What Starbucks’ wager on NFTs says about the way forward for loyalty
Over the previous yr, non-fungible tokens (NFTs) have turn into commonplace, with manufacturers incessantly tying them to digital perks, merchandise and unique experiences. Although the tokens have step by step been dropping shock issue, an upcoming push by Starbucks to tie NFTs into its lauded loyalty program might reignite some spark.
In a latest earnings name, the corporate teased a September launch date for the NFT tie-in, a transfer meant to draw new prospects to its loyalty program, which already awards free drinks and merchandise. The chain additionally hopes the loyalty replace shall be accretive to its core retail shops.
“This new digital web3-enabled initiative will allow us to build on the current Starbucks Rewards engagement model with its powerful spend-to-earn stars approach while also introducing new methods of emotionally engaging customers, expanding our digital third place community, and offering a broader set of rewards,” mentioned Starbucks interim CEO Howard Schultz in the course of the name.
Although full particulars of this system are but to be revealed, the announcement has created waves inside the advertising and marketing business. Starbucks’ loyalty program is an extremely successful part of its business, with over half its sales coming from its rewards members. Tying this system to the digital world and blockchain expertise underpinning NFTs might paint the best way for future packages.
“NFTs could make sense for loyalty programs because it is another way to interact with consumers,” mentioned Pedro Rodriguez, senior vp of progress and transformation at Horizon Media and head of its Chapter and Verse division. “With the depreciation of cookies, getting access to that first-party data [in other ways] is going to be critical.”
Some companies have already gotten a leap on introducing comparable ideas. Final December, Applebee’s launched an NFT-centric promotion wherein the proprietor of a one-of-a-kind digital picture unlocked a year’s worth of real-world purchases on the chain. Taco Bell and Domino’s are reportedly contemplating methods to tie NFTs to their loyalty programs, although, up to now, the manufacturers’ NFT promotions have concerned producing donations to their charitable arms.
Heavy betting on NFTs might assist enterprise for just a few causes, however on the core is the potential to market to youthful shoppers who’ve but to get in on Starbucks’ rewards program. If the technique proves profitable, different entrepreneurs trying to have interaction Gen Z might observe swimsuit.
“There’s a generation of difference between the use of Twitter and TikTok,” Rodriguez mentioned. “In the mobile space, there’s a generational break, and you need to begin to play in the spaces where the new generation is.”
Plus, the power for shoppers to commerce NFTs primarily based on their altering pursuits and loyalties might present a means for manufacturers to dump expensive balance-sheet liabilities.
“Points liability is a big deal,” mentioned Mary Pilecki, vp and principal analyst of buyer loyalty packages at Forrester. “The fact that an NFT can be traded means it has value. If I’m no longer interested in the product or brand, I can share that value more easily. … They are a value exchange between brands.”
As information privateness and entry turn into a much bigger problem, NFTs are additionally a means for shoppers to get one thing of worth for the knowledge they share with manufacturers. An NFT tied to loyalty rewards affords a tangible worth alternate that would make the transaction really feel worthwhile for each events.
“It’s a way to give data and get something in return,” Rodriguez mentioned. “A consumer will not want something from a brand unless it has something of value.”
Nonetheless, Starbucks could possibly be going through an uphill battle. In Forrester’s March 2022 Shopper Vitality Index and Retail Pulse Survey, 72% of shoppers mentioned that they had by no means heard of an NFT and have no real interest in buying or proudly owning one.
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