NFTs: the future of CRM?

Hype and opportunity are swirling around NFTs in equal measure. While some brands are guilty of jumping on this latest tech bandwagon for no good reason, it's also clear that there are beneficial routes for advertisers to take. Not least in terms of connecting with younger audiences and building brand purpose.

A further potential growth area for the adoption of NFTs is in relation to CRM strategies. That's due to the capacity of the tokens to store ownership and purchase data within their digital certificates, alongside the chance to deploy them in retaining and building a customer base.

But do NFTs really have a key future role to play in core CRM plans for major brands? Lucy Halley, head of strategy, London at Havas CX helia, argues that NFTs today lack the widespread adoption to drive valuable customer behaviours.

She says: "We don’t see an immediate application for many of our more democratic client brands – clients for whom, with 15 million to 20 million customers, their bases are by definition a broad church. NFTs currently don’t have the mass appeal to be effective in rewarding and habitualising existing valuable customer behaviours, or in driving new ones."

Beyond NFT art

However, this situation could change quickly. Dickon Laws, experience innovation partner at Ogilvy EMEA, makes the point that the ad industry remains focused primarily on NFTs as a form of digital art: "The whole metaverse and NFT space is in the Stone Age at the moment. The way we've attached this to digital art, it's like someone invented the wheel and is using it as a hat. I really think the future lies with CRM but people are still trying to make art and collectibles work for CRM."

As time goes on, the potential for NFTs is likely to grow where brands look on CRM as a chance to reward existing customers with items of tangible worth that add genuine value to the relationship, as opposed to tools for encouraging incremental sales.

Viewed in this light, Tom Hostler, head of brand experience at Publicis.Poke. argues that introducing NFTs and tokenomics into CRM planning could play a vital role in minting virtual objects of value to both the brand and consumers – these objects should offer "scarcity, permanence, and tradability" that a community can get excited and rallied around.

These objects, Hostler says, could reward loyalty not only with discounts and early access to products but "access to complementary experiences or services that extend and augment their original purchase."

A recent example of providing these experiences through NFTs was The Australian Open in tennis, and its venture into the NFT marketplace, which enabled the owners of small squares of a tennis court, via their NFT, to be rewarded with bonus material if a winning shot landed within it

Ben Richards, chief experience officer at VMLY&R, says that activity such as this enables businesses to blend the physical and digital worlds "to give consumers a feeling of ownership in the brand, but also a case to show how NFTs can offer loyal fans even more than the NFT itself, rewarding those who have invested."

NFTs for mass audiences?

Some larger consumer brands are already investing in this future despite the potential downsides around security and fraud, and the environmental impact of NFTs (the majority are bought and sold using cryptocurrency Ethereum, which has a massive carbon footprint). Nike, for instance, acquired the digital fashion studio RTKFT in December to boost its use of NFTs in the virtual world, and is also using the tokens as a tool to reward its top-level customers.

But these rewards apply only to a very niche section of Nike's customer base. Is building ongoing relationships with mass audiences using NFTs a possible growth area for advertisers? Ogilvy's Dickon Laws says: "They have to figure out what it is that they NFT. It's a brave brand that sets out to fractionalise ownership of a product. You struggle to see a brand like Unilever's Dove give ownership away in the same way."

Offering benefit for the customer is essential. Havas Helia CX is working, for instance, with Aston Martin F1 on NFTs to bring together "super-engaged fans" in the Formula 1 community around their shared passion, providing them with access, control and ownership that has historically been absent in the sport of F1.

However, there is perhaps some longer-term potential in larger loyalty programmes. For instance, Ogilvy is experimenting with a client on a reward mechanism where the brand issues an NFT of aesthetic value, given away free or for a small amount. This incentivises customers and also enables the advertiser to build a "white list" of consumers, to which it can run activity to reward over time.

NFTs in the metaverse

Beyond this, the most valuable use of NFTs in CRM terms is likely to be as part of a wider metaverse approach. Ogilvy's Dickon Laws says: "Every metaverse strategy should start with an NFT strategy, because that's the front door for your consumers going into the metaverse." This is most likely to involve offering customers a "utilitarian focus" through NFTs - luggage and other items, for instance, to complement travel experiences.

A joined-up approach that covers both virtual and "real-world" experiences is the recommended route for advertisers using NFTs to provide something that customers won't be able to find in either world. In addition, there's an opportunity to explore ways of delivering a brand promise in the metaverse through NFTs that provide consistent and meaningful experiences

VMLY&R's Ben Richards is convinced of the potential for NFTs to play a key role in the future of CRM. And he concludes that now's the time for brands to invest in "immersive training" across their operations if they want to capitalise on the potential of NFTs to build customer relationships as the technology moves into the mainstream. He says: "It’s not about jumping on a trend, but making the right strategic choice for your brand and ensuring you are showing up in an authentic way."