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Sporting Crypto - Dec 12th: Starbucks Launch Web3 Loyalty Program; Odyssey
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Intro Notes, Plugs & Amendments 🔌🔧
The penultimate newsletter of the year and as sports related news starts to die down a little, brand-side Web3 activity has hit sky high levels. For major brands at least!
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This Week’s Deep Dive: Starbucks Launch Web3 Loyalty Program; Odyssey
Starbucks have launched a Web3 loyalty program called Odyssey.
Members can engage in ‘journeys’, a series of activities, such as playing interactive games or taking on fun challenges to deepen their knowledge of coffee and Starbucks. They will be rewarded with a digital collectable ‘journey stamp’ — and yep, you guessed it — they’re NFTs.
The more stamps they collect, the more ‘Odyssey Points’ they will earn, unlocking access to digital, physical and experiential benefits, including virtual espresso martini-making classes, exclusive events and trips to Starbucks roasteries and coffee farms.
Starbucks aims to extend its concept of a ‘Third Place’ to a “digital community” that will enable new ways for Starbucks to engage with its members beyond the simple act of purchasing a coffee.
Starbucks are the latest brand to collaborate with Polygon, the Ethereum Layer 2, to create a seismic portal into Web3.
But why are Starbucks creating an on-chain loyalty rewards program when they have an incredibly successful one, off-chain?
We need to start with NFTs. Why are they important?
Permanent data storage
Basically - being able to own things online, and transport them whilst retaining the elements of permanence (from a data perspective) and provenance - is pretty cool, it turns out.
Blockchains are the best technology we have available to allow people to own things.
In 2016, Starbucks held more cash on their app and Starbucks cards than some banks had cash. This is a truly astonishing statistic.
So that’s point (1) - Starbucks have a seriously engaging customer loyalty scheme with well over 10 million registered users.
Someone said to me today that: Airlines are basically reward programs with some planes attached to them.
So much so that airlines can actually use their loyalty programs as collateral for loans.
So point (2) is that loyalty schemes have (to many) become the business model, rather than auxiliary to them.
To others, (3) they are still massive parts of a) their customer retention strategies and b) increasing volume of return consumers at specific parts of the year; think McDonalds Monopoly.
To summarise so far:
Starbucks has an amazingly engaging consumer loyalty program
Some businesses are literally reliant on their loyalty programs
Some businesses aren't, but still rely on them to increase the volume of repeat customers
Does Blockchain Help or Hinder?
The most important thing to discuss here is whether or not NFTs and blockchain in general, are the best use case here for Starbucks.
After all, they have an incredibly impressive rewards program already, so why change? Is the risk worth the reward here?
My maybe not-so-hot take is that I’m still not won over by this concept, and I’ll go into why shortly.
But let’s first point our attention to Reddit. This isn’t a random tangent, bear with me. It’s using an example to explain why using a blockchain is necessary.
By now, most of you know I’m a massive fan of what Reddit have done when it comes to NFTs. Over the last year, Reddit users have opened a total of four million wallets.
How? By simply making Reddit avatars that people use to customise their profiles tradeable. They basically bottled up the magic we saw from the PFP hype cycle led by Bored Apes and distributed it through their own audience. The avatars are better as NFTs as opposed to being off-chain, because they are transferrable and interoperable.
And, four million people went out of their way to try and buy one. We can call that a success where a blockchain has really been integral to it.
To summarise more simply: they’ve created a better proposition than the one they had, using blockchain, and millions of people have flocked to it.
On one hand, the flexibility, and composability of loyalty points as digital assets is really interesting. On the other, I just don’t quite see whether or not the incentivisation mechanisms are there for Starbucks to essentially ‘open up’ their loyalty points system because it’s on chain.
I do see why Starbucks want to create interaction and participation beyond a transaction at a coffee shop. But at the same time, how many people truly *want* a relationship with their coffee shop beyond that? Maybe I’m not enough of a coffee fanatic to understand it…
Is Starbucks going to be the place that their consumers go to for gamified experiences, or to experience culture (art, limited edition collectibles, first access to concerts and music). The leap isn’t huge - a lot of loyalty schemes (think phone and internet companies) tend to try and use their audience to leverage those types of things.
My soft line is I’m not quite sure how this takes off, but I’m there to be convinced. Because there is something very interesting about on-chain loyalty, but I don’t quite know if we’re there yet. In the short-medium term, I’m truly on the ‘simple unlocks’ bandwagon a la Reddit. Because people intuitively think “yes this is better” without doing mental backflips about why this *should* be better for the consumer.
The Sports Angle
This got me thinking, as usual, what is the sports angle here?
Well - there might not be one straightaway, but that issue that Starbucks have of ‘only interacting with a brand when you want something’ isn’t an issue that sports brands, clubs and franchises have.
I consume, read and think about Arsenal or England the soccer teams I follow often. Even when I’m not watching games on TV or at the stadium. My relationship with them as a fan, rather than a consumer, means my interactions are far-reaching.
The issue I suppose that many of these clubs have is that their membership schemes are so far catered toward match-going fans, that any digital equivalents that look to reward beyond that are either non-existent or have very rough edges.
Another issue is that when we think about Web3, this membership-type model has been augmented into something people are now referring to as ‘fan tokens’ — which doesn’t quite fit into the sports team loyalty ecosystems but also doesn’t quite fit into many Web3 roadmaps they’re beginning to create. This creates a lot of fragmentation and friction, so I think we’re a long way off any Web3-based loyalty systems being implemented at football clubs.
Perhaps in the future, we will see my digital self, interacting with sports teams, both virtually and also in stadia, and that fan journey is connected.
For now, we have two issues:
I’m not certain the loyalty model and blockchains are a match made in heaven right now (open to being convinced otherwise and I’ve already had many interesting discussions). The incentive systems I don’t think are quite right for big brands.
The fan journey right now in sport is so fragmented on and off chain, and those digital journeys especially need fixing.
I’m truly fascinated to see Starbucks Odyssey develop because if it does take off — it could have some awesome implications to how sports teams think about ‘fan engagement’.
More sports crypto stories & things to put on your radar
Nike and Swoosh are building momentum with their Web3 project.
Some sports franchises are still using NFTs for in-stadium experiences which is really interesting. I’d love to know the engagement levels on things like this form teams like the Dallas Mavericks!
Nike x RTFKT’s Cryptokicks are ‘Web3 enabled’ sneakers.
Great reads, great tweeting and more general ‘stuff’ that could impact you
SBF, the disgraced former FTX CEO was propping up leading media publication ‘The Block’. My thoughts are with the employees impacted!
Axie Infinity, the once hot play-2-earn game is now making around about $1m per year based on the current trend. Not awful in isolation but a hell of a lot down from their peak.
RED DAO have posted a really interesting article about the different types of opportunities that come with linking physical assets to digital ones.
Polygon are going all out at the moment. This time they’re looking at the music industry.
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