From Panera to Amazon: The Transformation of Membership Programs through NFTs

Speaker 1: 0:05

Welcome to Marketing Meets Web 3, a podcast that helps marketers navigate the news trends, opportunities and insights surrounding Web 3. Today's conversation is for information purposes only and does not constitute legal or investment advice. Hello.

Speaker 2: 0:22

Nick. Hi Alberto, how are you? I?

Speaker 3: 0:25

am very, very, very good, thank you.

Speaker 2: 0:29

Because I just had an amazing coffee here. Did you have your coffee already?

Speaker 3: 0:34

Unfortunately, no. I've been on a no coffee diet for two days. I have to do some dental work and apparently coffee isn't good for the teeth, so I have 24 more hours to go before I can have my first cup of coffee.

Speaker 2: 0:48

I totally knew that I was teasing you here. I had two today, by the way. Thanks for rubbing it in, by the way, and for the occasion, I've picked this piece of news that we can discuss, which is about Via Letti. Via Letti, of course, they make coffee, if you didn't know. So Via Letti is proud to announce the launch of their inaugural MoCA Expressions NFT membership program for those like you who love the art of coffee. So, yeah, via Letti is doing this, is getting into not only the membership programs, which we've discussed plenty here, but also, of course, the going the NFT Web3 route, and I think it's very interesting. We're going to talk a bit about how they plan to do it, which tiers they want to do, but just wanted to hear your first impression on this.

Speaker 3: 1:41

Well, my initial impression is that I want a cup of coffee.

Speaker 2: 1:44

Your decaffeinated impression. Is that one yes.

Speaker 3: 1:48

So Via Letti. Via Letti makes the MoCA pot, and if you haven't heard of Via Letti before, the MoCA pot is that stovetop espresso or coffee maker. It has kind of a cult following. It's a very old brand and the technology, the device itself, is really old and so it's got this long legacy and history behind it of people that if you know, you know and you love the MoCA pot, and if you look up MoCA pot recipes online, there are dozens and dozens of different ways to tweak your MoCA pot recipes so that you get the best cup of coffee. So this is a. Again, this is an old brand. This is a brand that has a lot of rich history to it and a cult following of people who really love the MoCA pot.

Speaker 3: 2:34

So what's interesting about this and their foray into NFTs? A? This is not a mass market appeal type of NFTs. So you know, to me this doesn't smell like a money grab where a brand is just looking at NFTs and saying, hey, this is a way for us to generate some cash, because really, I mean, how big is that market going to be? I think what's really pretty interesting about this story is that, you know, for a while now we've been looking at NFTs and looking at what's happening in the space and how NFTs relate to culture and to interests, and you know we have this hypothesis. I think you and I have talked about this a lot, about how NFTs in the future have the ability to represent our digital selves in a much more meaningful way, and so I'll give you an example.

Speaker 3: 3:26

So I was a skateboarder when I was a kid. I loved my skateboarder, and the thing that skateboarders do when they're not skateboarding, of course, is they like to decorate their skateboards, and they decorate their skateboards with stickers, and so it's almost this badge of honor to have your skateboard with 100 different stickers and you want to have the best stickers or the coolest stickers, and those stickers really say something about you and your personality and your skateboarding and your interests. We see the same thing with bumper stickers on cars. You've all seen vans and cars that are just plastered with stickers, and it's somebody who really wants to scream about their interests. But you also see things in more subtle ways, where maybe a person has just one or two bumper stickers or they have a license plate frame that says something about who they are. We've also seen this with laptop computers and people who put stickers all over their laptops to represent maybe they're in the tech world or the startup world, or they're a developer or they're an artist, and so they're using stickers as a way to represent themselves.

Speaker 3: 4:30

Okay, so what does this have to do with NFTs? So what we're seeing with a niche interest like the Bialetti Mocha Pot launching an NFT. I think we're starting to see this hypothesis come to life in a real way, in a more meaningful way, where these NFTs now are starting to represent deeper and more niche interests that are going to be indicators of what we like in the future and who we are, and so this could be the beginning of what I really do think we're going to see. You know, this huge, huge flood of NFTs on the market that really are just there to help people express themselves, to show what they like, to show teams that they're fans of, to show their interests. But there's another twist to this, and maybe I'll let you get into that. So, as you might expect, these NFTs are not just NFTs. They have a little bit more behind them. So what's the deal with the benefits or the rewards with these NFTs?

