NFTs and Their Relevance for a Loyalty Marketer

Posted on October 26, 2022 by Jubin Mehta

Collin’s dictionary had an interesting term as the ‘Word of the Year for 2021’. Any guesses? It was NFTs! Non-fungible tokens (NFT) as a term saw an increase in use by a whopping 11,000%! The excitement has petered down over the last few months but there was massive hype owing to the rise of sellable digital art on the blockchain and the possibilities it could open up. The entire space has become more realistic now and brands are entering the domain with some amount of research.

What is NFT?

To put it in very simple words- NFT is a digital commodity like art, music, or any other file that can be traded. Every piece of art is unique and it becomes an NFT after the artwork or file is minted on the blockchain. It sounds pretty complex but minting is primarily publishing a digital asset on the blockchain.

Why is NFT Important for a Loyalty Marketer?

A marketer’s job is to identify places or networks where the brands’ customers or potential customers hang out and take the brand there. And by this definition, NFTs are pretty big now- their market size in 2021 stood at $4.36 billion!

Some progressive brands jumped onto the NFT bandwagon early on but Starbucks took its time and entered with a bang by launching Starbucks Odyssey– an NFT Web3 extension to its already successful rewards & loyalty program. Brady Brewer, Starbucks executive vice president, and chief marketing officer said, “Leveraging Web3 technology will allow our members to access experiences and ownership that was not possible before. Starbucks Odyssey will transcend the foundational benefits that our Starbucks Rewards members have come to love, and unlock digital, physical, and experiential benefits that are uniquely Starbucks.”

Apart from Starbucks, “Nike sold an NFT Sneaker for $134,000!” reads an NYTimes headline, and they very pertinently ask, “Why would anyone spend that much for a virtual shoe?” For a non-gamer and a web3 world noob, all this reads rather outlandish but the buyer of this virtual sneaker, Mr. Chui, has something to say about his motivation, “The thing that gets me most excited is going through this renaissance. We’re experiencing this intersection of the physical, the virtual, the gaming world, and the investing world in real-time.”

It may seem a little far-fetched, but the reality is closer than it seems. For instance, Starbucks’ Odyssey is a lot more realistic, where the end customer does not need to have cryptocurrency or any other account but can still reap the benefits of the NFT-based program. Odyssey will allow consumers to collect digital stamps (not akin to loyalty cards that have existed for decades) and these stamps will allow them to unlock special experiences like a virtual coffee-making workshop from the best Barista to a real tour of the Starbucks estates in Costa Rica.

Rise and Fall of NFTs

2021 was the year for NFTs. 2022 beginning was steady but there has been a sharp fall after the first few months. In September 2022, the daily trading value on OpenSea was down 99% from its May 1 peak of $405 million! At the time of writing this on October 11, the daily trading volume was a meager $8.9 million.

The gaming industry and digital art collection industries were the two main industries that drove NFT adoption. In gaming, a new wave of blockchain-based play-to-earn games has emerged where people can play and win digital assets, which can then be exchanged for physical rewards or used to trade with other digital goods on OpenSea.

Although the overall adoption has tapered owing to the global economic downturn, reports claim that the NFT market size will rise to $200 billion in 2030. Only time will tell whether this becomes a reality but NFTs are unlikely to disappear entirely. NFTs are a doorway for brands to enter the metaverse as the lines between physical and digital are surely blurring. Steadily, more and more experiments by brands will pave the way for the future of NFTs.

Exclusivity and Community- A Loyalty Marketers’ Lure

The kind of possibilities that the metaverse offers are amazing. Imagine, two coffee lovers from different parts of the world meeting because of a special experience they unlocked through NFTs! Brands can play on the two biggest cards- providing exclusivity to members and the community angle where people don’t just connect with the brand but with other people too.

By exclusivity, we mean a campaign where a particular pair of sneakers are only available on the metaverse. Or if a user enrolls for the NFT program (without having any prior knowledge about NFTs or cryptocurrencies), he/she becomes eligible for a set of unique experiences that the brand is providing.

