Evolving Beyond ‘Captivity Programs’: How Web3 Complicates The Narrative Of Customer Rewards

Editor’s note: This article is based on an August 2023 virtual panel, BFF Buzz: Community Ownership. BFF Buzz Spaces share a high-level update on a niche’s momentary state of affairs, including imminent trends, evolving issues and public discourse at the time of recording. Listen to the full recording.

Nobody likes to be held captive. So why, for years, have consumers accepted airline status points that don’t transfer to different airlines if they switch to a new hub? What about credit card rewards that only apply to a limited menu of approved purchases, which customers don’t have a say in before they sign up?

In the rapidly evolving landscape of Web3, one of the most intriguing new concepts gaining traction is community ownership. There’s been paradigm shift in how we think about community ownership, and it’s capturing the attention of innovators, entrepreneurs and technologists alike.

At its core, community ownership in Web3 represents a departure from the traditional top-down models, placing power and decision-making directly into the hands of the users and participants. But there’s some nuance here: Literal definitions of community-driven ownership models tend to make regulators sweat, as sometimes these notions bump up against the definition of financial securities. If a Web3 brand is promising you financial upside and stake in company ownership, that’s not necessarily a community-driven model, but rather an unregistered financial scheme.

However, looser interpretations of community ownership that prioritize interoperable value offer us a fresh alternative to the stuffy customer rewards models of old. These updated models place real-world utility before meaningless status symbols and try to offer customized rewards that deliver practical value in their community members’ lives. 

This month, BFF had the privilege to speak with industry leaders who are at the helm of these new, innovative engagement models. Ahead, we hear insights from Tara Fung, co-founder and CEO of community rewards platform Co:Create, Breana Teubner, COO of brand engagement company TYB and Jana Bobosikova, who heads up dual roles as both CEO of beauty consulting firm EPIC Future Labs and co-founder of community-driven beauty brand KIKI World.

Generating value that’s not just transactional

Tara Fung, co-founder and CEO of Co:Create, sees community ownership as a vehicle to create mutual benefit and value between customers and brands. She highlights the preference for individuals to have ownership of their loyalty rather than being part of programs that don't offer true ownership of rewards. 

"Individuals want to own their loyalty,” she said. They don't want to be part of captivity programs where they earn status, they earn points — they earn things that are never theirs."

She also mentions the evolving landscape, where brands can use technology to encourage and reward behaviors beyond direct purchases, moving away from purely transactional relationships.

"There needs to be mutual benefit and value,” she explained. “It doesn't mean they're transactional, but all relationships involve a value exchange.” 

But unlike outdated forms of incentivization that reward customers with discounts, coupons and upgrades, brands now have the tools to encourage behaviors that aren't directly tied to purchases. What if the benefit isn't just a discount, but rather belonging, social connection, special events, games and customized products that reflect the customer’s identity. 

“The reason for [our brand’s] name Co:Create is we believe this phase of the internet and brands are going to be built on community engagement,” said Fung, adding that brands that use technology to incentivize voting, surveys and games will stand out.

Redefining collaboration

TYB chief operations officer Breana Teubner emphasizes that Web3 fosters an unprecedented level of collaboration — but we probably need to stop obsessing about it so much.

“I used to joke that Web3 will be adopted the moment we stop talking about Web3,” she said. “We at TYB certainly don't talk about Web3; we just build on it!”

Teubner, who formerly head up strategy and operations at Gap and Banana Republic (under the Gap, Inc. umbrella), places today’s technology hype along the continuum of commerce-driven trends going back to the 90s and aughts.

“We can look to the early 2000s era of the mall,” she said, adding that soon came social media, which drove commerce to platforms like Instagram and Facebook. 

Today, the next generation of brands are going to be built for smaller, more niche communities, driven by gamified, tokenized incentives and owned by holders of those tokens, as demonstrated by verifiable social proofs on blockchain. 

Teubner predicts this next wave not because it’s the “Web3” thing to do — but because it’s the natural evolution of consumer behavior.

Empowering the creative process

Jana Bobosikova, co-founder of KIKI World and CEO of EPIC Future Labs, defines the state of community ownership as "participation.” She emphasizes that involving users in product decisions through voting and highly anticipated, customized physical products enhances their sense of involvement. Think custom nail polish colors and products with personalized touches.

“At KIKI, the two actions that we're most excited to bring to the beauty consumer is to ask them what products they want — currently that's represented by voting — and then rewarding physical product usage,” she said.

While acknowledging the complexities ahead, Bobosikova envisions a future where ownership aligns with commercial reality, evoking tangible sensorial connections.

Learn More: How The Revolutionary Beauty Brand KIKI Is Getting Its Community Excited To Create Products Together

Bottom line: The essence of community ownership in Web3

In the vibrant, nascent landscape of Web3 community ownership, a central tenet emerges: the power of these relationships to create mutual benefit and value exchange. While distinctions and similarities exist between traditional loyalty programs and community ownership, the common thread is the recognition that all parties can be involved to the extent they want to be. 

In essence, the core principle is reciprocity — an active partnership where participants invest their engagement, time and contributions in exchange for tangible value and the ability to shape their digital experience.

Megan DeMatteo is BFF's Editorial Partner.

🚨 This newsletter and all the information in it does not constitute financial advice. If you don’t want to invest money or time in Web3, you don’t have to. As always: Do your own research.

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