To succeed in web3, brands need to understand that the future of loyalty is not about locking customers into closed systems. It's about giving them freedom — the freedom to own their data, control their rewards, and interact with brands on their own terms. Loyalty programs have never been more popular, but they've also never seemed more outdated. As the inflation crisis eases, customers continue to barter personal details for deals, giving them access to “regular” prices while non-members pay a premium.

Although this tactic is counterintuitive, it works. According to Antavu Global Customer Loyalty Report 202367.7% of companies have to make It plans to boost investment in loyalty programs to retain customers in the face of inflation. 79% of American consumers took the bait and spent more with brands that offered loyalty perks. Reports statesman.

However, this scramble to boost loyalty has revealed that traditional loyalty programs are losing their relevance. But there is a solution in sight. Blockchain technology has emerged as a potentially radical alternative to tried-and-true loyalty Programs Which many brands still cling to.

Walled gardens and limited use cases

Anecdotally, traditional loyalty programs operated within walled gardens where customer data was isolated, and rewards were limited to specific use cases. These models have long relied on third-party cookies and obfuscated data Practices To thrive.

However, as privacy regulations tighten and cookies are phased out, these models are quickly losing their usefulness. The result? Loyalty inefficiency through unused points, shallow engagement and fragmented data. Additionally, thanks to data breaches turning to the park variety, consumers are increasingly erring on the side of caution about how their data is collected and used, with many opting out of loyalty programs altogether.

In the digital age, traditional loyalty frameworks are beginning to break down. Nowadays, customers no longer have to be content with being trapped in closed systems, and brands can no longer take customer approval for granted. Instead, brands need to make a compelling case about the importance of sharing personal information with customer engagement.

This is where blockchain comes into play. Because if traditional loyalty programs are like store gift cards that can only be used in one place, blockchain-based loyalty is like cash: it is fungible and can be used almost anywhere without revealing the customer's identity.

In this context, smart contracts ensure transparency, while user-owned wallets put control back into the hands of consumers, redefining the exchange of value between brands and their sponsors.

Renew loyalty one block at a time

Imagine a loyalty program that runs seamlessly in the background, powered by blockchain technology but invisible to the user. Shoppers earn tokens for purchases and interactions, which can be redeemed for discounts, experiences, or even tradeable with others. Unlike traditional points, these tokens belong entirely to the consumer and are securely stored in the digital wallet.

Dynamic NFTs displays A glimpse into the future of onchain loyalty. These premium, customizable assets evolve with user interaction — think NFT badges that unlock exclusive products or perks, like Lululemon Rewards that give you a free month of personal training at your gym. These dynamic tokens can be tailored to the customer experience. By leveraging AI, brands can add security measures like verifiable credentials to the mix to help create personalized experiences.

Now, with verifiable credentials in place, users can share only the information they choose, while brands can use standard on-chain tools to build personalized loyalty experiences tailored to individual preferences. The result is a loyalty program that feels less intrusive, more authentic, and more engaging than traditional methods.

Although we're still incredibly early on these potential benefits, the idea is Technology abstraction It was the main driving force behind this model. Some have even likened this development to the rise of cloud computing (such as Amazon Web Services), where consumers see not the technology they interact with, but only the ideal user experience it creates.

Subscribe to the future of loyalty

With cookies disappearing and data privacy concerns growing, a growing number of brands are now asking themselves a critical question: “How can we make loyalty programs so compelling that users choose to actively participate?”

The answer lies in creating experiences of real value to customers. Gone are the days of buy 10 get 1 free. These traditional incentives (which don't feel like incentives anymore) can now be replaced with on-chain rewards such as collectibles, leaderboards, or experiences tied to tokens.

Brands must tread carefully when entering this new paradigm. Shallow attempts to bring products to the chain have failed spectacularly on web3. After years of improvement, the general consensus is that simply tokenizing existing loyalty programs without rethinking the value proposition is a recipe for failed experiences.

As blockchain technology matures, brands are embracing it model They will thrive, unlocking transformational rewards not only for their clients but for themselves along the way.