The feeling of belonging that a community brings in is always special. People often indulge in experiences or do things not for that thing but for the company with who they’re experiencing it. The metaverse opens up the world in that way because geography isn’t a constraint. A community can engage from any part of the world and bond over things they feel connected to.

Conclusion- Start Small, Start Now!

NFTs, metaverse, and the entire Web3 technology ecosystem has several opportunities for loyalty marketers to leverage and extend their customer engagement programs. It opens up an entirely new arena for referral programs and rewards & benefits programs to take customer experience to another level. The younger demographic across the world is already digital-first and for brands to stay relevant to the new incoming consumer base, a solid strategy for NFTs and metaverse is a must. Here’s another deep dive into the changing face of CX in the metaverse but the crux of the solution is to understand the space thoroughly, assign a small team and start with a pilot program to test out the waters.

Importance of Data Privacy for Loyalty Marketers

Posted on October 13, 2022 by Jubin Mehta

One in four Americans won’t do business with data-breached companies, reads the headline of this ZDNet report. And this is getting increasingly true across the globe. Cyber security and customer data privacy has become increasingly important for loyalty marketers and brands in general. At Capillary, we take customer privacy extremely seriously and as a loyalty marketer, you’re the gatekeeper of the end customer’s data.

Regulations like GDPR and CCPA mean more stringent regulations (which are actually good for business). And as a loyalty marketer, one needs to have a clear framework for safeguarding customer data and using it in the best way to benefit both the customer and the business. Some of the points to be kept in mind are:

Defining Personal Data: As a brand, how do you define personal data, what are the fields included in this?
Subscription Transparency: The way a customer signs up for communication and the way you ask for consent to send marketing information should also follow a framework.
Right communication: Both of the above should be clearly communicated upfront to the customer and the communication channel should always be open.
Customers own the data: The end customer needs to have control over their data and needs to have the right to access, edit and erase their personal data.

Data is Everything and the Importance of Customer Privacy

Over the last couple of years, there has been a massive upsurge in digitization and alongside, a proportional increase in data. But the amount of data doesn’t mean anything if it is not collected in a meaningful manner. A BCG-Capillary report said:

Only 29% of consumers agree that handing over their data resulted in better products or services
64% of customers blame companies over anyone else, including a hacker, if a company loses personal information/data
75% of customers now limit the amount of personal information they share online

In such a scenario, it becomes critical to have customer interest at the center of all marketing activity. And this is easier said than done. A McKinsey survey reported that some CMOs have retreated to using mass marketing instead of data-driven marketing and this is a sure-shot way to get loyalty marketing all wrong!

Understanding Contextual Integrity in the light of Data Privacy

Helen Nissenbaum, professor of information at Cornell Tech wrote an industry-defining book: Privacy In Context: Technology, Policy, and the Integrity of Social Life – where she introduced the concept of ‘Contextual Integrity’.

The definition of privacy is very subjective and ‘Contextual Integrity’ basically tries to define it better by looking at information flows and how can we arrive at a more holistic version of privacy laws in this modern digital age. Contextual Integrity can be understood as “The right to privacy is neither a right to secrecy nor a right to control but a right to appropriate ﬂow of personal information” (research paper).

And for a loyalty marketer, it is important to be in tune with these developments because along with certain restrictions, it also brings in new opportunities-

1) Privacy Innovation: Properly designed regulations can trigger new innovations which are capable of offsetting the costs of compliance.

2) Data Privacy as a Competitive Advantage: While complying with policies requires investment in different forms, being ahead in the game gives you a competitive edge while pitching to new clients. Businesses and consumers care for privacy and there are opportunities where people are willing to pay a premium for better security.

Data Privacy, Done Right

While here’s a post on all you need to know about data privacy, at Capillary, we’ve helped 250+ brands touch more than 900 million end customers in the best manner possible.

