Posted by Non-fungible tokens (NFTs) were once highly coveted luxury artworks that provided access to exclusive communities filled with celebrities and high profile individuals. However, 2022 brought NFTs’ inherent volatility to light, witnessing a total drop of over 40% in total NFT market capitulation and a 90% drop in NFT trading.
Since the general public is now aware of the speculative nature of cartoon monkeys and ASCII pictures of owls, scrutiny towards NFTs is at an all time high. Mass adoption of NFTs will only be possible with compelling utility and true value.
So how can NFTs provide value?
All NFTs are registered on The Blockchain, a decentralized, distributed public ledger of digital transactions, allowing for public verification of the authenticity and ownership of registered tokens. NFTs can be transferred, sold, or simply kept in one’s wallet, and are burnable or redeemable, which ‘deletes’ it from The Blockchain. This fundamental structure and interoperability allows corporations to take advantage of a specific use case: NFTs are perfect for customer loyalty.
In our research we’ve highlighted three major brands that have already delved into the realm of NFT loyalty. Let’s take a look at their current successes, failures, and methodologies.
Starbucks Odyssey
With their recently released web3 loyalty platform, Starbucks Odyssey, and their periodic NFT drops, such as the Siren Collection, Starbucks has taken a bold step into embracing NFT loyalty.
Odyssey assumes zero prior knowledge in web3, and the platform features an integrated NFT wallet for all of its users. It also offers a self-contained marketplace, made possible through their partnership with Nifty. Notably, Starbucks does not refer to their NFTs as “NFTs”, and instead uses the term “Stamps” in order to provide peace of mind to their fans that their Stamps are not linked to the ponzi-like nature of typical NFTs.
Odyssey Stamps provide real value, as earning a Stamp awards the holder with 1,500 Starbucks Rewards points which can be redeemed, transferred, sold, or simply kept in one’s wallet.
Stamps are obtained in one of two ways: through the completion of “Journeys” within the platform, or by purchasing a Stamp during a scheduled drop. Journeys consist of a series of quests including Starbucks trivia, virtual tours, and weekly coffee purchases that must be completed in order to receive the Stamp. The scheduled drops are announced and open to all Odyssey members during a set time period of which only a limited number are available.
After obtaining a stamp whether earned or purchased, fans are awarded a set number of rewards points, which can be redeemed or sold to another fan.
Nike
Nike is by far the most active and successful company involved in NFTs and Blockchain Loyalty. The acquisition of RTFKT Studio as well as their founding of the .Swoosh web3 platform is indicative of their commitment to NFT loyalty initiatives.
Notably, the acquisition of RTFKT studio also included RTFKT’s highly successful CloneX NFT Avatar collection. Each of the 20,000 NFT Avatars reached highs of over 8ETH in floor price, or roughly $8000 USD at the time, amassing a whopping $160 million total value at its peak. Each CloneX NFT gives the holder commercial rights to their avatar, and the 3D files are available for download which can be uploaded into any modern modeling engine such as Blender or Unity.
That being said, the current value of each CloneX has crashed to a 3ETH floor price at the time of writing, or roughly $5500 USD. Regardless, the price remains significant and holding a CloneX provides a number of advantages. In February 2022, Nike awarded all holders of a CloneX Avatar with a MNLTH NFT which eventually transformed into CryptoKicks NFTs. CryptoKicks NFTs is a collection of digital sneakers that are redeemable for their physical counterparts. Remaining in line with the concept of The Blockchain, CryptoKicks NFTs are able to be transferred, sold, held, or redeemed at the holder’s discretion.
Nike has also founded and released the beta version of their new .Swoosh (dot swoosh) web3 platform. Nike plans on developing .Swoosh into a social media marketplace, providing a centralized platform of digital NFT sports apparel as well as community-driven initiatives. In January of 2023, Nike opened up its first community co-creation contest #YOURFORCE1, giving fans the opportunity to design digital versions of Nike Sneakers to be released as part of its first signature collection of NFT sneakers. The winning designs are given $5000 cash, design opportunities with Nike, as well as royalties for all sales of their design.
Yves Saint Laurent
YSL is no stranger to the concept of NFT loyalty, having already released a variety of web3 items such as the YSL Beauty Golden Blocks, YSL Beauty wallet, and their exclusive web3 community, only accessible through the ownership of a YSL NFT.
Similar to Starbucks, the YSL Beauty Wallet is integrated with their web3 platform, allowing for unfamiliar or skeptical consumers equal access to any web3 initiatives. The web3 platform provides a number of rewards and exclusive perks to all members, although the specifics are kept tokengated and thus not commonly known.
YSL continues to offer opportunities to enter their community by integrating randomized NFT rewards into their products. Their Black Opium product line features these rewards, offering buyers of any of their Black Opium perfumes a chance of obtaining an NFT, granting them access to the YSL web3 platform.
So what’s next?
NFTs have a justifiably notorious reputation of being over-glorified and overpriced mediums of luxury art. However, this oversimplification of NFTs detracts from its fundamental nature of being easily transferable, sellable, and redeemable. The intrinsic value of NFTs does not lie within its art, but within its use.
Many brands and corporations are beginning to realize the conceptual value of a non-fungible token, and have taken strides in integrating them into their loyalty initiatives. This continued drive of harnessing the true capabilities of NFTs will hopefully redeem them in the eyes of the consumer and we will see true, compelling value in the future.