Thinking about launching an NFT program for your brand? Or maybe you already have?
In either case, you may be considering what types of utility (or benefits) to enable with your NFTs. The following is meant to be a helpful framework for tackling this problem.
1. Ask the “value” question
The most important part of launching an NFT program is having a good answer to the question, "how can ownable, digital assets add value to my customers?"
NFTs can be a great way to generate new revenue streams for your brand. The equity you have built up over the years means you likely have an existing audience who would be interested in buying your NFTs. And not only can you sell the NFTs themselves, but you can also program royalties into the smart contract, meaning you collect a percentage of all resales on the secondary market. Pretty cool, right?
But with any marketing initiative, consumers can sniff out a cash grab pretty easily. Being cast as “in it for the wrong reasons” risks negative publicity and alienating loyal customers.
To prevent negative sentiment, you may want to consider giving away NFTs as a reward or even a prize in a limited-time contest. However, even if you choose to sell NFTs, attaching tangible perks and benefits to owning one is the best way to ensure you’re giving value back to your customers.
But want to know a secret? NFT utility can also incentivize customers to take the types of actions that are critical to your business’ success. More to come on that below…
2. Consider the utility spectrum
NFT utility (or utilities) fall on a spectrum from transactional, to experiential, to community-building.
Whether they intend to or not, most successful NFT projects tend to pack their NFTs full of perks that rest in at least two of these categories. Simple enough right? Yes, utility is not created equal when it comes to effort and impact.
Let’s break this down…
Transactional utility
Think discounts and free merch - is a low-lift starting point to add value quickly after launching. These benefits incentivize short term purchases and get your products in the hands of people who have a newfound reason to spread the word on your behalf. This is perfect if your objective is to measure the ROI of launching an NFT program over 3-6 months. The lasting impact, however, of discounts and free swag is clearly on the lower side in relation to the other two utility categories.
Experiential utility
Think exclusive access to specific products, events, etc. - starts adding more dimensions to the NFT ownership experience. Human beings are wired to crave status and prestige. If you need more proof, revisit Maslow's hierarchy of needs or ask your neighbor why he bought his Mercedes Benz. Unique experiences, such as unlocking an entirely different section of your website or getting early access to a new product line, are far more impactful and buzzworthy than a discount code, but they add a layer of logistics to execute. Consider what is most likely to delight your customers and generate the greatest (short or long-term) impact according to your business goals. Then find a way to maximize that impact with the minimum amount of effort required.
Community-building utility
Think any activity that connects your customers with each other - is the holy grail of NFT benefits (and the reason you keep hearing the word community in web3 land). Today, many NFT projects have a digital town square for their communities to engage with each other. The most common is Discord, but YOU DO NOT HAVE TO HAVE A DISCORD TO BUILD COMMUNITY. For what it’s worth, this was the original intention of brand Facebook groups, until they were transformed into advertising portals with one-way communication.
So long as you find ways to help NFT holders interact with each other, you are on your way to helping spawn lasting relationships. This could take the form of virtual or IRL events or - as is common in decentralized communities - you could engage your NFT holders to vote on and contribute to product decisions you are making. In any case, this category clearly requires the most thought and planning, but it also presents the greatest opportunity for meaningful impact, loyalty, and lifetime value.
3. Poll your customers (or NFT holders)!
In the spirit of building community, make sure you’re tapping into your greatest resource - your customers. What do they want to see? What do they value most? You may be pleasantly surprised by what you learn from this exercise.
Note: you can do this before or after the NFT drop. It’s not uncommon to launch an NFT project with some utility predefined and a plan to co-create the utility roadmap with your NFT holders. This makes them truly feel like part of the process.
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