As a loyalty marketer, while the brand collects information about the end customer, pre-defined rules help you store and safeguard the data. The end customer can set preferences for how and how often would they like to be communicated, in what ways, and a two-way communication channel through which they can voice their feedback.

Chapter 3 of GDPR (General Data Protection Regulation) gives several rights of the data subject:

Transparent information, communication, and modalities for the exercise of the rights of the data subject
Right to information and access to personal data
Rights for rectification, erasure, restriction of processing, and right to data portability
Right to object and automated individual decision making

At Capillary, data privacy and security is a top priority and there’s a dedicated team headed by the Chief Information Security Offers. We are certified by the ISO, PCI, compliant with SOC2, and GDPR compliant. All data at rest is encrypted with state-of-the-art 128-256 bit keys and all production infrastructure is architected to sit within isolated Virtual Private Clouds (separate for computing, and storage). There is a four-step process we follow:

Continuous Auditing: We have a stringent audit plan of action where our Information Security Management Forum (ISMF) conducts regular audits to investigate operations across the board.
Client Assessment: Transparency is one of our core pillars of values and we’re transparent regarding everything security with our clients- the positive and the negative. We engage in several bug bounty programs like SafeHats to collaborate with security researchers and be proactive in plugging any holes.
Best Practices for the Best Security: Capillary platforms are well-secured and follow the best practices- secure data processing & transfers, role-based access controls, password-encrypted reports, and more.
2FA at all access points: Access to development, pre-production, and production environment using VPN tunnels, and all access points have two-factor authentication for people.

Conclusion – End Customer at the Center

It’s important for loyalty marketers to look at these regulations as steps forward in making life better for the end customer. Leaps in technology have enabled brands to do a lot more with customer data and with that, also comes enormous responsibility in the form is consumer trust. It is in the best business interest, to stay ahead of the curve when it comes to data privacy. This can be done by using some of the best consumer experience platforms like Capillary and delivering a superior end-customer experience.

The Changing Face of Customer Experience in the Metaverse

Posted on October 6, 2022 by Jubin Mehta

Metaverse as a term gained mainstream popularity when Facebook changed its name to Meta in 2021 but the term has a rather long history. In fact, it dates back to 1838 when Sir Charles Wheatstone outlined the concept of ‘binocular vision’! For our context, we’ll stick to the 21st century where ‘the metaverse’ is being discussed across tech and enterprise boardrooms.

In layman’s terms, the metaverse is an immersive internet or a digital twin to the real world where people can have ‘real experiences’ in the virtual world. Consider Nikeland as an example. A virtual simulation where a person can experience all of Nike’s experiences and more in an immersive way.

For some, this may seem too outlandish but the future is closer than it seems. Gartner predicts that 25% of people will spend at least one hour per day in the Metaverse by 2026. “Vendors are already building ways for users to replicate their lives in digital worlds,” said Marty Resnick, VP of Research at Gartner. “From attending virtual classrooms to buying digital land and constructing virtual homes, these activities are currently being conducted in separate environments. Eventually, they will take place in a single environment – the metaverse – with multiple destinations across technologies and experiences.”

Use Cases for the Changing Face of Customer Experience in the Metaverse

There are infinite possibilities in the virtual world. Just like the Nikeland example above, there are several ways in which a brand can engage with customers in a digital landscape by adopting metaverse customer engagement strategies:

Imagine a furniture store giving a completely virtual 3d experience to the degree of simulation as to how it’d feel when a customer sits on a particular kind of chair!
Apparel & Fashion is the biggest segment where brands can design various kinds of experiences. A Wipro study says that “If consumers could experience products in AR, 71% would return less often and 40% would pay more.”
Hyper Real Virtual Events: After the pandemic, events have become hybrid and in the metaverse, events can take an entirely new avatar where authenticated digital identities are interacting with brands and real transactions are happening.
Reaching New Audiences: There are more people on the metaverse than one might imagine. Consider the South Korean platform Zepeto which launched in 2018 and already sold 2 billion pieces on its metaverse where fashion giant Zara hosts some of its specialized products (more on this). While in India, there have been weddings happening in the Metaverse! (imagine the entire marriage commerce industry in the virtual world.)

