Token Gating: Unlock The Future of Consumer Engagement
Token gating equips brands with the power to connect with customers, increase engagement, and create a community that cements their leading place in the market.
In this article, we’ll explore what token gating is, how it works, and its benefits. Then we’ll go over a few practical examples in the market.
You’ll also learn how Mojito can provide the resources to make token gating possible as an enterprise brand web3 solution provider.
What is token gating?
Token gating (also known as tokengating, NFT Gating) creates value for customers by offering limited-access benefits, like private communities, events, or additional assets on a decentralized network.
The catch? Only owners of the token can access these perks.
This creates exclusive ecosystems where consumers must hold a set amount or specific version of a given token in order to access certain privileges. Token ownership provides potential access to many perks and rewards this way. Tokens are usually distributed through a free mint or primary sale, and can typically be traded on the secondary market.
Tokens can be purchased through a brand’s custom marketplace or places like OpenSea and bought with different types of cryptocurrencies such as Ethereum.
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Web3 and token gating: How it fits together
Web3 refers to the third iteration of the internet:
- Web1 offered static informational pages.
- Web2 invited users to create their own corners on the internet with social media.
- Web3 gives everyone the power of digital ownership and sovereignty online. Web3 proposes a decentralized network and the ability for each user to control their own data.
All stages are popularly summarized into three words: read, write, own.
How tokengating works
A token proves digital ownership of an asset, which can be verified on the blockchain.
"Token gating" limits access to exclusive offers for token owners only.
For example, a luxury brand might sell limited-edition watches that come with a tokenized certificate of authenticity of the physical product as well as a digital representation, and then provide token-gated access to private offers, communities, and events.
When someone earns or purchases a token with their digital wallet, the transaction is recorded on the blockchain, a public and decentralized ledger.
There are many ways to get a token from a brand. Customers could have purchased a product that included one, or they could have bought a meme, image, or art piece as part of an NFT project. The original owner can also resell tokens.
Once someone has a token, they can use it to enter your gate.
For example, if they join a private chat community on Discord, they could connect their digital wallet containing the token to get access.
Or, they could scan a NFT QR code and get benefits directly from your brand --like how the Tampa Bay Rowdies operate their digital season pass, to increase season ticket holder engagement NFT holders scanned a QR Code in stadium at Food & Beverage locations. By scanning the QR Code the point-of-scale verified ownership of the NFT and passed on a discount, exciting season-pass-holders to spend more across the season of games. All powered by NFT QR Code based benefits or tokengated discounts.
You can leverage many opportunities, especially if you partner with an enterprise solution provider that can create the right system and support for you and your customers.
Token gating in a nutshell: A fan gets ownership of a token => they use it to access exclusive assets, experiences, and/or communities => they can hold the token and continue to receive benefits, or sell it on the secondary marketplace.
Embracing web3 and consumer engagement
The changing economy is teeming with possibility, and web3 innovations are transforming the landscape for everyone. Brands can embrace these innovations and create a remarkable experience for their most passionate customers.
But besides excitement and long-term trends, brands can’t ignore web3. Here’s the bottom line: Consumers continue to adopt web3 principles.
They no longer want to read information or solely interact online. They want a decentralized and intimate relationship with the brands they believe in. Consumers want to own their creations and assets and control their data.
Web3’s allure for customers is about digital ownership.
We can see this shift with consumers’ changing sentiment on web2, especially as they face data privacy threats.
While consumers might not know everything about web3, their habits point to it. The Washington Post shared some revealing statistics regarding American internet users:
- 72% of users distrust Facebook with their personal data
- 63% of users distrust TikTok with their personal data
- 60% of users distrust Instagram with their personal data
With the rising distrust of Big Tech, along with the growth of the community economy and web3 interest, companies would do well to prepare for the continued shift in consumer behavior.
Customers want to own their data and creations rather than large corporations.
Web3 ownership and transparency reinforce that goal. In turn, brands can win consumer trust, loyalty, and engagement.
Token gating is the best way for brands to get started. Patrons can unlock exclusive community features, loyalty programs, intimate access to brands for super fans, and customer buy-in with assets.
If you want to see first-hand how your brand can leverage token gating and community memberships—and keep up with web3 trends, analysis, and profiles—sign up for our newsletter.
What are the benefits of token gating?
In this new and sprawling landscape, there are plenty of ways brands can use token gating to increase their value and win loyal customers. NFT token gating has many creative uses and benefits, and many have yet to be discovered.
Ten token gating benefits
1. Viral growth opportunities
Word of mouth is the most effective form of marketing, and web3 token gating helps fuel it.
Whether through a surprise “drop” or project release, fans get excited and spread the word about the opportunity.
They share value increases of the token or the cool art that comes with an NFT. All this buzz ignites online activity and grows your reach.
Fan clubs are one example of this—as we’ve seen influencers and celebrities experiment with in the past—such as VeeFriends, Flyfish Club, Stoner Cats, Bored Ape Yacht Club, and more.
2. Increased brand loyalty and engagement
When customers collect and own a piece of your brand, they are more likely to become long-term buyers. Not only will they continue to purchase from you, but they will also serve as natural ambassadors of the brand.
Additionally, any private community or exclusive perk will continue to increase their loyalty and positive brand perception.
3. More scarcity-linked value
When something is perceived as scarce, customers see it as more valuable—especially in the luxury market. Token gating can offer limited access to products, events, and communities, adding an incentivized component in purchasing or investing in your brand.
Companies can also offer token-gated products with extreme exclusivity, adding a high collectible value to the brand.
4. High-growth communities
One of the most powerful benefits of token gating is its potential for powerful brand communities.
When super fans have a chance to buy into a private community, they help build and grow the brand. Not only do they generate buzz for the company, but they also help establish purpose and acceptance that can only be found in tight-knit communities.
