Positive impact on sales and customer loyalty
NFTs are already being used successfully in the retail industry to increase sales and boost customer loyalty. This article shows concrete use cases of blockchain technology to achieve these goals.
The competition for the customer interface is becoming increasingly more expensive
The customer interface is defined as the sum of all customer channels and customer interactions. These have a significant influence on the purchase decision. During the digital transformation, a large part of this has generally been shifting to the digital world for several years. There, the choice of ways to reach the customer and place the company's products and services is seemingly unlimited. Thus, it is currently also a challenge for many companies to make the right combination and to generate enough touchpoints along the customer journey to achieve a sufficiently high customer loyalty.
All this leads to very high sales and marketing costs. Coupled with the rising expectations of the customer groups, which the GenZ in particular is setting in its consumer behavior, this task is made even more difficult. Most (potential) customers are quickly bored by traditional customer contacts and the attention span is getting shorter and shorter.
In 2019, for example, 84 billion euros were spent on experimental marketing to increase conversion in the retail sector worldwide, making it one of the largest marketing expenditures. Unfortunately, this no longer results in a 5:1 RoI ratio like it used to, and social media, influencer marketing, and paid advertising are also on the rise.
Why are NFT's currently gaining access to the retail industry?
To counteract the problem described above, NFTs are currently becoming an increasingly popular tool. They are a simple and comparatively inexpensive way to improve the brand experience, increase customer loyalty and differentiate from competitors. In addition, the functionality of a non-fungible token can be highly customized to the customer group. NFT projects can also be designed very differently in terms of effort, in analogy to the company's orientation.
On the one hand, simple structured projects can be realized, which allow a first step in this new world with little effort. On the other hand, it can also be used to establish sustainable customer loyalty programs. A big advantage of NFTs is that even after a simple start, the NFT can still be used if the project should be expanded. High coverage and direct contact with end customers often make it easier for many participants in the retail industry to get started.
Areas of application in the retail industry
In the following, some selected examples for the use of NFTs in the retail industry are presented. For individual advice, please contact us directly! You can also learn more about the basics of NFTs and the resulting added value for companies in the linked blog article.
The raffle as tool to generate word of mouth marketing
A concrete example of a simple first step into the world of NFTs is the raffle or sweepstakes. Here, one or more NFTs are raffled off as a prize among the participants. The big incentive to enter is that the NFTs are linked to a so-called roadmap, which includes various added values. For example, it would be conceivable for a collection of 100 NFTs, which has different rarity values, to be raffled off to (potential) customers. The example collection contains 75 normal, 20 rare and five epic NFTs, each of which is linked to corresponding added values and benefits. This not only creates a kind of "inner circle" of people who can enjoy the retailer's exclusive incentives, but also FOMO at the same time. The Fear of Missing Out often arises in the NFT sector among those who missed the raffle and thus do not have access to the company's roadmap, which at the same time can make for curious word-of-mouth marketing.
How well this tool works is shown, for example, by the various limited drops of various fashion brands, which have generated a very high attention and a lot of interaction with the brands on social media due to the shortage with the help of sweepstakes.
To additionally increase the engagement rate, the raffle can not only be carried out randomly, but can also be linked to a social media challenge, for example. In this way, the company also benefits from user-generated content and the community has the opportunity to influence the chances of winning.
As mentioned above, the NFT can continue to be used in the long term after the campaign. In the Web3 space, it is common to extend the roadmap, as Yuga Labs did with the Bored Ape Yacht Club, for example.
The NFT as a cost-efficient bonus program for customer retention.
Bonus programs like Payback, where customers can collect bonus points, are nothing new for a long time. In this area, NFTs in particular are taking retail to the next level of evolution. Because the NFT is based on smart contract technology and can therefore perform automated functions, these offer a wide variety of new possibilities when combined with a website and an associated Web3 interface. For example, tokens can be given out for certain member actions, which can then be redeemed for discounts, services or entry into raffles for exclusive products.
A key difference from previous programs is that the tokens are tied to the NFT rather than a user ID, as was previously the case. This brings with it a crucial incentive for customers. The tokens generated also directly generate value for the owner of the NFT, as this can be passed on/sold together with the tokens.
Here's a quick example:
Suppose I own an NFT from a lemonade company that gives me discounts on lemon flavored sodas. This NFT is well stocked with tokens due to my consumption. However, I would rather drink the orange flavored soda from now on. Now I can sell or trade my NFT on the secondary market for cryptocurrency to get added values of another NFT. Thus, all "investments" in the brand are sustainable on the part of the customer, which is a fundamental change. This creates a very strong lock-in effect in addition to the word of mouth marketing already mentioned.
A major advantage of implementing the bonus program by means of a so-called "token-gating" project is that, due to the blockchain, security is implemented directly. This approach can usually be implemented much more cost-effectively than a comparable Web2-Inhouse development and offers a faster RoI.
Integrate customer opinions in product development.
Another aspect of a retail NFT project can be in the direction of a decentralized autonomous organization (DAO). This is a structure to which only the NFT owners have access to participate in decision-making. This enables companies to develop and launch new products directly for and with the target group without having to spend additional money on market research. The fact that holders can even be rewarded for this with the tokens mentioned above creates added value for both parties.
All of these opportunities should be aligned based on the company's goals. For an initial project outline, we recommend a discovery workshop, which is briefly discussed at the end of the article.
Anti-counterfeiting with a Product Passport
Another application example is securing a product or service with a certificate. A major advantage of the blockchain is the counterfeit protection due to the decentralization and transparency of the individual transactions.
Thus, it is possible to link an NFT to a product, which provides information about the value chain, or at least about the manufacturer, to prevent plagiarism. The digital NFT can be linked to the physical product via an RFID tag. This means that the buyer can see directly who issued this NFT and can thus verify its authenticity. Furthermore, every customer is directly in possession of an NFT from the company, which can be used for the above-mentioned customer loyalty measures, for example.
This approach is already being used in other industries. For example, Bayer Crops has co-developed a blockchain platform to process and control seeds.
Successful NFT projects in the retail world.
Many well-known brands such as Coca-Cola, Burberry, Louis Vuitton, Adidas and many more have already implemented NFTs to benefit from the aforementioned added values, among others. Based on the added values and application areas, we are convinced that blockchain and especially NFTs with the right concept are an excellent measure to generate a very high benefit with little internal effort. In addition, the chances of success are strengthened by the unique opportunity now available to be among the first movers and gain a head start.
Jump-start with the Discovery Workshop
Before implementing an NFT project, however, a well-thought-out concept that is optimally aligned with the business goals as well as the target group of your company is essential for success. Since the topic is still very new, we recommend a Discovery Workshop in advance, which on the one hand imparts knowledge in the area of NFT, Metaverse, Blockchain and Web3 and on the other hand outlines a first project idea in a joint session. You are welcome to use the contact form below to arrange an initial, non-binding consultation with us. We look forward to your inquiry!