Recap | What are Redeemables, great brand examples and build considerations
Image credit: RTFKT x Nike Cryptokicks
Here’s an explainer on Redeemable NFTs, today’s most helpful use cases and build considerations based on a number of active projects and exciting conversations with brand leaders at Mojito.
What are Redeemables?
Redeemable NFTs are a digital token that can be exchanged for a physical good or service in the future (e.g. physical items, pre-sales, tickets, merch, physical artwork, special offers, access). Along with RWAs (real-world assets) and asset-backed NFTs, these terms are all used interchangeably, so for the purposes of this explainer, we’ll call them Redeemables.
Redeemables are gaining significant traction as a way for brands to seamlessly tie together physical goods and digital twins, giving the brand enhanced engagement/loyalty opportunities as well as net new revenue streams.
What are the brand benefits of offering Redeemables?
- 🛍️ Offers consumers tangible value | This makes a digital NFT more attractive to potential primary and secondary buyers because they can at least peg the value of the NFT to something tangible in the real world.
- 🖼️ Better liquidity and optionality for consumers | Especially for traditionally illiquid and siloed markets like art, handbags, sneakers, watches, or wine & spirits, NFTs offer brands and buyers more transparency and optionality when buying and reselling.
- 💹 Secondary market revenue for brands | Every time the Redeemable NFT (which represents the physical good or service onchain) trades hands, the brand can receive a piece of that sale through a royalty enforced on-platform and possibly beyond.
- 💰New revenue streams for brands | Tap royalties from the secondary market. Generate incremental revenue from preorder trading. Incentivize stockpiling with future rewards and benefits.
- 🧐 Authentication to ensure a premium product experience on the secondary market | Redeemables can also offer authentication assurances to ensure an excellent Brand experience in the primary and secondary. Examples include a Certificate of Authenticity (e.g. Nike Air Force 1s or Ticketmaster tickets), or storage assurance (e.g. temperature, packaging, light for Wine) or insurance certificates (luxury products).
- 👀 Open-source visibility of redemption events | When a redemption occurs onchain, one NFT is submitted to the brand and another NFT from a 'redeemed' collection' is received in its place. This method enables distinct clarity between Redeemed and Unredeemed NFTs onchain while retaining the ability to market to users based upon onchain data and assets.
What are some notable use cases?
Retail
Nike’s Cryptokicks are digital collectibles that can be redeemed for their physical counterpart sneakers in a process RTFKT calls ‘Forging.’ During Nike x RTFKT’s Forging events, "holders of eligible digital collectibles can redeem for limited made-to-order physical products. Forging events last for a limited time, so always check for dates and set reminders."
Premium fashion
Cristóbal Balenciaga’s ‘To the Moon’ drop came with redeemables such as Balenciaga gear, gift cards to designer Brands and even the 70-year-old drawings by Cristóbal.
Sport
Every Australian Open tennis AO ArtBall NFT was redeemable for 2 tickets to the Australian Open tennis grand-slam in 2023.
Premium beverages
Glenfiddich single malt Scotch whisky launched 200 limited-edition ‘Chinese Lunar New Year NFTs’. Each NFT is linked to a physical bottle of Glenfiddich 21 Year Old Gran Reserva single malt and serves as a digital receipt verifying ownership and authenticity. NFT collectors can hold it, resell on an NFT marketplace, or redeem it for the physical bottle.
Considerations for creating Redeemables
What happens to the NFT when someone redeems the real-world asset? In short, it depends on how the brand builds it.
A number of options are possible with differing pros and cons, with one winning approach emerging.
1. 🔥 ‘Burn it’
The NFT is burned when the consumer redeems the physical good or experience. The NFT is no longer functional or ‘owned’ by anyone.
Pros: simplest to execute. campaign is over.
Cons: ‘Burning NFTs’ removes people from your token-holding community, which brands very typically shouldn't want to do.
2. 🛍️ ‘Trade it in’
Consumer sends the NFT to the brand’s treasury wallet, and once received, the brand ships them the physical item. The NFT is now owned by the brand.
Pros: the brand owns the NFT supply and could choose to resell to other holders at a later date.
Cons: the brand loses a valuable customer, the consumer is no-longer invested in the success of the NFT project, only enjoying the lifetime value of the physical item. It signals that the brand sees more value from owning it than the customer does.
3. 📭 'Stamp it’
When the consumer redeems the physical good, the NFT metadata is updated to distinguish [REDEEMED] v [UNREDEEMED].
Pros: Consumers are still invested in the success of the NFT project. Maintaining ongoing onchain continuity is a priority for both the brand and holders.
Brands get access to a secondary market, authentication assurances, new revenue streams and opportunities to create imaginative loyalty tiers that build LTV.
