27 million people will soon have a chance to get an NFT for the first time.
Starbucks announced last week that it will be combining its loyalty rewards program with Web3 technology. The venture, called Starbucks Odyssey, will allow its nearly 30 million rewards customers to earn and purchase digital assets via NFTs as well as gain access to experiences and perks.
Of course, Starbucks' move into the blockchain means a lot more than collecting token-based freebies for drinking coffee. It signals the larger trend we’ve been following of brands making big bets that Web3 is the future for not only customer loyalty, but engagement overall.
We spoke with branding guru and Founding BFF Kat Cole in June about the emergence of big consumer brands in Web3 and here are some highlights from that conversation:
“It was about four years ago. I was still at Focus Brands, very lightly dabbling in crypto… I was running the multi-channel e-commerce licensing CPG division and I remember on Twitter, the founders of Litecoin started stalking me and trying to get me to get Cinnabon to take Litecoin as payment in all of our malls. And I was like, “Who are these guys?” I saw Burger King doing an experiment with Litecoin. So, I thought, I'm not nuts. I'm not some crypto-lady running Cinnabon trying to make my crypto dreams come true with my cinnamon roll company.
And then it happened again in 2020. The minute I saw the PFPs and the collectible NFT projects, it was so obvious that that is something that could unlock and modernize loyalty, membership and rewards. So even if Web3 only brought loyalty, membership and rewards, think Starbucks points, Hilton points, your Kroger card, even if that became what it is, that would be a lot. But now being digitally commemorated and fully transparent on the blockchain, that was the next obvious use case to me for Web3 for consumer brands.”
“I'll take two components of Web2 life that are evolving into Web3. One component is the idea of membership, which we might think of as loyalty programs, points or rewards. Some way that we get value for our participation with a brand and there is either the surprise and delight formula, you spend a lot, you become a gold level, we send you special coupons. gifts, benefits or perks. And then there's earn and burn, right? You're literally earning points that you then burn for dollars, and both of those are yesteryear ways of me participating in some tiny way as a consumer in the value that I create.
What that did for loyalty programs is it created a direct relationship. A more intimate one between me, the consumer and a brand. Because now you have my email you have my purchasing behavior that I'm not only allowing you to track, demanding that you track, so that I get credit for it and now you know more about me. Now you can go fund more customers like me. That’s Web2.
The other is this idea of how I can own a piece of the business I support now. Angel investing is a way, but that isn't accessible to everyone. I could also own stock and equity in a business, but these are pretty highly regulated ways and not accessible.”
“Both investing in a company and the idea of participating in an app or a digital membership program are a little bit of a black box. When we go to the blockchain, where every transaction and action is being validated by thousands of computers, it’s all transparent and traceable. It’s also transferable. Right now, I can't transfer my Starbucks card to someone else very easily.
The blockchain being fully transparent as a foundation, unlike the systems of the past, then, it layers on a digital commemoration of my membership and loyalty instead of having 30 separate apps on my phone. It becomes this discoverable and public, if I choose to be doxxed, archive of the brands and the projects that I believe in. There are a lot of things in my wallet that I'm incredibly proud of and that I affiliate with and that are my tickets to membership programs and to loyalty and, what you could argue, as a modernization of loyalty programs. And for those that are connected to some value, it’s also owning a piece of something that is at the very beginning of having a value asset of some type.”
“I'll start on a continuum because it is important to recognize there's also a middle ground. What we like to call Web 2.5 or “purple pilling,” which is you basically put a Web3 skin on Web2 behavior. Some people don't have the full capabilities, or desire, to launch tokens or DAOs or fully manage a community. For example, layer on an NFT as a digital commemoration of your participation in a brand's one time event. Let's pretend Athletic Greens puts on a wellness festival and we issue a digital ticket. Instead of it being an ugly, weird QR code, it's a piece of art. And that piece of art is a unique, non-fungible token. It gets you into the festival and you also now have it in your wallet. If I wanted to, in that scenario, we could stop there. It's just a cool digital ticket.
I could take it one step further and say this NFT that you have in your wallet, that was the ticket and the proof that you were there, which is kind of cool amongst the community. A month later, we are going to connect people with that NFT and ask people to submit their addresses if they would like a special gift from Athletic Greens sent to their home.
You start to get a sense of how this could be very simple and very basic, and if we chose and had the capabilities to do it well, we could start layering on what people call utility or value that starts to then have people thinking, “Oh wait a minute, I want to hold on to this NFT in my wallet because it's key to community.” Now we have real connectivity amongst our members that radically transcends our product or our NFT. And that community is the power.”
“I'm grateful for the courageous brands that are willing to do everything from cringe to crush in this space and teach us what to do and what not to do. I want to see more from Adidas, Nike, LVMH, Starbucks and more from Chipotle. They not only will teach the industry, they will bring the masses along.
I'm surprised we're not seeing more from sports teams. I'd love to see more athletes, more sports, more digital commemoration. I mean, what else could bring the masses along faster than that? Hundreds of billions of sports fans around the world in the developed world, so I think there's a lot of untapped potential in the world of sports, especially because of sports and and I would. I would add entertainment because of their preexisting fan base and the ability for those teams or verticals or creators or stars in the space to go down many paths, whether it's launching digital assets in a game, creating a special event only for certain NFT holders or simply releasing a POAP from one of their concerts or events. There's so much going on here in the infrastructure space to enable this.”
“Participating in anything that's early is messy. The mess is obvious. Look for the magic.
It's why my BFF is so important to build Web3 in a way that puts more power in a more diverse community and has women and women- identifying participants and just diverse participants in web3 feeling comfortable and connected. This is our chance to build it very differently. It doesn't mean it's perfect. It doesn't mean that the trends and the belief system and Web2 don't immediately carry over. They do, but we're still building from scratch and so the mess is obvious. Look for the magic and bring your magic.
You can't let the mess define what you believe is the potential. It is always messy and confusing and overwhelming in the beginning, and there's a ton of jargon that's tough to navigate. Then eventually, it becomes commonplace. Eventually, we will just be using credit cards to buy NFTS and the whole wallet thing is going to be happening behind the scenes. I'm comfortable with the mess. I don't stay in it for a long time because it's not the highest and best use of my time, but I don't judge the space because of the mess. I look for the magic and then look for the builders within it.”
This article and all the information in it does not constitute financial advice. If you don’t want to invest money or time in Web3, you don’t have to. As always: Do your own research.
Caroline Fairchild is Editor in Chief at BFF
