How Brands Use NFTs For Community Building And DAO Access

FEWOCiOUS auctions five new unique NFT works of art, along with five physical paintings and never-before-seen drawings in a collection titled “Hello, i’m Victor (FEWOCiOUS) and This Is My Life” at Christie’s on June 28, 2021 in New York City. (Photo by Noam Galai/Getty Images)

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Many companies are exploring the utilities of non-fungible tokens to help brands gain new audiences, build loyal communities, and stand out from competitors. In fact, the crypto market aggregation site CoinGecko’s found that 77% of crypto-savvy survey respondents list “utility” as the most important reason for buying an NFT.

NFT buyers are still a niche. Only about 3% of American internet users owned an NFT in 2022, according to data published by the analytics platform Finder, even though NFTs have been in the public eye since 2017. NFTs associated with brand experiences appear to be the ones gaining steady traction throughout price movements and market cycles. From physical merchandise perks to exclusive event passes and loyalty programs, brands that are bringing the metaverse into the real world are nurturing communities of NFTs fans.

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For instance, StarbucksSBUX has always been in the “surprise and delight” business; it recently expanded this strategy to NFTs, offering free NFT stamps, extra points and a host of real-world benefits for members of its Odyssey community.

For a different type of loyalty perk example, the fine jewelry company L’Dezen by Payal Shah created a smart contract for a “digi-physical” pair of 18k gold, 2.27-carat diamond earrings to be shipped to the highest bidder. The winner received an insured pair of one-of-a-kind earrings and a PFP NFT that allowed them to digitally impose the earrings onto their social media profile pictures.

In short, a variety of companies are using NFTs to bring more value to customers.

Driving Engagement Through ‘Phygital’ Rewards

Customers are increasingly interested in tokens that can bridge the gap between virtual and physical, offering tangible value outside of just owning it. This kind of “phygital” (physical + digital) twin system is an effective way for brands to gain more engagement while also allowing customers to try something new and be rewarded.

One recent example is the “Pharrell Pack” by the music artist Pharrell Williams, who recently collaborated with the NFT collection Doodles. Not only does this pack contain digital apparel from activewear labels like Adidas, Humanrace and Billionaire Boys Club, but it also gives holders a token that can be cashed in for real-world clothing.

Another collaboration is the partnership between Tezos and McLaren to launch a collection of NFTs, starting with various digital components of the MCL35M 2021 Formula 1 race cars.

“The project encouraged active brand involvement from more than 450,000 enthusiasts hoping to get all 23 McLaren Racing Collectibles, one from each race,” Victoria Zavyalova, the head of brand culture and storytelling, Fuelarts x TezosXTZ accelerator, told me in an interview.

Digital-to-physical experiences are more than a passing fad, especially for luxury retail brands like Dolce & Gabbana. The fashion brand released an NFT collection called “Collezione Genesi” in 2021; it still offers utility today, allowing holders to access an exclusive online community. At least one original NFT buyer also received a custom-tailored physical copy of the Glass Suit NFT, a unique Dolce & Gabbana suit. Utilizing NFTs to encourage a sense of belonging among devoted shoppers might be one of the best mainstream use cases for blockchain technology.

Optimizing Customer Reward And Loyalty Programs

Loyalty programs aren’t unique to corporate NFT experiments, yet NFTs can help traditional customer reward programs stand out in oversaturated markets. The average American is enrolled in 16.6 loyalty programs but only active in about 7.6, according to Statista. As such, smart companies are turning to the metaverse to deliver the sense of novelty and personalization that make a brand memorable to customers. Many brands use NFTs to revitalize customer engagement through digital surprise-and-delight moments.

For example, Brooklyn café Gertie teamed up with the loyalty platform Blackbird, allowing users to get free perks like bakery items and coffee through digital experience, essentially reinventing the traditional punch card.

Gertie founder Nate Adler also mentioned to me a bigger upcoming program backed by investor Fred Wilson. They are opening a new restaurant in Brooklyn called Gertrude, offering anyone the opportunity to become a founding member based on three levels of membership. Benefits include token ownership, a friends and family invitation to pre-opening dining, access to secret menu items, a custom cocktail named after you, and more.

NFTs Are More Than A Passing Fad

Some brands are taking their NFT experiments even further by allowing customers to make the decisions through decentralized autonomous organizations, called DAOs.

Beauty brand NYX accomplished this with a small group of NFT holders through its GORJS DAODAO, a Web3 community for beauty creators. Through this collective, NFT-holding members can propose new projects, vote on product drops, and claim both physical and digital rewards earned through community participation.

From the status indicator of owning a blockchain-verified luxury fashion item to the customer reward of getting free food delivered to you, NFTs provide a range of loyalty program utilities that have only started to impact what customers expect and want from brands.

While many NFT holders might view digital collectibles as investments or financial assets, NFTs can also be standalone brand components, regardless of secondary market sales or prices. Such NFTs help brands connect with younger, tech-savvy audiences around the world while helping companies keep track of giving loyal followers priority access and special treatment. With the right business strategy, NFTs can be a powerful tool for community-building while fostering a sense of co-ownership, shaping the brand’s future image and creative value.

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I’m the founder of a newsletter-based publication, Vivid Minds, which focuses on how leaders overcome challenges. I’m particularly interested in exploring the intersection of mental health and the creator economy, as well as the impact of digital trends and crypto on our well-being. In 2016, I had the opportunity to interview Vitalik Buterin, the founder of Ethereum, when ether was just $12, and has been following the crypto scene closely ever since. In the last six years, my work has taken me around the world, from Moscow to New York City. In San Francisco, I helped host blockchain conferences for over 3,000 attendees. In 2018, my own blockchain event in Germany, called Blockchain Visionaire Summit, brought together hundreds of attendees and contributed to the growth of the European blockchain scene.