5. The metaverse is another major channel for customer support. Like social media, people are bound to share their feedback about a brand in the metaverse, and in effect, it becomes a touch point for a brand to provide customer support.

Rise of Gamification, Avatars, and Challenges

A key element of the entire metaverse is ‘gamification’. Creating a digital twin to the real world and embedding various dimensions to make it as real as possible. Like Nikeland, Hyundai’s Mobility Adventure is another game on Roblox (watch video) which is Hyundai’s first virtual experience developed by a global automotive brand to showcase future mobility lifestyles in the metaverse. The campaign aims to attract young people familiar with Hyundai Motor products, technologies, brands, and future solutions.

But the Metaverse is much more than building a game! There are innumerable challenges on the way:

High cost of investment: Hosting experiences, investing in technology, hiring technology talent, and maintaining online security is a massive investment.
Securing identities: With each person having an avatar and financial transactions happening, handling user data and ensuring authentication is an absolutely critical part of the strategy.
Different geographies, different rules: The metaverse is a single playground with people from all over the world but the physical world is not as fluid. Rules of commerce have been defined for the physical world but it is still very much in progress in the metaverse.
Rethinking org structures: The Metaverse will be an entirely new setup for retail brands dealing in physical stores and eCommerce. What is the job of a salesperson in the Metaverse? What kind of skill sets are required? Where do you hire these people? All these are relevant questions that’ll come up as a brand enters the Metaverse.

What does it mean for a Brand?

As a brand, standing by the sideline is never an option if one wants to grow. The kind of activity around the metaverse and the interest from young people are humungous! This is where the future is and as a brand, it is absolutely critical to have a plan of action in place. From our conversations with several top brands across the world, here are some suggestions from Capillary to plan your entry:

Study the market, watch competition: Some progressive brands have made heavy investments already and for someone watching from the sidelines, it’d be critical to hire an expert just for a market study and get a sense of the returns or results of the early pilots (contact us).
Zero in on your target audience: There is a very specific but diverse set of customers on the Metaverse. It is important to get a pulse of this audience and see whether this is your target market. What are your products that would be appealing to the young uber tech savvy Metaverse audience? What are their values? What are they looking for?
Have a plan of action: The Metaverse is here to stay. The world is going digital at an unimaginable speed and it is of utmost importance to have a plan of action. After the research, see if you can carve out a small budget for the Metaverse and start out with a pilot. Dedicate a small team or a few hours from everyone within a team responsible for initiatives in the metaverse.
Start small, start right: It’s okay to start small and start late but it’d be worth it if the first three points are in place. Decide a platform you want to experiment on, run some simulations, and kick off with your pilot!

The Metaverse provides ample space for delivering a great customer experience and for a brand, at the end of the day, this is what it is all about.

SuperApps: Evolving CX in the Digital Age

Posted on October 4, 2022 by Abhijeet Vijayvergia

In today’s digital era, e-commerce is fiercely competing with modern retail & mobile commerce is adding impetus to this growth. According to Beyond the Checkout Cart report by MIT, 80% of shoppers check online prices, with one-third of them accessing the information on their mobile devices while in the store. This implies customers are using multiple channels & touch-points to keep themselves as informed about products/services as possible.

To quench the transitioning need of customers, brands are moving toward a mobile-first approach. The popularity of SuperApps is driven by this upgraded pattern of customer interactions to improve customer engagement & centralize customer experiences. The SuperApp experts of India’s most awaited SuperApp – TATANeu launched in April 2022, Pratik Pal (CEO, TATA Digital) & Harveer Singh (CBO, TATA Digital) joined us in our exclusive fireside chat on Era of SuperApps – Unearthing digital growth possibilities along with Aneesh Reddy (Executive Director & CEO, Capillary Technologies).