Speaker 2: 5:31

Yeah. So this was a very interesting part when I was researching this piece of news, because they are offering different types of NFTs. We've seen this before. Some of them are premium, some of them are rare, some of them are super rare or ultra rare, they call them, and depending on the kind of NFT that you obtain, of course, you get access to different services, products, upgrades and stuff, and what I found very interesting is that the list of benefits that you get from this membership program is very, very large and it's very varied in a way, and they are making use of the fact that they're doing something which interests people and they have a knowledge about an area that could be of interest for users, and they're making this knowledge available via this membership program, and I found that to be very interesting because it's a bit different than what has been done in the past. At least, I haven't seen a membership program that goes so far in terms of creating these rewards for their NFT users.

Speaker 2: 6:45

So, having said all of that and primed all of you on the variety behind this membership program, I want to play a game with you, which is that I'm going to be telling you a reward and then you tell me you try to guess which tier it is. Is it the premium tier? Is it the rare tier or the ultra rare tier? Just to see the depth of this program. Okay, so I'll go with the first one. So access Wait wait, wait, wait.

Speaker 3: 7:17

So premium, rare and ultra rare. Yes, okay, all right, okay, so I'm ready, let's play Archival via Letty Art Prince.

Speaker 2: 7:27

We'll see you then, guys, in a few minutes.

Speaker 3: 7:29

The middle tier. What is it Premium?

Speaker 2: 7:32

Rare, Rare, You're wrong. This is accessible through the premium NFT. So this is on tier one. Let's say we can talk about tier one, tier two, tier three if it makes things easier. But you see, in this case we have like art prints. I was also thinking, oh, this is somewhat premium. I guess it sounds cool. Anyway, this is tier one. Let's go for another one A complimentary bag of Mocha Express. What is this?

Speaker 3: 8:02

Oh, that's got to be a tier one too.

Speaker 2: 8:04

This is a tier two.

Speaker 3: 8:06

It's a tier two. Yes, so coffee is more exclusive than exclusive art prints. Ok.

Speaker 2: 8:13

OK, you're very bad at this game. Let's go for another one more A conversation with the business minds behind Violetti.

Speaker 3: 8:22

That has to be a tier three.

Speaker 2: 8:24

OK, yeah, that's a tier three. That was very clear. Let's go for another one VIP treatment at stores. Hard one, ooh, I'm going to go. Tier two oh, yes, nice, you're getting good now. Ok, last one. All right, last one, because I want to make a comment on this one Coffee tasting and master classes. Tier three Tier three, definitely, and one of the. So you got very good at this. You just needed, I think, a few ones to warm up, but yes, all this.

Speaker 3: 8:55

What I really need is a cup of coffee.

Speaker 2: 8:57

Also, but on this last one, the master classes I find this to be a no brainer. Many companies, many businesses, are doing something that is very specific and very niche and people that, like it, would love to know more about this. Not everybody, of course, but some of them, some of their audience, some of their users, and I think, having access to a master class, or having access to the baristas in this case, which is one of the rewards as well, I think this is very interesting for people and I think it helps to create a very strong community or connect with your community, if the community is there. So, yeah, very, very interesting.

Speaker 2: 9:34

And before we move on to the next piece of news, well, again, congratulations on your more or less passing the exam. And I wanted to ask you because what do you think about this? Because we talk about these companies getting into Web 3 and using Web 3 to improve on their membership programs or to help their marketing, but we usually talk about Adidas, lou Vuitton, nike, mercedes, and we're talking here about Violeti, which, as you said, is not so big. So I think this is interesting and I wanted to hear what you think about this.

Speaker 3: 10:10

Yeah, I mean I think this is again.

Speaker 3: 10:14

We've had this hypothesis for a little while as we've watched the market evolve and all of this experimentation that's been happening with NFTs has been happening at the very high global brand level.

