Wonka’s Golden Tickets: NFT’s and the future of loyalty
Like many others, we have recently become excited about what is being referred to as “Web 3.0”. In particular, there are some very interesting emerging applications and ideas that we believe could have a big impact on loyalty programs and the way individuals and communities are incentivised in the near future.
Web 3.0 is perhaps best described by Chris Dixon, one of its leading figures, as “the internet owned by the builders and users, orchestrated with tokens.”
By “tokens,” Dixon is referring to one of the key features of blockchain technology. Blockchain tokens provide the ability to store and prove ownership in a distributed way, without the need for a centralised authority. In the same way that blockchain technology can be used to power a distributed digital currency like Bitcoin, it can also be used by a creator to tokenise a digital asset on the chain and allow it to be sold and transferred to a new owner.
NFTs, which stands for Non-Fungible Tokens (non-Fungible meaning that the token itself cannot be altered) are currently receiving a huge amount of attention as the embodiment of this new technology (Collins Dictionary just announced that NFT as their “word of the year” for 2021). NFTs are being used by a growing community of digital creators and artists to sell their work in a completely different way.
Token transactions can be subject to binding programmatic rules, which “live” on a blockchain, and which can continue to apply to any future transactions. These are commonly referred to as “Smart Contracts”. For example, a Smart Contract can be used to give the original creator or owner a percentage of any future sales value of their work. A creator could use this to benefit if their work increased in value on future sales after they had sold it.
While most of the best-known recent cases for NFTs are for digital creators and artists, there is also increasing excitement about their application in other areas. We’re particularly excited about their use as a new way to incentivise people and for building what are currently thought of as “loyalty programs” into the very core of businesses.
An analogy we’ve been using recently to explain how this could work comes from Charlie and The Chocolate Factory, Roald Dahl’s famous children’s book. In the book Willy Wonka, the eccentric chocolate entrepreneur hides golden tickets inside five of his company’s chocolate bars. The kids who find these tickets get access to his chocolate factory, a place nobody has been able to enter for many years, with a personal tour from Willy Wonka himself. During the visit, they get access to many of his new products and ideas.
In the most simple sense NFTs, and tokens more generally, are like Wonka’s Golden Tickets — they allow businesses to give unique benefits to a community.
In the world of NFTs and the blockchain, Wonka’s Golden Ticket could do a lot more. Along with giving you access to unique products, services and benefits (“visiting the factory, trying the mint sugar grass and meeting the Oompa Loompas”) it could also allow you to easily access benefits at partner businesses — Wonka Golden Ticket Holders could always get subsidized rides to the factory with Uber.
Bored Ape Yacht Club (BAYC) is one well-known early example in the web 3 community demonstrating how owning an NFT could give access to unique member benefits. If you own one of the limited number of “Bored Ape“ NFTs in your wallet you get access to the club.
Perhaps most importantly, and as explained in this thread on loyalty and tokenisation, tokens can be sold on the open market. If the value of a business, and consequently the value of its token’s benefits increases, then holders of the token can benefit by selling these tokens to others using the blockchain. With Smart Contracts, businesses could also benefit from future sales of their tokens to others.
Tokens and the blockchain provide a completely new way to build and incentivise communities and indeed businesses. We think many new businesses will be created with an initial group of token holders. These communities will be uniquely incentivised to help grow the business as a new type of “shareholder”, although one that has other legitimate rights rather than that of actual company ownership (traditional shareholders could also receive tokens that could be linked to their actual shares owned).
It is very early days in the web 3 and token space but brands like adidas are already starting to investigate NFTs and are creating collaborations with new Web 3.0 communities like the Bored Ape Yacht Club.
At Spaaza our goal has always been to incentivise people in new and better ways. It seems clear that tokens are going to be a very important new incentive technology that will open up many new opportunities and ways of building businesses and communities.
Charlie and The Chocolate Factory is also a commentary on consumerism and the sometimes unhealthy relationships between customers and the products they buy. However when used the right way we think good incentives can create more sustainable and better relationships between businesses and their customers and communities.
We’re looking forward to exploring these opportunities with our customers over the coming months. If you are interested in joining us, either as a member of our team or customer please get in touch.