Here are the 4 takeaways from their conversation:

SuperApp: The driver of brand growth and customers’ convenience

In contrast to the standalone apps, SuperApps support a composable business ecosystem by offering multiple products and services under one umbrella. They are to simplify the lives of customers by offering them everything they need from basic to fitness to finance & luxury in one spot. They open a stream of options for customers to shop from, engage more with the app, and earn rewards.

Highlighting TATA Digital’s approach here, Pratik Pal said “TATA’s checked on its offerings of customer brands in major categories namely Fashion, Electronics, Pharmacy, Lifestyle, etc. TATA group has an assembly of renowned customer-facing brands, a nationwide customer base of 120 mn customers, a strong omnichannel footprint, & an ecosystem – that’s where we decided our offerings can be realized via SuperApp.”

For instance, shoppers can purchase a smartphone, earn NeuCoins, and redeem them to shop for shoes, apparel, or groceries. In this way, every transaction unlocks new rewards for customers on SuperApps. This way, SuperApps unfolds new growth dimensions for brands (TATA Digital drove 7Mn+ users in just 5 months) and provide a delightful customer experience with unbelievable rewards.

Strategies to deploy a SuperApp

Brands planning to launch a SuperApp need to explore the high-frequency use case they believe in. Pratik said “Our belief for TATA Neu is in loyalty. We’ve designed it as ‘Earn & Burn Everywhere’ for all our offerings. So, the more the customer’s shop, the more they will earn & this can be redeemed anywhere across groups & brands under TATA.” Further, Harveer adds “We believe loyalty is much more than rewarding customers with rewards driven by some sort of mathematical formula in exchange for a transaction.” That’s how TATA came up with the idea of launching “Neupass: Pass to the good life”, as they mention adding 5% of transaction value every time a customer makes a new transaction & eliminating any usage restrictions on that.

Another key learning Pratik mentions is “Never take technology for granted”. When building a SuperApp, it’s not only about building an app, you need to consider the user base of millions of customers, concurrency in terms of mobile devices & multiple use cases which you need to consider to make technology choices. Needless to say, the app-building principles, data backups, massive cloud infrastructure, & selection of the right service/solution provider are the core factors when you plan to design & launch a SuperApp.

Customer Data: Key to unlocking memorable customer experiences

SuperApps open another dimension of gathering data to create a 360-degree view of their shoppers while shopping across brands. This helps brands within a group widen their range of target audiences. Furthermore, it helps them understand customers’ shopping preferences to cross-sell services and provide meaningful rewards.

When new norms of customer privacy rules are flashing every now and then, it’s the responsibility of the brand to safeguard its customers’ data. TATADigital is one of those brands which are already practicing consented marketing. To this Pratik further adds “We’ve consent architecture in place for customer data as the data security policies across different brands in TATA group are regulated under different laws & rules.” As SuperApps have multiple offerings from multiple brands, a single data privacy policy can’t rule. The data privacy guidelines for financial services and that of pharmacy brands will be different.

Emerging customer and digital trends across different sectors in India

As India is transforming into Digital India, more & more online transactions are happening from tier 2 & tier 3 cities as well. The leading customer trends according to the speakers mentioned are:

Evolution in payment systems
Localization
Focus on Supply chain & Infrastructure
Sustainability

Pratik believes supply chain & infrastructure needs a lot of focus and development, especially since we are moving more towards instant commerce – deliveries of food, grocery & products within 20-30 mins of time frame. However, to be more efficient in instant commerce, technology adoption has to be significant. A lot of human involvement at present will be replaced by technology to provide convenience and quick resolution to customer needs.

Further, you can tune in here to watch the session to get some significant insights & leadership lessons on SuperApps & its evolving ecosystem.