Speaker 3: 10:25

So you've got the Nike, you have Starbucks, adidas and Puma and all of these huge brands that are experimenting. But inevitably that experimentation starts to find its way to smaller brands and eventually it'll get to small, medium-sized businesses, even down to your local mom and pop entrepreneurs, who, as this technology, gets easier and easier to implement in businesses, and so creating something like a NFT collection that's an homage to your product's legacy today might seem a little bit inaccessible to a small business owner, but I really do see a future where, as this technology gets easier to use, there will be tools that allow even a small local entrepreneur who has a business that's maybe been around for a little while and is well known in the community will be able to do something similar where they're creating these digital items that represent an allegiance to their brand or to their business and that also unlock additional benefits and value for their customers. So this is, I think, a harbinger of things to come, and really cool to see this play out in real life.

Speaker 2: 11:36

Yeah, and we seem to be not the only ones thinking about this, because the next piece of news is about a report, an industry report of marketing and membership programs, and it's called Global Loyalty Programs Market Intelligence and Future Growth Dynamics Data Book. Did you app with that name? Yes, I don't know. It has all the buzzwords. It has a ring to it, definitely. Yeah, it's got everything in it. Yeah, it must be awesome. It's like 2,500 pages of a report, but the like how much does it cost $100? No, no, no, no, try 7,000.

Speaker 3: 12:24

Oh, I was really off.

Speaker 2: 12:28

Yeah, you're not getting better at this, but what's interesting is that this is only the Q1 2023 update, so I guess that every three months there is another 2,500 pages, which it says out of pages.

Speaker 2: 12:44

And what I found interesting is that, of course, this is a Global Loyalty Programs Market Intelligence data book, so it's not a crypto-related high-p-thing about NFTs. It's a report from the industry and it's talking about how the industry is going to grow and they expect it to grow and how much it has grown in the past, and we're going to talk about the figures they share. But also they talk about how brands companies are moving towards Web 3 and using NFTs to help with their loyalty programs, to improve the loyalty programs and to enhance the variety that they offer to their users. And I think I may be wrong. I don't know if this has made its way into these kind of industry reports before, but it may be one of the first at least that talks about Web 3 for the general market or for the general industry. What do you think? Are you excited about this? Hopefully.

Speaker 3: 13:46

Yeah, no, definitely. So let's dig into some of the data points here. So let's see the Global Loyalty Market is expected to grow by 12.7% on an annual basis to reach $135.9 billion in 2023. It also states that the Global Loyalty Market will continue to grow over the forecast period and is expected to record a compound annual growth rate of 12.2% between 2023 and 2027. Finally, they say the Global Loyalty Market is forecast to reach $215.4 billion by 2027. So that's solid growth for an industry and obviously we've been watching the industry and we believe in the strength of the loyalty market.

Speaker 3: 14:32

But it's really interesting to see you know to your point that they're calling out new technology like NFTs and Web3 as a piece of the overall loyalty view. So, again, like you mentioned, this wasn't a report coming out of a crypto focused research firm. This wasn't, you know, coming from somebody who has a vested interest in crypto or NFTs. This is coming from a research firm, you know, with 2,500 pages of reporting and a $7,500 price tag, coming from a firm that obviously values deep and good research, and for them to call out at a very high level in the executive summary, that NFT-powered loyalty programs are entering the picture is really, really interesting and I think it's an important inflection point as we move into the next phase of NFTs. So talk to me a little bit about some of the brands or some of the initiatives that they called out on the NFT side.

Speaker 2: 15:28

Yeah, it's also interesting to point out how brands and companies are going about this, and I think this speaks of the moment in which we are in which we are, because they talk about how most of these companies are going into Web3 via partnerships and, for the most part, they talk about Polygon. We also did this in a recent episode, where we talked about how Polygon is becoming the place to go or the place to be for most of these companies using Web3 for their loyalty and membership reward programs, and they talk about Polygon partnering with Chacha, matcha, starbucks, lohti Group and, of course, there are plenty others that we've covered in the past. And I think it's interesting how most of these companies are getting through partnerships, as they say. And, yeah, I don't think this is going to be the rule moving forward. Probably in the future it will be something that companies try on their own, but right now, I guess, because the ecosystem is still fairly new, they're going there with somebody who knows the place, holding their hands, I guess, to make the transition easier and to understand where they're getting into.

