How Scotch & Soda is building a new customer experience with NFTs

Fashion brand Scotch & Soda launched a new loyalty program with great fanfare this fall: Club Soda 3.0. New, and 3.0 because it’s not the fashion retailer’s first loyalty program. The original Club Soda started a few months earlier. The difference: the new form of membership is through NFTs. Is this the new way for brands to build an online fan base?

Now, those who have been following the news about NFTs and cryptocurrencies may be wondering: why is a company coming out with a new NFT right now? After the crypto boom of 2021 and early ’22, when digital artworks were often sold for hundreds of thousands of euros, and brands like adidas and Gucci made millions selling digital designer objects, tokens have recently had a headwind.

What are NFTs again?
A non-fungible token is roughly translated as a non-fungible digital certificate of ownership on the blockchain that is linked to a unique digital asset. The buyer of an NFT therefore owns a unique digital product, which it is easy to find out via the blockchain that the owner is the owner of. The registration of the NFTs is linked to a personal digital wallet; this allows the owner to prove that he owns the digital product. However, the owner does not have exclusive rights to the specific item. It is purely about financial ownership.

During the Salesforce event Dreamforce, we spoke with Nino Bergfeld. As a retail consultant at Salesforce and co-founder of the Web3 studio at the software company, he advises retailers and brands on the implementation of Salesforce NFT cloud. With that product, companies can make and sell NFTs themselves. He also sees that the wind is against NFTs: ‘We are in a crypto winter now. Last year, everyone wanted to jump on that bandwagon to make a quick buck. Companies approached us about how they could get involved, how they could sell NFTs. When the market collapsed, people just as quickly lost interest. But the interesting thing is that companies are now starting to implement the technology in a different way than we saw before. It is no longer used as a way to generate revenue, but as a CRM strategy.’

Connection between web3 and web2

Wait a minute: NFTs, aren’t they those digital works of art that you can hang in your metaverse room? Yes, says Bergfeld, that’s how it was used a lot before. So how do you use NFTs as a customer relationship management system? “When you receive the NFT, an opt-in process is started where you leave an email address.” And this is where it gets interesting for companies. You are anonymous on web3, you are only visible with your wallet. But as a company you cannot send an email to it.

This is possible if customers buy your NFT and then provide their email address. You establish a connection between the web3 identity (the wallet) and the web2 identity (your email address and phone number). ‘And you immediately see which other NFTs your customers have, so you can see, for example, which other companies they find interesting. Suppose adidas sells an NFT and sees that many customers also have Gucci NFTs. It is not for nothing that these companies have recently had a collaboration.’

Scotch & Soda is the first brand to use Salesforce’s NFT Cloud to launch an NFT. Or rather: a thousand NFTs. The first thousand were given away for free to the fastest responding fans. A community has now been built on Discord, where NFT owners are kept informed of developments in the program, and tickets are distributed among members for special events.

New marketing relationship

Stephane Jaspar, cmo at the fashion retailer, sees many possibilities for the program. ‘You can see Club Soda 3.0 as a version of our traditional loyalty program taken to a higher level. They are closely related, but through Web 3.0 we can enable a level of engagement and co-creation that is not possible with traditional membership programs. At the same time, we are building a bridge between two groups: On the one hand, we hope to excite our Club Soda members about the web3 journey and, conversely, web3 enthusiasts about our traditional brand and clothing collections.’

As CMO, Jaspar sees why NFTs are often seen as a marketing gimmick. That power should not be underestimated, he says. “NFTs are potentially a very powerful, sophisticated marketing tool for a brand. They allow you to offer fans a more personalized experience, help you reach a new audience and, in the long term, also increase brand awareness.’ Still, he primarily sees the benefits of building brand loyalty. ‘Web3 is about decentralizing power, from a small group to many. On the one hand, it allows you to give up some of the “control” often associated with traditional marketing , but on the other hand, it helps create a safe environment in terms of both privacy and an ecosystem where the creativity of your fans is stimulated, celebrated and can flow back to the brand. And the resulting income can be shared with them. So yes : it’s “marketing” but in a more honest, authentic and balanced way. I hope this will give you a win-win situation that may even lead to a redefinition of the existing “marketing” relationship between “brand ” and “customer” – and the meaning of these three words.”

Share in the company

The added value of NFTs for brands is clear. But the last ‘win’ for the customer is not yet. Why would it bite? According to Bergfeld, a large number of applications can be thought of, and much more is possible than we currently think. An advantage is the advantages and benefits. ‘For example, as a brand you can reward your customers if they help you with your sustainability ambitions by giving them an NFT when they use sustainable shipping methods or buy only sustainable products. And it then gives access to a certain product, for example, which you can only buy if you have that NFT.’

It is of course also possible with a ‘normal’ loyalty program. But: ‘The hallmark of web3, which also includes NFTs, is the open standard, shared ownership. With an NFT, you as a customer have a kind of share in the company that is worth more than just loyalty points. It can give you the right to vote for a new design, or a new goal for an organization. And if you’re not interested in certain benefits, you can just resell that NFT.’ It sounds crazy, customers reselling their ‘loyalty points’. But it can also benefit the organization. Scotch & Soda receives a 10 percent fee each time their NFTs are resold.

Exclusive events

Scotch & Soda is now working on a new batch of NFTs to reach a wider audience beyond the initial thousands. According to Jaspar, the first group largely consists of known users of the original customer program. ‘But there is also a significant proportion of new zealots with whom we had no contact before.’ The group is encouraged to maintain their NFT by regularly giving them invitations to exclusive events. Nevertheless, they are already being traded – albeit for relatively small amounts. A ‘standard’ Founders Pass costs 0.03 ether, around 45 euros. The more special versions – there must be a difference – are sold for 0.1 ether (about 150 euros) or offered for ten times as much.

Turning point

Scotch & Soda is early, says Bergfeld, primarily because NFTs have yet to break through to the general public. “The process is still too complex for that. You need a crypto wallet, you need to convert money to cryptocurrency and with that you can buy NFTs. You also have to pay gas fees for that, the transaction costs, which are often relatively high.’ As an illustration, the transaction cost of the Twinkle NFT we offered earlier this year was higher than the highest bid. “But there are many parties currently facilitating this experience,” Bergfeld continues. ‘As a result, you often no longer need a wallet, just an email address and a bank account.’

What also helps the acceptance of NFTs is that companies no longer call it an NFT but a collectible. And that there will be several big parties that will introduce the public to it. Starbucks is in the process of converting its loyalty program to NFTs, Bergfeld said. ‘Heavy users in the US are already making extensive use of the ability to put money on the Starbucks app for quick payments. It will soon be the case with NFTs, although that difference is not even visible to users, except that it gives them more benefits. I am not a predictor of the future, but I think there are many NFT projects on the way. A company like Starbucks could be the tipping point through which the large group of consumers come into contact with this.’

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