Using Crypto to Prioritise Valuable Customers, and drive Loyalty — A case study on McDonald’s & Uber Eats

A major chunk of proposals involving crypto integration with consumer applications revolves around loyalty — primarily aiming to have an exponentially increasing curve of LTV/CAC over time.

Loyalty enables popular consumer brands and platforms to retain their user base, and the traditional approach to achieve this has been financial incentives like discounts or freebies.

Another approach towards loyalty has been partnerships and co-branded experiences — like a Swiggy Credit Card from HDFC Bank, or a potential partnership between Netflix and Nykaa.

This post is structured into two parts:

1. A review of a proposal to scale this via crypto, and a discussion about a couple of its demerits (Source article: Building the ultimate loyalty rewards program)

2. In the second part of this article, I propose a different approach to creating loyalty — offering ‘Priority Services’ and restricting access to these services to only the top 1% of users.

Enter Crypto: Scaling Partnerships and driving Loyalty (A review)

Crypto can enable brands & platforms to build a much more extensive list of partner services & co-branded experiences for their users — all without large teams and tedious legal contracts.

For example, an AirBnB loyalty program powered by crypto (proposed by Scriblooooor & Yash Bharadwaj in articles linked here and here) might enable power users to access a wide range of local services like Gyms, Taxi Services, and even E-Sim Cards, and empower local businesses to gain access to high-quality users with a significantly lower CAC. How AirBnB can execute this is, by using crypto to issue tokens to users based on their spending and NFTs based on their activity.

Source article: Turbocharging Airbnb’s Loyalty Program using Solana

Any partner can then accept these tokens as a payment, or verify the NFTs ​​to offer specific deals without even having to speak with or integrate with AirBnB.

Source article: Turbocharging Airbnb’s Loyalty Program using Solana

Here are, however, a couple of problems with trying to achieve loyalty via a free market of partner services:

1. It’s almost impossible to curate a 3rd party free marketplace and guarantee the services that are promised
2. Creating a standardised purchase experience is almost impossible, as it would again require the integration of thousands of APIs from multiple businesses
3. Although AirBnB might benefit from this, it does hardly benefit businesses listed on AirBnB itself. Also, it’s tough to speculate how many local businesses would want to accept AirBnB tokens as a payment, given the low adoption of web3 in many countries.

Loyalty via Priority — enabled by Crypto (Proposal)

To resolve the dependency on 3rd party partners, we can instead enable the company’s internal business partners to come up with ‘priority services’, allow them to monetise on these services, and ultimately fuel loyalty for the company, all via crypto. These internal business partners can be Listed Restaurants for a platform like UberEats, or Franchise Outlets for a brand like McDonalds. Let’s take an example to understand what these priority services can be -

Let’s say you order from McDonalds every day, and one fine day you decide to get a takeaway. Now there’s a huge queue at the takeaway counter, but you just have to stand and wait for your turn — even though you are more of a regular customer than anyone else standing ahead of you. You’d feel frustrated, but then there’s nothing you can do about it. But imagine this — what if McDonald’s recognised you as a priority customer, helped you skip the queue, and checkout faster than anyone else? Wouldn’t you become much more of a customer, admirer, and recommender of McDonalds?

Brands and platforms likewise can reward their loyal customers with priority treatment — in McDonald’s case, it can be anything from a priority queue to unlimited drinks or even free party bookings! Now imagine the same concept extended to supermarkets, airline companies, amusement parks, and also to their aggregator platforms.

Mock announcement tweet from McDonald’s

I will be explaining the proposal by taking 2 companies as examples —

1. A brand, McDonalds
2. An aggregator platform, Uber Eats

McDonalds — serving over 69 million customers daily in over 100 countries

How it works

1. McDonalds issues 10K NFTs to their most regular customers worldwide, with a ~5% royalty rate on trade.
2. Customers receive their NFTs in their wallets and can start using these NFTs to access all of the priority services promised by McDonald’s.
3. Since these NFTs are very rare in number, there is an automatic demand (again based on how strong the priority service proposal is) and people start trading it in the market (again, these NFTs are globally usable).
4. On each trade, McDonald’s earns a royalty which is used to power these services, introduce new services, and make money.

Regular distribution & loyalty

New NFTs can be minted and distributed periodically based on users’ activity and spending at McDonald’s outlets or in their in-house app. NFTs can be distributed based on users’ recent activity and spending (post announcement) rather than considering the all-time data. People already holding the NFTs will consume more from McDonald’s to experience their priority service, and the remaining customers will start spending more at McDonald’s to receive the next distribution of the NFT.

Product Mockups

NFT Claiming Flow for Users who receive the NFT

Claiming Services flow after NFT is claimed

UberEats Takeaway — 486M Daily users Globally

Uber Eats has a huge user base in multiple countries around the world. They can not only reward users via Priority Service NFTs but also incentivize their partner restaurants to define their own Priority Services and monetize upon them. Offering great priority services will help partner restaurants attract some of the highest spenders and quality users to their outlets. Let’s dive deeper to understand how it’ll work.

How it works

1. UberEats announces 50K Priority NFTs, to be distributed to the highest spenders on the platform. Restaurants are invited to come up with priority service proposals to attract these users. Users will naturally choose a restaurant that offers better priority service. So this creates internal local competition among restaurants to come up with the best priority service.
2. Once the NFTs are distributed, users can validate their NFTs to gain access to the priority services at the restaurant. What this idea also enables is an unlimited possibility of what a priority service might look like, and it would be interesting to see how differently these are shaped around the globe
3. Restaurants and their priority services will have their rating system, helping users to know which one of them is good
4. Since these are rare NFTs, there will be a natural demand & these NFTs will be traded in the market. All of them will have a 5% Royalty rate, so any time an NFT gets traded, Uber Eats will make money
5. A part of this money will then be used to incentivise the restaurants to deliver the promised Priority Services to the users.

Why Solana is the best choice for this

1. It’s the only chain where they can issue a billion NFTs to 150 million people without needing another IPO. The estimated cost of issuing a billion NFTs with compression is $10K. This is orders of magnitude better than the estimated $33B on Ethereum or $32M on Polygon, more context here.
2. The mobile stack and Saga phone enable a consumer-grade experience by abstracting out the wallet. More on wallets as a feature here.

Closing thoughts

It’s interesting to imagine how brands around the globe and leverage their own stores or outlets to dish out a premium, priority experience to their best customers. It is also interesting to imagine how these NFTs will trade in the market how high their prices can actually shoot up to.

An experience like this might open up new routes for high value Web2 customers to enter Web3 and explore the ecosystem. These users, carrying high value assets will, at some point, interact with DEXes, own crypto currencies or maybe buy more NFTs.

In summary, it benefits everyone involved — the company, their partners, the users and even the chain on which it runs (ideally Solana)!

Thanks for reading :)

Reach out to me on twitter to discuss more.