Speaker 2: 16:38

And, yeah, so they also covered that. And one more thing that they covered I think it's interesting and I would like to hear what you think about this is they use one of the main programs that has worked well in the past, the Panera Bread Membership Program, which did very well and surprisingly well. This was one of the projects or programs that I did some research on and, yes, it was initially thought that this wasn't going to work very well and eventually it worked really well. So they're using this success as an example of a company that tried membership programs, has success doing it and it could be leading these efforts of other companies, of course, getting into more membership programs and, specifically, restaurants. They talk about a lot about restaurants getting into membership programs and potentially plenty of them doing it through Web3, because we are seeing this trend happening right now.

Speaker 3: 17:40

Yeah, you know we talk a lot about membership and loyalty on this podcast and alongside the work we have going on at step three, but the trend of companies turning towards membership programs, I think is something that's been in the works for actually quite a while. So if we think back as far as maybe the beginning of Amazon Prime, that's probably the first mass adoption, retail-oriented consumer membership program that really drove, I think, strong commercial success and was really became kind of a household name. Right at this point. There are very few people who shop at Amazon or e-commerce at all who aren't familiar with this concept of Prime, at least in their major markets, and so this idea of membership has been something that has been proven both online and offline in the past, and now we're starting to see this happen at a smaller scale with smaller brands that are looking at the model and saying you know, transactions are cool. Transactions obviously benefit the business when somebody spends more with us, and we can recognize that to an extent. We can recognize that with a discount to the consumer, but it's also a very delicate balance. Loyalty programs that are strictly based on points and discounts have to be very well managed in order to remain profitable for the business. At the same time, it's hard to find that tipping point for the consumer where it's actually worth the hassle of collecting these points and then using these points to get a discount or get some sort of no freebie or something. What's interesting about a paid membership program is that your consumer is putting skin in the game when they become a member of the program. So, looking at something like an air bread, looking at something like even Costco, for instance, in an offline environment you have people that are paying to become part of a club, knowing that membership in that club comes with a set of perks that nobody else can get. And so, in addition to the great deal like at the bottom of this, everybody wants a good deal and I think that's People continue to drive consumer activity. But in addition to getting a great deal, there is something interesting. I think that there's a psychological switch for people when they realize that they're part of an exclusive club and membership can do that. So I really do think that in the future, as loyalty programs, as this report states, maybe come back into fashion or find a larger adoption with companies, I think we're going to start to see the evolution of loyalty programs that starts to morph from a strictly transactional you know, get points, spend points program into something that's much more experience driven, that's much more about joining a club, that's much more about Even having fun or enjoying community interaction within that club.

Speaker 3: 20:33

I guess another example that I'll throw out there to compliment this piece of news is sweet green. There are a newer brand. They've been in market for five or six years, maybe a little bit longer in their early markets, but they're a, they're a restaurant chain and they do like fixer of healthy food. So you walk in it's kind of like a salad bar, chipotle style salad bar. You go in and you make your salad and it's just really good, healthy, simple food.

Speaker 3: 21:01

And they launched this program in twenty twenty two called the sweet pass and the sweet pass program. What's interesting about that? They have two versions. They have a free version which anybody can join and you get baseline discounts and you know, you get a few perks here and there. And then they launched the sweet pass plus program on top of that. And sweet pass, sweet pass plus, it's a paid program. It's, you know, ten or fifteen dollars a month and that unlocks even more benefits and it gives you access to even more chances to, you know, enjoy your experience with sweet pass, whether that's through engaging with them, maybe at events, or additional Sort of perks for the per members, but also better deals. So I think you know we continue to see this play out in market, where these membership programs are evolving from being Maybe a very small niche interest to something that can actually drive as much value as a loyalty program and in fact compliment loyalty programs In a much more interesting way we'll be right back after a word from our sponsor.

Speaker 1: 22:03

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Speaker 2: 22:34

Yeah, you talked about ski having a skin in the game, and I want to talk about something similar, which is engage to earn, which is a new concept.

Speaker 2: 22:43

We're gonna be talking a bit about this.

Speaker 2: 22:44

Well, I think it's.

