Loyalty is dead.
I know what you are thinking.. What the hell. I thought Toki was a loyalty platform. I thought the whole point of this presentation was to learn about web3 loyalty and hear how this chump thinks blockchain is going to make loyalty better. Well, I have bad news for you. I can’t promise that. No one can. And the founders that are pushing that messaging haven’t looked at the data and can’t be trusted.
According to McKinsey, loyalty is a an all time low. In 2022, more US consumers were reported switching to different brands and retailers than ever before. When you think about it, this actually makes sense. With inflation at a record high, more people are looking for value; price is at the top of the list of consumers’ motivations for switching. “Novelty”, as a value, has risen in importance. Consumers are keen to try something different, making innovation an imperative for brands that want to win (or win back) consumers. Mckinsey claims, “Combining innovation with the perception of better value could be a particularly attractive offer.”
Loyalty in the web2 world has been incredibly boring anyway. The typical program goes as such:
No wonder these things aren’t working.
What if instead of loyalty solutions, an anti-loyalty solution is what your consumers actually want? Sounds alarming, but it’s not. The way we see it, providing incentives to get your customers to keep coming back to shop with you is absolutely table stakes. It’s a non-negotiable. If you aren’t doing it, your customers will take notice. But what makes a real, authentic impact is going above and beyond that to align with what your consumers really want - genuine connection with brands and flexibility to move between them.
You might be thinking, why would any brand want this? And I’m hear to break the unfortunate news that- It isn’t about what brands want, it’s about what consumers want.
When Amazon introduced two day shipping it was shocking. No one knew it was possible. Consumers loved it. But for brands it was difficult! Brands had to move heaven and earth to align with this new consumer norm. Now free two day shipping is now what all consumers have come to expect from their online shopping experience.
In an anti-loyal environment that bends to the interest of consumers, consumers have the ability to exchange loyalty tokens between brands.
A much, much higher quality understanding of their consumers. This new world is a marketers dreams.
Before: Nike knows Sasha because she shopped at Nike one time in 1998. She’s disappeared off the face of the earth since then.
Now: Nike knows Sasha shopped at Nike one time in 1998. But also knows that since then, Sasha has become a loyal Vuori shopper. She’s very socially active engaging with all their social accounts on a regular basis. However, her spend with them is only centralized around the holidays. She really cares about her health though because she also is a Tier 4 loyalist at Athletic Greens and Whoop. Based on prior data, it looks like Sasha is in her early thirties and lives in NYC. A prime customer demographic. Apparently one that was underserved last year which really hurt Nike’s top line. Nike decides to utilize a few Toki tools below to re-acquire Sasha and the rest of her highly lucrative cohort.
First off, they start activating personalization via cross-brand discounting. In the Toki portal, they create a few discount rules (or what we like to call alliances). When someone is holding over 1,000 Vuori tokens and at least 200 Athletic Greens tokens in their Toki wallet and they come to the Nike site, Nike is going to show them a Toki discounting pop up offering them 20% off their Nike order! That’s a bit more than most brands offer in the newsletter subscription offers, but its worth it to require a customer that is clearly so aligned with the brand vision. The offer is enticing and unexpected, exactly the type of thing to catch Sasha’s eye.
Now, Sasha has converted. The discount got her. At checkout she learns about Nike’s Toki loyalty program. In it, Nike has set up cross-brand rewards. Cross-brand rewards are discounts attached to reward tiers which are given to shop at other brands. She see’s that Tier 5 mega loyalists at Nike get a 15% discount at Athletic Greens forever and always! Wow, that’s huge for someone like Sasha that is an Athletic Greens subscriber! Nike has baked these discounts into their LTV costs. They’re totally fine eating the bill on these discounts if it means that Sasha will be trying her hardest to get to Tier 5. They’ve done the math and Tier 5 means $1000 in additional spend so giving a discount like this is no biggie.
Okay so Sasha is converted and starting to increase her LTV. But how does Nike find 10,000 more Sasha’s? Well, they recently developed a hypothesis that customer of this same demographic are big Whoop users. Seems like a no brainer, but worth testing. So for the month of May, they create another alliance with Whoop, where anyone that has Whoop tokens in their wallet is allowed special access to Nike World - a token-gated shop where Whoop users can get free Nike products with their Nike or Whoop tokens. All the products are sub $20 so the CAC checks out.
Nike likes the idea of this cross-brand gating and token spending combo. Super novel. Is Sasha going to feel left out? Maybe there is a way to use this with her too so she doesn’t feel left out and she sees the value in playing the loyalty game. Tier 5 is a long way to go! Maybe they can incentivize her along the way. They set up a gating rule (like above) where Tier 3 loyalists can gain access to Nike World as well so they can exchange their Nike tokens for free products from alo, Whoop, Athletic Greens and more. Again, this is a very novel idea. Today, if you collect loyalty points, they don’t unlock anything cool. Imagine a tomorrow, where when you collect loyalty tokens you can spend them on free product, and it doesn’t have to be on product with the brand you shopped at. Sasha starts spending her tokens while constantly aiming to level up her loyalty tier!
Now, sometimes Sasha isn’t loyal to the Nike store. She goes to visit her parents down South and the closest place she can find Nike sneakers is the local Dick’s Sporting Goods. Now, Nike wants to make sure that their customers are getting benefits no matter where they shop. Sure shopping directly online or in-stores is great, but revenue from Dick’s Sporting Goods isn’t so bad! In order to increase that revenue, they get Dick’s onboard with Toki. Dick’s creates a multiplayer token rule in their Toki portal so that every time someone makes a purchase at Dick’s and it’s of a Nike product, they are getting rewarded 5 Dick’s tokens for every dollar spend and 2 Nike tokens for every dollar spent. Finally, a way to incentivize retail purchases with multi-token issuance. Sash is delighted.
Lastly, Toki has an exchange network where users can exchange their tokens from one brand with another. Nike decides that being a part of an open ecosystem isn’t really their thing. However, being a part of a cohort of the 10 top brands in retail, that’s something. They create an exchange rule with Sephora, Starbucks and Starbucks. Sasha is pumped.
The common thread you will see here is loyalty is no longer about loyalty anymore. It’s about alliances, playing a multiplayer game and driving home personalization based on digital asset collection and how employing these strategies can lead to smarter customer acquisition and retention.
Interested in diving deeper into the five Toki strategies for this new stage of loyalty? Email us at firstname.lastname@example.org