Consumers get to choose whether they claim the physical item. Secondary buyers get access to a liquid open marketplace with assurances the NFT will come with the right to claim the physical item.
Cons: Depending on the secondary marketplace experience, consumers may not be able to decipher between the REDEEMED and UNREDEEMED markets and offerings with this technical method, which can result in buyer regret and negative sentiment from purchases of NFTs where the physical item was already redeemed. This is easily managed by issuing a second token. How? Read on:
Serving up a ‘Stamp it’ example from tennis
To crystallize the ‘Stamp it' concept, we’ll unpack a live brand case study where physical items were linked to the NFT, in this example as ‘tickets’ to a live event.
For any brand leader in another vertical, the ‘tickets’ could easily be interchanged with any physical POS item like premium handbags, sneakers etc.
NFT Collection 1
The tennis grand slam event Australian Open launched an NFT project with 6776 NFTs in Collection 1 uniquely numbered #0001 - #6776. The artwork from Collection 1 are tennis balls wrapped with art hence AO ArtBall.
The Redeemables
Every Australian Open NFT from Collection 1 gets to claim 2 tickets to the Australian Open 2023 finals week starting 20th January 2023, for free, redeemed via a simple token-gated experience.
NFT Metadata on Collection 1 was updated
When consumers redeemed their tickets, the NFT metadata was updated to show REDEEMED. The metadata makes up the NFT and is traceable on the blockchain.
Additional NFTs from Collection 2 are issued to holders
At the same time, for consumers who redeemed the tickets, the Australian Open issued them a new NFT from Collection 2 [CLAIMED], directly to their wallet. Collection 2 NFTsfor example could have different artwork, a Certificate of Authenticity (COA) that provides extra validation that the Ticketmaster tickets are genuine.
Why? This is two-fold
- The Brand, Australian Open can isolate which NFTs are associated with [CLAIMED] tickets, distribute tickets to holders via Ticketmaster, track trading data, the floor price of Collection 1 [UNCLAIMED] vs Collection 2 [CLAIMED], reward this new tier of engaged customer i.e. the first claimers of Redeemable tickets, proof of attendance etc; and
- Potential secondary NFT buyers on the secondary market can see which NFTs have tickets [UNCLAIMED] from collection 1, make a bid with confidence they have the right to receive the 2 tickets. The COA can travel with the tickets.
Pre-order visibility
Australian Open can forecast token holder attendance at the stadium gates and revenue holders may spend in the precinct; and has enriched data as to which NFT holders are most likely to attend their live experience.
Our 0.02 ETH 🍃
We recommend Brands considering adding Redeemables to their loyalty stack issue a second NFT when the physical item is claimed so potential customers can easily distinguish between which NFTs on the secondary have had their physical item claimed. Brands get to track trading data between claimed and unclaimed redeemables and reward a new tier of engaged customers to grow LTV.
The future of Redeemables with Mojito
We’re weeks away from launching a live example of Redeemables, we can’t wait to share with you. If you’re interested in building Redeemables into your loyalty stack? Get in touch
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Adopting the Avatar: the Core of Consumer Customization
A brief playbook for brands building for the digitally-native generation.
According to McKinsey, fashion companies are expected to double their investment in technology by 2023. This statistic was one of many released during 2021's digital assets boom, revealing an important truth: consumers — and especially Gen Z — care deeply about owning their digital identities. In the two years since "NFT Summer," we've learned a lot about the evolution of consumer habits in digitally-native spaces. These insights can help guide the future of how brands operate and consumers engage in virtual environments.
As a short follow-up to our last blog post on how web3 is driving a return to the internet's golden age of customization, we're sharing some additional thoughts on how you can build for the next wave of consumer adoption. This evolution is already showing signs of incredible value for forward-thinking brands like Gucci, Valentino, L'Oréal, Adidas, Nike, and many more.
Web3 Returns the Internet to the Golden Age of Customization
This is what it feels like when the future enables what so many users loved most about the past.
MySpace, StumbleUpon, GeoCities, LiveJournal, Tumblr — the early internet thrived on user-driven, customizable experiences that, while rudimentary in design, clunky in function, and altogether useless for major brands (i.e., not monetizable or targettable), offered humans some of the earliest opportunities for representing themselves online.
Two decades later, across multiple transformational eras of the internet (more on this below), what can we learn from these now archaic — and predominantly extinct — platforms? To start, let's set the stage of the golden age of the web and the subsequent erosion of online customization that followed.
These early platforms referenced above were among the first to offer users a customizable digital sandbox that lacked the restrictions — and intrusive, expensive, increasingly ineffective advertising practices — that is now commonplace across tech. These were platforms on which people created, not platforms on which products were sold.
