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Loyalty programs today are boring, and loyalty as a whole is on the decline and with changes in targeting and acquisition, loyalty has never been as important as it is today.

Loyalty programs have become monotonous and unexciting. The traditional formula and rewards are predictable and unoriginal, contributing to the decline of loyalty as a whole. However, in a time where distribution methods are constantly evolving and acquisition costs continue to rise, loyalty has become more crucial than ever before. To create a future of loyalty, we must start from the ground up and revolutionize the way loyalty programs are designed and implemented.

Despite having an average of 16 loyalty programs in 2022, consumers in the US exhibit low engagement rates of less than 50%, a trend that has persisted for the last decade. The challenge of acquiring and retaining customers has become increasingly difficult and expensive, especially with the shift towards online distribution and the limitations posed by Apple's privacy policies and Google's planned phase-out of third-party cookies in 2024. Brands are struggling to gain valuable insights into user preferences, making it challenging to effectively acquire and retain customers.

As a result, customer acquisition costs (CACs) have risen by 222% in the last eight years, with a 41% increase in the last year alone. Additionally, CPMs have increased over 60% across Meta and Google's programmatic ad platforms. With more choices available to consumers than ever before, brands are finding it harder to retain them, with 77% of US consumers trying new shopping behaviors since 2020, including exploring new channels, stores, and brands. The intense competition necessitates retention incentives for customers, making loyalty more crucial than ever. Despite the decline in loyalty, brands must recognize its importance and find innovative ways to revitalize it.

What’s Wrong with Loyalty Today? Let’s start with today’s loyalty experience from the consumer perspective.

  • Most loyalty programs are not personalized, and lack context about user preferences and spending habits.

  • Joining loyalty programs involves friction around creating an account and sharing personal data.

  • Fragmented loyalty experience due to lack of connection between loyalty programs, making it difficult to transfer rewards between brands.

  • Creating a strong loyalty program can be expensive, particularly for businesses with low purchase frequency.

  • Partnering with other brands to expand loyalty network presents integration and operational complexity.

  • Engagement in loyalty programs is declining, while ⅔ of loyalty programs are eroding value for brands.

Loyalty should benefit your customer

Picture this: you're a brand looking to create the ultimate loyalty program for your customers. What's the key to success? It's simple: put the customer first. But don't just stop there. You need to create an experience that's not only compelling, but smooth and seamless.

Strong Data suggests that your customers are ready and waiting for something new and exciting. So, what's the secret to winning their hearts and building long-lasting relationships?

It all starts with personalization. You can't treat every customer the same. They have different tastes, preferences, and needs. That's why you need to collect data on each and every one of them. We're not talking about spying on your customers without their consent. Instead, use a mix of Web2 and Web3 data retrieval tactics to collect the information you need. This allows you to create a loyalty program that's tailored to each customer's unique desires and motivations.

Personalization acts as the foundation to creating a truly dynamic loyalty program. By applying an element of gamification. You tap into a powerful acquisition mechanism that appeals to customers by taking boring points based rewards to new places - No more boring point-based rewards.

A great example of this is Starbucks with their Odyssey program. Users can choose their own avatar, complete educational quests, play mini-games, and trade their assets within the app. Who wouldn't want to be a part of that?

Additionally, you can add levels or tiers, achievement badges, leaderboards, and even allow customers to share their achievements on social media. The key is to make your customers feel special and recognized. With gamified mechanics, you can provide engaging experiences without breaking the bank.

A core idea here is that it can be a lot less expensive for brands to provide engaging experiences through gamified mechanics rather than costly rewards.


Community is one of the few tools in the marketing toolkit that is both engine and fuel for distribution. In fact, your brand is your community. And there’s no better way to supercharge your loyalty program than to tightly integrate it with your community. By creating a strong community, your most loyal customers will become your best advocates and ambassadors. You can further tier your loyalty program by offering exclusive perks and events to members of the community, or gamify access to it by unlocking community access based on earning specific achievement badges. Critically, as targeting becomes increasingly difficult through “traditional” methods like programmatic ad marketing, brands will have to spend more time and effort creating a community that naturally attracts users—in other words, a community that consumers want to opt into.


Opting in is a big theme in Web3 and absolutely critical to loyalty going forward. It’s also synonymous with ownership. In a recent podcast with Patrick O’Shaughnessy, Jeff Green of the Trade Desk says:

"the best way to get loyalty from your customers is to closely align your interests with theirs."

It’s a simple but very powerful concept. Unsurprisingly, that's why we think Web3 wins in the long run. Web3 is about giving brands the opportunity to align themselves with their customers, by default. And what better way to align incentives than through ownership?

By aligning incentives between brand and community member, you are redefining the relationship between brand and consumer, encouraging cooperation toward a common goal and a more participatory consumer experience—one where the customer is more active, vocal, and engaged in the direction and outcomes of the brand. That may manifest in contributing to a product roadmap or a new set of flavors or colors; shaping the company vision and values; or being invited to online and offline events that are exclusive to the community members. Make your community feel valued as a stakeholder, and they will repay you in spades. In this new paradigm, the customer wins when the brand wins.

What ownership means for loyalty programs more generally is that customers should be able to collect and own their benefits. That means transporting them off platform, trading them (perhaps not all, but a subset), and redeeming them elsewhere.


Finally, this brings us to interoperability, or the ability for loyalty programs to interoperate and work together. This is the single most significant shift that Web3 enables: true data interoperability between brands and other stakeholders. Brands now have the opportunity to turn siloed communities and loyalty programs into ecosystems of loyalty where complementary brands and creators collaborate and enhance each other, leading to a better experience for the end user. In other words, embracing multiplayer loyalty means embracing new creators and complementary brands with their own engaged audiences, leading to an expansion of a brand’s total addressable market. The future of engagement and loyalty is multiplayer, and it’s based on Web3.

Why Web3?

I'm not here to tell you Web3 alone is going to solve engagement for you. And for that matter, you absolutely can and should invest in personalization, gamification, and community without Web3. That said, Web3 not only makes ownership and interoperability singularly possible (these properties would not be possible without Web3), it also enhances and amplifies the other properties. Let’s start with the impact of ownership and interoperability, which are deeply linked and fundamental properties of Web3, on loyalty programs. It’s only when the consumer owns the benefits of a loyalty program themselves that they can actually have a unified experience across all their loyalty programs.

Think about that. As soon as a brand comes in and tries to lock in the user into their own walled garden, that unified experience breaks—and the user experience suffers. Web3 is ownership is interoperability. These properties have ripple effects. For example, with brands facing a cookie-less future, digital collectibles can help incentivize users to share zero party data for enhanced context and personalization. Similarly, gamification dynamics are massively amplified when you own the outcomes of your actions; and of course, ownership is the key to align incentives in a community.

Conclusion The way brands interact with consumers is going through a paradigm shift, accelerated by changes in technology, business models, and regulations. Brands need to keep up—and they can do so by becoming {Hyper}Aware and using their findings to act authentically to expand their brand experience towards things like loyalty programs that are built on personalization, gamification, community, ownership, and interoperability.

Perhaps you already have a loyalty program, you don't need to scrap it. Like Starbucks and Nike have done, test more dynamic experiences or consider extending your program with digital collectibles.

Aside from our digital solutions to help brands integrate more tech solutions, were also opening a community for Founders, creators and builders looking to bring their brands forward by way of Web3. If you're {Hyper}Aware of the future of commerce ...

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