5. Logistical and security advantages
Token gating also provides a more efficient system for selling and reselling event tickets and other logistic-heavy customer experiences.
For example, if your brand holds an important event, it can be made available only to token holders. If they cannot attend, they can sell it to other token holders, keeping the event exclusive to the target audience.
Offering a secure transaction method also avoids many kinds of scams and other unfortunate realities of ticket-buying.
6. Additional value to products
Your overall value can increase as you create digital assets, communities, and other valuable components through tokens, especially if attached to your products.
When a customer buys a product that comes with an NFT and token-gated advantages, they know they’re getting more bang for their buck.
7. Token-gated commerce for exclusive sales
Sell highly limited products to specific token holders to generate more value and interest in joining your web3 community.
8. Valuable insights with traceability
When you use token gating, you can easily trace who uses your benefits and when, as well as who they sell to. You can use this information to improve your overall brand and find out what interests people.
9. Customer buy-in
Not only would customers get exclusive value from tokens, but they could possibly turn a profit when they sell them. When they join a token-gated community and club, they invest in the brand with the potential for real return on investment.
10. Recurring revenue
If your token gating is linked to a card or art as an NFT, you make a percentage of that sale and further revenue when it’s resold.
This is a substantial opportunity—considering that your project could increase in value as it becomes more popular. It can increase your revenue or help you re-invest as you build your brand’s future in web3.
Examples + use cases of token gating
1. Enriching brands through social clubs
When Liverpool FC wanted a way to build its fanbase community, Mojito knew it could utilize token gating for the best solution.
The club launched the LFC Heroes Club collection on Sotheby’s Metaverse. These NFTs not only provided great art and collectible assets but jump-started a digital membership club.
This technology establishes ways for sports teams to connect with their fan base, rewarding them and even converting them into partial owners through distinct forms of on-chain digital collectibles.
These digital assets can be seamlessly claimed, purchased, sold, or held.
With ownership of an LFC Heroes Club NFT, fans gained entry to a community with virtual hangouts, match day activations, generous giveaways, spirited competitions, real-world meetups, guest appearances, discounts on Liverpool Club merchandise, and other benefits.
While the NFTs are original, authentic, and limited edition digital collectibles, the project goes beyond memorabilia. It delivers real-world utility and benefits to its owners.
Brand-led membership programs are one of the next major things in web3. There is no better place to start than the global sports community, which has long united people worldwide around a common passion.
This pioneering launch by LFC pushes the frontiers of worldwide fan engagement, with a ripple effect anticipated across diverse industries as major brands embrace the practice.
2. Elite access
Lyrical Lemonade released an NFT project collection of different carton designs. The media and events company took full advantage of token gating when it limited the NFTs to 500 and required ownership to get exclusive access to rewards.
Holders get merchandise only available to them and exclusive NFT ownership opportunities. Owners also get tickets to the Summer Smash event.
Mojito facilitated the project by building out the token-gated website and platform to make the project successful.
Toni Sudimac, Head of Partnerships at Lyrical Lemonade, stated in an interview with Boardroom:
“Our thing was that we wanted to protect what Lyrical was and not make any abrupt changes because the last thing that we would want to do is alienate our supporters. So that’s where the idea for the Carton collection came in. We wanted to kind of test the waters and do it in a way that was true to us.”
The test worked. Because of Lyrical Lemonade's success, the organization wants to invest more in web3 opportunities.
In the same article, Sudimac expressed his wishes to streamline the entire token-gated experience, mentioning that at future festivals he would like holders to scan their NFT for direct access at the entrance.
Token gating, web3, and brands
As web3 provides more opportunities and consumers increasingly crave community, endless possibilities exist to create a growing and loyal customer base.
Web3 applications and opportunities are new and developing, and the brands that take advantage now will position themselves for future growth opportunities unique to them.
As managers and leaders work to find ways to introduce their brand to web3, they can utilize token gating to get started and leverage its practical uses now.
Choosing your partner to launch token-gated experiences
When you’re developing your token-gated project, there are many factors to consider.
You want the process to be user-friendly and enjoyable for your customers. You also want it to be successful, secure, and able to position your brand for continued growth.
The right partner can deliver your infrastructure, UX, and go-to-market so that you can successfully launch your web3 initiative.
Mojito's consumer engagement platform makes using blockchain technology, NFTs, and token gating simple.
Our solutions combine the user-friendliness of web2 platforms with web3 benefits. You can create your own NFT platform marketplace, mint NFTs, launch NFT drops, nurture customers, generate reports, and more.
Mojito’s winning API and enterprise SaaS solution provide you with the following (and more):
- Token gating setup and management
- Dynamic NFT setup and management
- Simplified wallet setup and management (non-custodial and custodial options)
- Memberships, rewards, and loyalty program setup and management
- Fiat and crypto payments on primary and secondary sales
- Free mints, buy-now drops, Dutch auction, and standard auction
- Secondary marketplaces to list for sale and make offers
- Minting setup and smart contract deployment
- Smart contracts and automation
- Insights and reports
- Multi-party royalty splitter
- Product guides, FAQs, and technical support
Web3 memberships are the future of brand loyalty, and token gating makes it possible to customize and build your club for passionate customers. Communities fuel brand growth, and it’s never been a better time to get started with web3.
Once brands build a thriving membership online, there’s no telling where that momentum will lead. Devoted fans become ambassadors, launching a buzz campaign that doesn’t stop.
But if companies want to maximize their success, they need to start now. This is the perfect time to build a community foundation so that you become the market leader when web3 adoption comes full circle.
Learn how to take advantage of token gating and web3 opportunities with Mojito. Get in touch with Mojito today to bring your web3 strategy to life and make your token-gating vision a reality.
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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.