FAANG companies undoubtedly standardized the internet user experience. These companies built easier ways for people to create and disseminate information while creating the ability for the world's biggest brands to reach these new, content-craving audiences through new experiences and digitally-native business models. However, FAANG-style companies have also contributed to the flattening of the once-loved, now-nostalgic digital aesthetic, eliminating (or narrowing) users' ability to find customization online.
Example: go to StumbleUpon right now, and you'll just get dragged between identical Pinterest boards.
Implementing Web3 CRM: Wallets Are the New Email Address
How to Implement Web3 CRM for Consumers
Your customer relationship management system is your business's beating heart. It’s how you nurture customers, track vital information, and make strategic decisions.
Now that web3 has entered the fold, traditional CRMs can be augmented. So the question is this: Is your brand prepared for it? And what does the future look like?
Brands can expand upon their CRM data with wallets and token interactions to build loyalty in the changing digital economy.
If your CRM is the heart, what happens if it can't support your entire customer base along with their actions and interests? Consumers are adopting web3, and you want to be there from the start.
And with increasingly more limitations on what consumer data brands can collect, store, and use, along with apps and systems that don't talk to each other, brands miss out on data everywhere.
You need web3 CRM capability to connect wallets and token usage to your web2 data to accurately paint a picture of your customers.
Enhancing your CRM with web3, you can track and reward engagement across virtually any physical or digital touchpoint and connect it all in one place to analyze and manage.
Onboarding customers to create web3 wallets is the first step to getting started. The good news is that, with Mojito, the process is seamless for new users. They can set it up and manage it with an email address. In many ways, wallets have become the new email address, offering more benefits for customers and providing brands with the holistic data and CRM capabilities they need.
Mojito's web3 CRM collects and pulls all these moving pieces from different parts of the web together to create one remarkably effortless customer experience.
In this article, we’ll compare the differences between a web2 and web3 CRM, the benefits of using a web3 CRM, and how Mojito might be the right fit.
What’s the difference between web2 and web3 CRM?
The CRMs most brands use do not facilitate the needs that web3 has—the biggest one being connecting offchain and onchain data and creating an integrated portrait of customers across all physical and online interactions.
Web2 CRMs provide essential data and communication tools to manage emails, SMS lists, social media followers, eCommerce buyers, event attendees, and more.
But it's difficult to connect every data source you'd like to trigger into your web2 CRM, let alone add new data sources in web3.
Brands can instead use a web3 solution to augment their CRM by connecting data sources in a different way that brings everything together. Companies can create the most connected, data-rich CRM they've ever had.
Brands require CRM solutions to capture the entire customer data picture across both the internet and real-life experiences. In turn, they create a community-driven customer base, increase sales, and use their CRM for better connections, communication, and data.
Wallets are the new email addresses
It's no secret that brands are losing data through their traditional channels. Big Tech companies are reigning in how much data you have access to, like Apple limiting cookies, and how brands now get an incomplete picture of their customers.
Additionally, as customers interact with web3, your brand is in the dark until you establish web3 CRM capability.
Web3 wallet addresses are unique identifiers for users on the blockchain. Their address is recorded when they purchase an asset or trigger activity on the chain. With Mojito, onchain and real-life interactions join together in one familiar experience.
As your customers interact with your brand and create or log in with their wallets, you can associate that with their customer profile.
When a customer logs in on your profile manager, they can add their web3 address, resulting in a holistic view of your customer.
This is a huge opportunity for first-party data. Your brand can get direct analytics from your activities through a verified, authentic process supported by onchain and offchain interactions.
Wallet addresses offer a more reliable and extensive way to gather data on customer behavior, help drive engagement, and make better growth decisions.
Cookies are the new NFTs
While traditional solutions suffer from increasingly limited access to cookies, web3 offers brands a bright and better future.
NFTs are non-fungible tokens. A non-fungible token is a digital asset recorded on a public decentralized ledger called a blockchain. It can be verifiably owned and impossible to forge.
NFTs make it possible for someone to digitally own an asset, which has changed the future of technology. But it also provides a unique opportunity for web3 CRMs, engagement, and data.
"NFTs: your ticket into a brand's action." — Michael Litman
Dynamic NFTs utilize live metadata to gather customer information and drive engagement.
Before solutions like Mojito's Dynamic NFT, non-fungible tokens didn't change. And why should they? People wanted a unique digital asset that would last forever and retain or grow in long-term value.
But as web3 matured, so did the perspective on NFTs.
What if the value of an NFT was change?
For example, artists began to experiment as they created NFTs. They would explain that the NFT would change and evolve. This in itself made it valuable and rose in popularity.
Brands would learn how to use it for data and supercharge engagement only a short time later. Traditionally, metadata remained static, but now Dynamic NFTs update metadata based on consumer behavior.
