt the same time, the wild shifts in regulatory and technology conditions are pushing brands to look at loyalty programs as reliable drivers of customer data collection.
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