Speaker 2: 22:45

You did you tell me what you think, but I'm yeah. So we're gonna be talking about engage to earn and specifically about this program launched by Gucci that recently revealed that the holders of an NFT that was sold months ago, I think in March, are now able to obtain physical items from Gucci, of course, as well, as long as long as they perform or do some kind of work in the, in the game that Gucci has created. So, basically, you were able to obtain via payment, of course NFT in the past and as long as you did something with this NFT, which gave you access to a game that Gucci created, then now you can receive new NFTs and you can swap these NFTs or Be be awarded these, these physical items, thanks to you having this, this NFTs that you not only paid for but you also earned. So this is where the engage to earn part comes, comes into play, and I would like to hear, first, if you've seen this engage to earn part in the past, and then you're also your first impressions on this move by Gucci.

Speaker 3: 24:05

Yeah, so engage to earn. I think it's something that I've seen this in a few smaller NFT projects, not specifically for redeeming physical products, but the idea that the more you engage with the community, the better your benefits are or the higher status you have in the community, and I think this is a really interesting model. It's it's rooted really in in video games. To be honest, I think, like most gamification, looking to video games or other types of games Provides a really useful model for thinking about how do you keep people engaged, how do you keep them motivated to keep going. And what's interesting about this example is that, with the engage to earn model, you really you're asking people to things. You're asking people what do you have? In other words, what NFTs have you collected that show that you're a fan of our brand? And then, what have you done to, what actions have you taken, how you engage with us to prove that not only do you hold these things, but that you're also an active participant in our, in our community, and why I think that's important is you know the thing about NFTs.

Speaker 3: 25:12

One of the great things about NFTs actually is that they're tradable. We can sell and buy those things freely, as because they're completely owned by us, right? So when I own a Gucci NFT, I can take that to open sea and I can put that on a marketplace and I can put it up for sale. However, if you're Gucci, do you want people just buying the NFT and coming in and claiming benefits or do you want them to prove that they're also an activated customer? And I think most people would say it's the latter, and so an engaged to earn model is basically giving us a new way to describe or to identify our customers who have these digital collectibles from our brand but who are also participating in our ecosystem.

Speaker 2: 25:59

What do you think about this other part? So in the last episode we talked about Louboutin, I believe, and Farrell Williams, the singer, slash designer. We'll just go with Farrell Farrell, okay. So we talked about this project and this program and in this case, if you remember, you purchased an NFT a somewhat pricey one and this NFT then gave you access to a physical item. In this case, you are also obtaining a physical item, but you not only need to have the NFT, but you also need to do some engagement in some way.

Speaker 2: 26:43

Right, I wouldn't say play to earn, because it's not really a game. You have to perform some actions. So engage, let's say, to use the word in that Gucci is using. And I find this to be different somewhat, because we've seen a lot of, as you said, games doing this, but you always get at least in my estimation you always get digital stuff. So you do things in the digital world and you get digital stuff, and to me, it's a bit different when you do something in the digital world and then you get something physical. It's still an item, but one is tangible and requires work to be done, and the other one is digital and also requires work, but can be reproducible much easier and with a lower cost, and I think this makes a difference and it makes the whole idea of rewards and using NFTs and using these platforms way more interesting.

Speaker 3: 27:39

Yeah, you know there's a duality here, right, there's on one path, a customer can collect NFTs, digital collectibles, and they can also participate in the ecosystem. So it's pairing ownership with engage to earn, and now that becomes my identification as a customer in your ecosystem and maybe that's how I unlock those other tiers. In the Beoleti example, we were talking about that tier three, the ultra premium level, where I get access to things like a conversation with somebody inside of their company. You know, there's only so much of that that you can give away, and you want to make sure that, if you're engaging with somebody in your community that way, that they're actually invested in your business. And so I think engage to earn plus ownership is one path where consumers who are just your super fans, your super advocates that's the way you find those people and that's the way that they can actually signal to you that they're your super fans and they deserve to be treated differently. I think.

Speaker 3: 28:40

On another path, though, there is this interesting thing happening with NFTs and redemption of things like physical goods, where the second path somebody can be a customer with you using an NFT is to simply think about that.

