Our last article was about decentralized personalization. A key question that it triggered is: how would you maintain relationships with customers through decentralized customer data?
In this article we will go deeper on:
how direct relationships can be built by using wallets as a communication channel and decentralized customer data.
how that differs from other channels like email and social; and the benefits for brands as well as users.
why this stops the marketing automation vendor lock-in.
a compelling case study by Fiat.
how to get started.
But first...
A wallet: what is it?
A wallet is an app that lets you manage multiple blockchain addresses. The wallet app is used as an extension to your browser or/and as a mobile app. Examples are Metamask wallet and Coinbase Wallet.
Blockchain addresses can be seen as bank accounts. They are owned by users through private-public key combinations. Ownership means that only you control the accounts, not the bank, not the network. Just you. A common phrase is 'not your keys, not your coins'.
These addresses are commonly used to transact crypto currencies or coins. But these addresses can also hold unique tokens (NFT’s). These tokens can simply represent ownership of art. But have more potential use cases.
Such as: access to gated content or services, access to a community, build loyalty points, own gaming items, enable voting rights or even: represent ownership over a real-world asset.
Wallet as a communication channel
Now that we have established some understanding about what a wallet is, let's look how it can be used for communication. There are basically two different ways: 1. via the address, 2. via a token/pass.
1. Via the address itself: that is accessed through a wallet app.
Communication from account-to-account in wallets can be established through communication protocols like Push for Metamask or XMTP for Coinbase.
See below an example on how the user interface looks via the Push protocol service. The push protocol is an add-on to your Metamask wallet and can be activated separately as browser extention and/or mobile app.
2. Via a token/pass (NFT’s): that is owned by an address in someone’s wallet.
This pass/token can be added to mobile wallet services such as Apple or Google Wallet. See below an example of how that communication looks like. This shows our very own Leap Day Token for our first 100 followers. And how a message pops up via the Apple Wallet on an iPhone. The benefit of this approach is that an user doesn't necessarily needs to hold a blockchain wallet app. Making it more accessible for a wider audience while keeping the benefits, which we will discuss below.
Email, social & wallets compared
So, you might be thinking; “That looks cool. But who cares? We have email, social and in-app messaging, right?”. In the table below we plot the key differences.
Wallet communication combines some of the positives of email and social. It can be used for private 1-1 interactions as well as for public 1-many. Users determine where to be reachable for what information publicly. Making people easier to find than with email, while also avoiding unwanted spam or ads.
But it also adds new potential. The address & data are stored on a public blockchain and can be owned. This adds potential to increase value on the address or in tokens owned by the address. The tokens can be made transferable, opening all kinds of new loyalty incentives. We will discuss these in a follow-up article.
Why for users?
For users it is great. Because they control access and have full ownership of their account and data. The user decides which parts remain private. But as well which elements are public. Making it feasible to find people connected to either decentralized networks like Farcaster or via domain names like ENS domains. The wallet is the public profile where the user can decide which information to show publicly. Tokens in the wallet can function as 1-to-1 private direct channels with opt-in built into the technology (no SPAM!)
Why for brands?
Now, brands have a new way to build relationships with their customers and prospects. One where there are options to build both private as well as public channels. In a direct way. Connection without worries about where the network owner goes next. Centralized networks usually start with an attract strategy but will always change to an extract approach over time.
This attract-extract cycle has been applied by Google, Facebook, Amazon, Apple, Salesforce, etc. Usual extract tactics are:
change the algorithm to prioritize paid positions,
restrict API usage,
put high data input/output costs on,
higher the network tax (ads or commission),
or even; just compete in the same marketplace with more information
No vendor lock-in
We call it DIRECT marketing automation for a reason. Traditional marketing automation says you own the data you build in their platforms. And you do. But it is often very hard to take your data and move to the next vendor. Why is that?
Well, a couple of reasons. The data is often built around a data model from the tech vendor. And when you want to put data in or out it isn’t unusual to charge you for that (egress/ingress fees). This creates a lot of friction. So, the lock-in effect in marketing automation is very real. Putting the vendor in between you and your customers.
Now with DIRECT marketing automation the customer data stays with your customers. The data model should be set by the underlying blockchain. In theory, making it very easy to move from one vendor to the next. No data import, export, no data egress, ingress fees. Just take your private key and bring it to the other vendor supporting the same public blockchain.
FIAT USA case study
As any other automotive brand, Fiat has a couple of challenges. Customer journeys tend to last several years. From first noticing the brand to buying a car. And once people have chosen a brand, the loyalty rates are quite high (around 50%). So, it is important to reach first-time buyers. But it is hard for Fiat to directly engage with customers because their transaction channel are dealerships.
Email, search and social have opened ways to directly engaged with (potential) customers. However, engagement levels are low, particularly for younger audiences. This has to do with a couple of reasons:
Saturation: email boxes are so swamped that open rates around 20% are now considered acceptable, while click-throughs usually go below 2%.
Network tax: in aims to keep up with high shareholder expectations, Google, Amazon, Facebook and Apple are increasing their network tax by showing fewer organic results and more and more paid results, leading to an average engagement rate of an organic Facebook post to decline below 2% (source).
Indirect incentivization: creating loyalty or rewarding people for engagement is difficult because these channels do not provide direct means to do microtransactions.
New channels: younger users tend to search for new ways to engage.
So, to combat some of these challenges, Fiat USA launched mid-November 2023 the FIAT Pass. A free, non-transferable, token giving users access to benefits like:
Entry ticket to the FIAT community
Loyalty and co-creation experiences such as: free rides, mobility subscriptions special branded collectibles, in- and on- car art, and early access to upcoming cars
Link to car usage such as driver settings, rewards for sustainable driving, proof of car maintenance, etc.
They built the community around the FIAT Pass in collaboration with Web3Audience and by using the Zealy quest platform. Where they used dynamic brand content, gamification to engage and foster long-term brand advocacy and co-creation through user generated content. Resulting in:
530.000 quests completed
20x engagement vs traditional social channels
Over 55.000 pass holders; creating a direct channel to a young audience, interested in the FIAT brand
Through the FIAT Pass, they can now keep engaging this audience with. For example, new branded collectibles like the Fiat Cinquecento collectible below.
Want to know more about the FIAT USA case? Check out an excellent longer article by Marc Baumann n at Dematerialzd.
Now what?
Brands can start preparing for direct marketing automation through:
INSIGHTS: A good start is to begin gaining insights into how many of your site visitors already have web3 wallets. This provides insights into which percentage of your customers are already using these new technologies.
COLLECT: The next step is to see if you can start collecting some of the wallet addresses of existing customers in your CRM or CDP. This will enable you to start recognizing or messaging these customers through wallets.
ACTIVATE: With the above done, a strategy can be put into place to start releasing your own pass or collectible. Enabling non-native users to adopt those even when they have no wallets through easily accessible wallet creation via email.
If you came this far, you are probably interested!
Now let us help you to get this vision kickstarted into reality.
Reach out to Jurrian Elekan or Samuel van Deth and we guide you through a feasible and practical go-to-market approach.