Upside co-op | Brand NFTs as community tokens

Brand NFTs as community tokens

As brands become ‘community marks’, their NFTs will provide utility as membership tokens.

As previously argued, the third dimension in “brand3” is about adding elements of community and ownership to the “brand2” mix of creating an engaging proposition and relationship with your customers. Brand as an identity mark has long been the cornerstone of cult brands or love marks: the marks we use to communicate who we are and what we believe in. Now, with web3 we are ready for the next evolution of brand: brand as community mark. By creating a sense of belonging for the people who subscribe to its values and ideology, brands can become true fandoms.

In that sense, branded tokens or NFTs are more than just authenticated ownership of unique digital assets. Whereas brand NFTs can be used as digital twins to authenticate physical good transactions, these ownership tokens can also provide access to a lot more. By transferring physical products to the digital world, owners can use these digital goods to expose the brands they love as an extension to their digital identity and create a stronger offline to online connection between their self-image and social status.

However, the real promise for these brand NFTs is to become the foundation for a more engaging and multifaceted digital consumer connection. Dropping and minting an NFT with each consumer transaction can create a dynamic and composable digital entry point specific to the goods being purchased, with endless possibilities for new and creative loyalty and after-sale engagement. Savvy brands are tapping into NFTs as a way to engage with their fanbase, creating next level fandom. And the tech these NFTs run on allows brands to bypass the platform-centric marketing world of web2 and reclaim ownership of their digital consumer relationships.

Experience is what ultimately drives brand relationship and loyalty, so brand tokens need to be centred more around utility and access, than merely identity and status. When linked to a transaction, the experiences these NFTs enable range from unlocking certain additional (sometimes temporary) features to the owner’s right to access exclusive content, experiences or services. This would create a new form of CRM that binds customers closely to the brand by linking digital service extensions directly to the physical product. Holders of brand NFTs could use their proof of ownership to get exclusive add-ons, merchandise, early access to new releases, or any other special privileges. “Access leads to ownership and ownership leads to access.”

A person with the right NFT gets invited to pre-purchase the next big thing. Or, buying a product gets a person an NFT that is an invitation to an exclusive event. With tokens like these, brands can finally create digital experiences that truly extend their physical product. As a result physical and digital experiences ultimately combine to deliver a seamlessly connected and through-the-line brand experience.

The personalised and composable nature of NFTs makes them equally useful to use as membership tokens or tiers for a brand loyalty program or even as branded NFT rewards. With consumers increasingly reluctant to join loyalty programs because they feel the value they offer is not worth signing up for, tokenised loyalty programs and NFT rewards could present the next frontier for loyalty and reward concepts. NFTs can become a digital award for a loyal customer and thus open a new chapter in consumer engagement, based on scarcity and uniqueness. “Nothing increases the customer’s attachment to the brand as much as the feeling that the brand recognizes him, appreciates, and distinguishes him”.

And as they are programmable, NFT rewards can provide additional utility to their holders over time. As such, NFTs can function like a loyalty membership card, providing the member with access to exclusive benefits, events, special discounts or time-based exclusives, amongst a host of additional privileges accessible only to holders. And like your regular membership card, these NFTs would showcase your status and loyalty tier, making them non-transferable and non-persistent, as ownership and access rights would expire if eligibility terms would no longer be met. This in contrast to NFT rewards or fungible reward tokens, which would be easier to redeem, transfer or even trade than their loyalty point counterparts.

All together, through brand tokens and NFTs consumers get to signal to others which brands they love and identify with. Brand ownership becomes social; a way to self-identify and a way to belong. In this sense, brand tokens are more than authenticated ownership; they serve as a receipt of authenticated membership into a brand community. This, to me, presents the real opportunity for brand tokens and NFTs — community membership, utility and co-creation. By tokenising communities and gating access to member-only experiences and privileges, brands can recognise and reward their most engaged and devoted fans. Here you have a highly loyal group of consumers that not only have highest share of mind, heart and wallet, but also want to actively engage by contributing ideas, giving feedback or providing social endorsement. As such, they are the ideal test bed to experiment with new propositions or innovative ways to engage. Experimentation is lower-risk with a token gated community — successful ideas can either be replicated at a larger scale outside the community, or they can remain community-only, creating truly unique experiences for members.

There is also an element of gamification when brand tokens or NFTs are being used as rewards or “bounties” for completing certain community quests, e.g. supporting a marketing flywheel by issuing tokens as member-get-member rewards. Leaderboards can recognise top contributors by highlighting the performance and participation of token holders. And specific NFTs can be issued to gate membership to more exclusive tiers or VIP subgroups, providing holders with additional clout and status.

The key is to sustain member engagement and look for ways to reward the long game over short-term gains. Getting consumers to move beyond buying to contributing, collecting and ultimately ownership. Rather than randomly dropping NFT releases, brand communities should instead focus on dripping a constant stream of products, signals, content, incentives, rewards, tokens, points, interactions, or events. As an engagement and activation strategy, drips mean shifting focus and budgets from seasonal campaigns and releases to investing in continuous interactions with members, across all URL and IRL touchpoints. By mixing physical products with tokens and NFTs, brands create their own micro-economies, where customers are turned into fans, collectors, traders, and ultimately co-owners of the brand.

Source: @dotta

The best brands are the ones that build belonging and tap into brand tokens and NFTs as a way to create sustained customer engagement. More than anything else, these tokens are about finding belonging, showing status, and crafting identity. Together with enhancing and extending the customer experience across a seamless continuum of physical, digital and extended realities, it sums up the UTILITY consumer fans and community members can expect from collecting and earning brand tokens. Whether a token’s utility is transparently exposed by the brand’s community roadmap, or dripped as part of a surprise-and-delight gamified experience, it turns the promise of NFTs into ‘Never-Finishing Treats’ …

Web3 is signalling the next phase of the consumer internet, as brands move their activation model from one-to-many (web1) to one-to-one (web2) and now to many-to-many (web3), with peer-level community engagement and co-ownership as the next frontier. By aligning incentives between brands, employees and consumers, a new and different kind of growth flywheel emerges, one in which ownership unlocks community access, and where member engagement and contributions are being rewarded with an ongoing stream of “drips”. Going beyond isolated initiatives or drops to create durable value and long lasting loyalty.