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Marketing Briefing: The future of NFTs in loyalty programs

  • Starbucks has been getting a lot of attention for its moves surrounding NFTs.
  • Will NFTs find their home in loyalty programs?

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Marketing Briefing: The future of NFTs in loyalty programs

In July, CNBC published a story on NFTs cryp-tip-toing their way into loyalty programs. More specifically, the story focused on Hang, a B2B startup that aims to help brands build unique loyalty programs through NFTs.

Hang's early clients include big names in the food and beverage industry, like Budweiser and Pinkberry. It’s also made deals with names in the music festival industry, like Bonnaroo. 

When it comes to brands' loyalty and rewards programs, NFTs seem to offer a certain level of flexibility, both for the brand and the customer.

One example Hang’s CEO and co-founder Matt Smolin mentions in his interview with CNBC is customers' ability to sell their loyalty perks if they choose in an NFT marketplace. Brands could then take royalty percentages for these resells. 

Another example seems to come in the form of personalization, according to another story by CoinDesk. To upsell to a customer, a brand could offer her an NFT-based reward that’s more in tandem with her recent shopping history, rather than something more generic based on the amount she’s been spending. They can differentiate the value to better fit the preferences of a specific customer.

Still, NFTs have gotten a reputation for being, well, ‘Not Fully Trusted’. (See what I did there?)

Case in point: in the time between May and July this year, it’s been estimated that criminals stole around $22 million in NFTs through social platform Discord, according to recent research.

Still, that hasn’t stopped big companies from exploring the technology. Take Starbucks, for example.

What Starbucks has been brewing

On September 12, Starbucks officially introduced its new member-exclusive digital community, Starbucks Odyssey, marking the coffee chain’s first dive into NFTs.

In an interview with TechCrunch, CMO of Starbucks, Brady Brewer (yes, that is his last name) said the company will be using Odyssey as a way to build on its existing rewards program – converting perks from grande to venti, if you will – as well as building more of a community around its products. 

Starbucks Odyssey will house activities dubbed ‘journeys,’ like interactive games, or challenges surrounding coffee knowledge. Users can earn NFTs by participating in these activities. These NFTs, in turn, can be used to retrieve various rewards. They can also be bought and sold in an Odyssey marketplace.

What’s all the hubbub?

NFTs allow the coffee chain to get a little more flexible with its offerings. The rewards, for one, can go past just getting free beverages. They could range from a coffee martini making class to a trip to Starbucks’ coffee factory in Costa Rica. Then, of course, there’s the fact that consumers can sell these NFTs if they wish, giving them more leeway.

Another thing that Brewer points out is the opportunity NFTs present in getting consumers to participate in activities they might not have otherwise – for example, trying out new Starbucks products to earn more tokens.

Food (or coffee) for thought

Despite building something new using NFTs, Starbucks is staying away from the actual term ‘NFT’. Rather, it’s calling these tokens ‘journey stamps’. 

“It happens to be built on blockchain and web3 technologies, but the customer — to be honest — may very well not even know that what they’re doing is interacting with blockchain technology. It’s just the enabler,” – Brady Brewer, CMO of Starbucks, to TechCrunch.

Is the NFT’s destiny to be the behind-the-scenes enabler for marketing experimentation? 

That is the question…

Three questions on tokenized loyalty programs with Lauren Pietersen, director of products and partnerships at Merkle

In this Q&A, Lauren Pietersen, director of products and partnerships at Merkle, a customer experience management company, dives into the challenges, potential and future of tokenized loyalty programs.

What are the challenges with offering tokenized loyalty programs? What are the risks?

There are two primary challenges with tokenized loyalty programs: the program must be grounded in a company’s long-term loyalty strategy (rather than using Web3 technology as a splashy headline-grabber without staying power), and the tokenized components of the program need to be easily accessible and understandable for the average consumer. At this point in the adoption cycle, most loyalty program members will be unfamiliar with the concepts of crypto wallets, smart contracts, minting, burning, and even NFTs themselves, so a well-designed tokenized program will allow the user to participate and benefit without having to understand these nebulous topics.

Do you see tokenized loyalty programs replacing today's loyalty programs?

Tokenized loyalty programs won’t replace loyalty programs; rather, they will enhance them. While evolving, loyalty programs need to remain accessible and understandable to consumers and brand loyalists on all points of the technology adoption spectrum. Using tokenized loyalty as an enhancement allows less tech-savvy brand loyalists to remain in a traditional Web2-based program, while more tech-native users can enjoy the benefits of the Web3-enabled programs.

How have consumers been responding to these programs? What will it take to make this catch on?

There are few examples of true tokenized loyalty programs in production to date, but Starbucks’ public announcement of their Odyssey program on September 12 is garnering major press and public attention and excitement. The program waitlist is open, and Starbucks Rewards members are eager to see exactly what awaits them. It will take a major brand mover in the loyalty space, such as Starbucks, to push other brands forward who may have been hesitant to invest in or test a Web3-based program. One thing is clear: while the hype of art-based NFTs may be cooling, Web3 technology is not going anywhere. It’s becoming greener, and it underpins a number of increasingly sticky and important concepts and technologies, such as decentralized autonomous organizations (DAOs) and asset trading, with more big name financial organizations planning for an undeniable future reliant on digital assets.

What we're reading

Bank marketers talk data analytics (Banking Journal)

The art of storytelling in bank marketing (The Financial Brand)

The Environmental Working Group launches a campaign against Bitcoin mining (Coin Journal)

Looks like that NFL marketing campaign was the right move for SoFi (

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