Brands can leverage metadata in many use cases:
Loyalty programs: Customers can join membership communities when they purchase a digital pass with Mojito's traditional, familiar checkout experience. Every time they interact with your brand across any first-party or third-party platform, like redeeming rewards or visiting an event, their token metadata is updated and fed back into your CRM.
Exclusive access: Brands can implement token gating, limiting access to your brand's NFT or memberships. Gate websites, apps, events, games, and more. When customers check in, their activity becomes trackable.
Enhanced membership and subscriptions: Dynamic NFTs allow brands to sell time-access passes with expiration dates. While owners can always retain the NFT, their subscription must be maintained for full access to benefits. Brands use the metadata to identify subscription holders and analyze their activity (while adding a new revenue stream).
Customer interactions: Brands use NFC-enabled spaces to connect customers with their Dynamic NFTs and events, physical checkout experiences, and more, intertwining digital and physical customer engagement. When someone redeems a reward by scanning a code or object, your brand can track that activity.
Web3 solutions like Mojito use webhooks to send data from third parties back into your CRM. Every time a user takes an action, Mojito sends that data to your CRM and vital tools. Your data is collected, verified, and authenticated in one place, on or offchain.
Mojito offers a cohesive relationship management infrastructure. You can leverage a complete picture of your customers through thousands of interactions involving physical triggers, third-party apps, web2 tools, and web3 activity. Customer actions across the web or in real life can be configured to work with your CRM.
You’ll be able to understand your customers better than ever and reward them for their engagement at a level that was impossible before.
Benefits of using a web3 CRM
You don’t have to worry about a bumpy or complex ride when you adopt a true web3 CRM.
You’ll have all the tools, resources, and tech stack integrations needed to make an enterprise solution for your customers that meets the standards of your brand.
Below are several benefits you can expect when you connect your web2 CRM to a web3 solution.
1. Bring web2 and web3 data together
Mojito facilitates web2.5, meaning instead of "switching" web experiences, brands and customers can use web2 and web3 with no learning curve or friction at all. All is encompassed in one familiar internet experience.
Users can pay with a credit card or crypto and interact with the online apps they've used all these years (as well as easily using web3 apps).
Mojito enables brands to collect and pull necessary data to understand their customers through all web iterations and experiences—all in one CRM solution.
They can use the full power of this web2 and web3 data for events, NFT collections, token gating (exclusive access based on ownership), and other digital ownership experiences.
2. Actionable data for better customer relationships
Every brand wants to improve its customer relationships. Still, as the internet becomes more fragmented, especially with the introduction of web3, improving service and keeping up with expectations will be much more difficult.
Web2 CRMs are not capable of putting all these actions and platforms together.
However, web3 CRM platforms improve customer relationships by incorporating off and onchain activities through a centralized database.
If brands adopt an enterprise web3 CRM, they can meet changing consumer needs and stand out in the market with better and improved relationships thanks to the tools and possibilities web3 offers.
3. Improved sales and marketing strategies
Now, more than ever, your sales, marketing, and customer service teams will have access to the most accurate and transparent data within multiple channels and communities, all in one place. Your CRM can include customer history, preferences, community management details, and more data points within web3.
You can use accurate and more abundant data to analyze customer behavior for improved decision-making. A suitable CRM can also help sales and marketing teams provide personalized messages based on their data, increasing conversions and other KPIs.
4. Next-level customer service
Not only does better, more current information help improve customer relationships but so does the level of service you can provide.
Your team can proactively resolve issues with real-time data collection (for example, tracking customer engagement and pinpointing areas of opportunity), which increases customer satisfaction.
Brands can go beyond positive experiences and create the best problem-solving processes and community-building opportunities for your customers.
5. Greater ROI potential
Web3 CRMs connect your stack, improving overall sales, marketing, and customer service and building long-term loyalty.
These critical benefits offer bigger ROI potential and future growth. By analyzing blockchain activity, brands can track the popularity of certain products, use blockchain-verified data to track inventory and invest in the areas customers are most interested in.
Web3 CRMs also open new revenue streams, like selling digital assets with NFTs. Brands can even test the reception of new physical products by selling limited sample releases with “NFT digital twins” (when a physical good comes with an NFT representation at purchase).
6. Strategic positioning
You can better position your company for the economic shift to the decentralized web with a web3 CRM.
For example, Mojito's web3 CRM also includes "web2.5" features for the transition.
Some customers won’t know how to navigate web3—they’ll want simplicity. Others will want every tool available to them. Web2.5 serves everyone. New users can pay with a credit card and have a user-friendly experience. At the same time, web3 adopters can take full advantage of innovation and opportunities with cryptocurrency payments and more.
Brands will serve web2 and web3 users for the internet's evolution, and they'll have a robust CRM foundation for the new economy.
