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NFTs have become a key customer attraction and retention tool for some organizations. Are they something all businesses should be considering?
A non-fungible token (NFT) is a certificate of ownership and authenticity for an asset, typically a digital file such as an image, video, audio clip or other. It certifies that you’re the sole owner of a unique asset stored on a blockchain, which is a secure, shared and public digital ledger that keeps a record of an asset’s ownership history.
Since the technology confirms that you own the original asset and not a copy—though duplicating digital files is very easy to do—it creates a sense that the item is rare. This is what makes the NFT valuable. Each token has a specific value, which varies in accordance with supply and demand in what is a free and unregulated market.
It’s important to understand that NFTs aren’t interchangeable, unlike cryptocurrencies (for instance, all bitcoins are similar and have the same value). However, NFT ownership is transferable.
NFTs as tools for building consumer loyalty
NFTs are often issued for digital artworks sold at exorbitant prices. But beyond certifying these astronomical transactions, NFTs are essentially equivalent to smart contracts. They can be linked to a wide range of assets, such as physical goods, digital assets, an ownership stake in a building or a car, etc.
NFTs can be issued for collectibles, niche items, exclusive products or membership to a group. This is where NFTs become interesting marketing tools. The idea isn’t so much to sell NFTs as a revenue stream, but rather to use them for attracting and retaining customers, as well as creating brand engagement.
Here are a few different ways that NFTs have been used for marketing purposes.
Montreal Canadiens
In the fall of 2021, the Montreal Canadiens started selling special packs of digital pucks, photos and commemorative game tickets on their Dropshot platform. Collectors can now trade these NFT on the platform.
National Basketball League
The National Basketball League created NBA Top Shot NFTs, which are packs of animated trading cards that feature some of the best shots of all time by the sport’s top players.
Just for Laughs
Just for Laughs is selling a collection of digital art and highlights from the comedy festival’s history, including a recording of the first time they got a laugh from the audience.
Now consider a company that makes niche goods or luxury products, such as clothing, sports accessories, alcoholic beverages, etc. It could follow the example of the Montreal Canadiens or Just for Laughs by offering digital assets to generate buzz around their brand. Major brands like Nike and Gucci are already on board and selling NFTs.
Contracts with multiple possibilities
Another thing to know about NFTs is that the tokens are programmable. This means a company could sell an NFT that essentially serves as a membership card and program it to give the NFT owner access to perks or events.
And since NFTs are both unique and traceable, they could be used as proof of eligibility for a service, like a maintenance guarantee. By virtue of being contracts, NFTs open the door to a whole host of possibilities.
Making NFTs mainstream
Despite all the potential of NFTs, selling them currently remains a technical challenge because you need to have a reliable and secure payment system. That’s why it’s mostly just large companies that are capitalizing on NFTs right now.
But we can expect NFT sales platforms to crop up with simple solutions and secure payment systems. This kind of service could be a total game-changer. In fact, Shopify, which already has a reputable e-commerce platform, is presently testing a beta version of an NFT-commerce platform. It will allow consumers to purchase NFTs directly from a merchant’s secure site and pay for them by credit card.
Knowing this, your company may want to start thinking about adding NFTs to its e-commerce strategy.
NFTs and the metaverse
Looking ahead, there’s a chance that NFTs could find a huge market in the metaverse (i.e., digital worlds accessed through virtual reality headsets). Your avatar will be able to buy goods in the form of NFTs, attend concerts, join team meetings, perform endless tasks while playing games—all virtually, of course.
A growing number of companies are interested in the metaverse, and it’s not just big tech players like Facebook and Microsoft. We’re also seeing manufacturers like Nike sell virtual clothing for video game avatars.
This article was written with Guy-Jacques Langevin, co-founder of Buzztroop.