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Brands are increasingly looking for a gateway to Web3 to connect with their customers. Whether it’s a presence in a virtual world (fast food chain Wendy’s opened a restaurant in Meta’s Horizon World) or digital goods (Coca-Cola launched virtual fashion items in Decentraland), companies are experimenting with attracting customers using these new environments.
Often they do this with a sense of FOMO – fear of missing out – as they race to capture the hearts and minds of Generation Z and Millennial consumers on these emerging platforms.
The gap between interest in Web3 and current experience presents an opportunity
Our recent survey of over 700 online consumers reveals they are indeed interested in using Web3 to interact with businesses: 51% said they would be interested in using these technologies to engage with brands. In the same breath, however, consumers say brands are not doing it right by delivering Web3 experiences that fully appeal to them, with 48% agreeing that companies are largely unsuccessful with their current initiatives.
This finding reveals an opportunity for brands: they can experiment with it immersive ways to satisfy consumers’ appetite for Web3 and to welcome new customers to their businesses through these new channels.
Develop a Web3 access strategy today
While there are many opportunities for brands using Web3, many companies struggle to determine what kind of experience they want to develop at this stage of the technology. The complexities and costs associated with developing rich experiences within these environments — including the risk that consumer preferences could suddenly change — have limited many companies in their efforts to experiment.
In particular, non-fungible tokens (NFTs) can serve as a stepping stone for brands to Web3 because they are immediately practical for business. They also include future utility for other Web3 applications in distributed autonomous organizations (DAOs) and the metaverse.
The shift from collectible to utility NFTs
In 2021, much of the excitement around NFTs revolved around collecting rare, one-of-a-kind NFTs to post as a profile picture or keep in a digital wallet.
On the brand side of the equation, this was reflected in companies launching NFT collection projects that buzzed the initiative, but largely resulted in little benefit to the collector. Since then, from a brand perspective, the conversation around NFTs has shifted away from being primarily used as collectibles utility NFTs that confer benefits on the holder.
Our consumer research reflects this shift.
To date, many companies have experimented with collectable NFTs to boost buzz as part of their Web3 initiatives. However, when it comes to including NFTs as part of the brand experience, customers say they would like to see a shift in this strategy. They indicate that utility NFTs (with added benefits) generate 5.1% more purchase intent than the traditional collectible NFTs launched by many companies.
Best performing types of utilities for NFTs
Customers also have specific types of utilities they look for in NFT-compliant branded programs, and the value businesses can bring them as a result.
Consumers say the main benefit they seek from utility NFTs is a way to be rewarded for their brand loyalty, with 37.4% saying it increases their brand engagement. Other key benefits users look for in utility NFTs: a way to support organizations that make social impact (27.8%), a brand community with exclusive offers (26.6%), and a way to purchase event tickets. obtain (23.9%).
NFT-enabled brand communities provide exclusive experiences
With the buzz around collectible NFTs fading, the next logical step for companies looking to attract Gen Z and Millennial customers is to build a brand community powered by utility NFTs.
NFT brand communities can not only attract new customers with digital assets, but can also provide additional benefits to deliver greater engagement and value. By packaging these benefits into an active brand community powered by NFTs, companies can provide ongoing customer engagement – earning brand loyalty as a result.
In these groups, brands can continue the conversation with their customers and offer special perks, benefits, and content to loyal members, such as access to special events, discounts, and behind-the-scenes interviews. An advantage of these private membership communities is that brands can engage NFT holders in a managed, brand-safe environment.
Specifically for brand communities, our survey of over 700 consumers indicated certain benefits would drive them to become more NFT holders, with members-only discounts at the top (43.1%), followed by access to special product features (late check-in) . in a hotel, for example) (31.5%) and access to exclusive merchandise (30.7%). These added, exclusive features create additional value for Gen Z and Millennial customers.
Take advantage of Web3 today
Web3 technologies provide compelling opportunities for brands to immerse their customers in virtual experiences and participate in decentralized ways. But because these technologies take time to mature, many brands view them as only available in the future. In the meantime, they are experimenting with one-off initiatives to attract Gen Z and Millennial customers on these platforms, so as not to miss out on emerging opportunities.
NFTs provide a practical stepping stone to Web3 for brands looking to experiment with opportunities that NFTs are now unlocking, and future-proof their strategies as virtual worlds mature and evolve.
The best news is that companies can start branded NFT communities today, with web technologies that users are adopting at scale. Whether using NFTs as part of loyalty programs, as social impact initiatives or for community building, these digital tokens offer an attractive way to attract Gen Z and millennial customers and keep them loyal to your brand.
Dave Dickson is the founder of PicoNFT.
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