Speaker 3: 28:53

Nft is a way to get a great deal. And so you know, going through some of the calculation here on this example, it's possible that somebody who buys this NFT on OpenSea and then uses it to redeem a bag is going to get a better deal. Right, and they're going to get a better deal, a better deal, a better deal, a better deal than they might pay in store. Now they had to go through a little bit of friction and some hoops and they obviously had to go find that deal on their own. But that's another path where consumers can start engaging using web three mechanics and ideas. That brings business to your door but also allows the consumer to kind of more passively just deal hunt, if you will. You know so maybe they're less and less involved with your brand. They're not really on the engage to earn path. They still want the deal. They can go to an OpenSea, maybe they can find that NFT, and then they can come to your store and they can redeem that.

Speaker 2: 29:41

Yeah, one more angle here I was thinking about when you were mentioning this, which we may call shopping in a virtual marketplace.

Speaker 2: 29:51

So one thing I was thinking is that of course, there's friction to go in the web three route, but we don't know how much this friction costs versus how much this accessibility is valued. So I think in the future, when we see more projects like this one launch and more of these projects where you can purchase the item in the real world and you can also purchase it via web three, if we see the price of the web three version be higher than the price in the real world, then this means that the friction is costing less than the value that users get from getting from this being accessible anywhere, and the other way around, of course, if the price of the real world item is higher. So I think this is interesting because it will give us some information as to the value of these things. Let you let the market do these things and then the arbitration tells you, or the arbitrage tells you, where the value is and which leg is more valuable. And, yeah, I think that's going to be interesting to see in the future.

Speaker 3: 31:03

Let me take that one more place, because I haven't had coffee today, so my brain's moving at different speeds. So Is there a world in the future where we actually see NFTs that are basically claims to redeem a product? It's almost like buying an option on a physical product. I could see somebody purchasing an NFT that's a right to redeem a product that today might be $500, but maybe they're a trend spotter or maybe they're really plugged into culture and they think that this fashion item or this accessory is going to go to $1,000. They lock in that price by buying the NFT for $500 and knowing that they can redeem that at any point in time for that physical good. Then that price skyrockets to $1,000. They redeem the product and now they essentially just made themselves $500. What do you think?

Speaker 2: 31:55

Yeah, definitely. I think we're going to see a lot of that After the market is created, of course. Then we will see, via this checking, these two vias the real world and the worth three part which one brings more value to the user because there's friction, but there's also accessibility. In the other way, in the other case, there is less friction but less accessibility because I don't know, I don't have a Gucci store near me, for instance.

Speaker 3: 32:27

I think we're going to see a metric on this in the future. Physical to virtual ratio.

Speaker 2: 32:32

Yeah, I don't think we have this yet, but it's coming. I think it's coming. We talked about coffee, the part that you like, this part in particular. We talked about industry growing in terms of loyalty programs. We've seen the growth in the past and how it's projected to be like this in the future. We've also talked about Gucci doing something similar to what Louboutin did, but adding a few key differences, in my opinion, which take away that you want to give us today based on these news.

Speaker 3: 33:12

I think what these three items to me sum up this week are really that we're starting to see more nuanced and more sophisticated ideas come to pass in NFT driven loyalty and just NFTs. In general, from a brand perspective, we are seeing companies start to delve into Web 3 in new and interesting ways that I think are really starting to lean into some of the native properties of Web 3, things like ownership, things like participation, things like open and free markets that allow people to easily trade their digital items. What started as a speculative area of growth, I think when it comes to loyalty, as this report that we talked about calls out, this is actually starting to become. Nft driven loyalty is becoming a bright spot within the industry that I think we've maybe not unlimited, but plenty of room to grow in terms of bringing the power of Web 3 enhanced membership and loyalty to businesses of all sizes.

Speaker 2: 34:19

That's a nice takeaway, I like it. Okay, I will leave you on that one with that one, and well, good to see you, as always, and I will see you shortly, I guess.

Speaker 3: 34:31

Sounds great. Have a good vacation.

Speaker 2: 34:33

Thank you.

Speaker 1: 34:35

Thanks for listening to Marketing Needs, web 3. If you enjoyed today's episode, please like and subscribe in your favorite podcast app.