[Dive #78] Hang - Web3 Loyalty
Web3 🤝 Loyalty Programs
For all those wondering how TPan is able to write a ~1500 word long-form piece 5 days a week…I don’t know either. 🤷♂️ I jokingly describe it as a ‘happy accident’, which is pretty accurate.
That said, here’s a peek into my brain and one of the ways I get ideas for what to write about. In this case, a buddy of mine texted me a few weeks ago:
As you can tell from the text thread, I’ve been thinking about how Web3 could create a shift in what loyalty can be and might look like. Although I didn’t write about Hang the next day, I’m glad I waited. Let’s get to that part in a bit 😉
Let’s put our growth and marketing hats on and explore some broader concepts related to that world. That way, we can better understand why Hang is a big deal and how it fits in.
Acquisition
This was my main area of expertise earlier on in my career. How does a company acquire more high quality users?
Whether it’s a consumer brand or a B2B company, you need more sales, more users, and more clients. TLDR: Number needs to go up.
Number go up = Next round of funding or eventual liquidity event (sell company, go public, etc.)
Let’s focus on the consumer side for the rest of this post. There’s plenty of strategies and tactics to get more customers and make number go up:
Launching paid marketing campaigns on channels like Facebook, Tiktok, or Youtube
Creating engaging social or written content (company blog, Instagram account, etc.)
PR (getting the New York Times to write about your company or product)
Sales
Partnering with Product and Engineering to optimize onboarding and sales flows
The list goes on.
All these channels are important for a company and the right mix depends on a variety of factors, such as the company’s marketing budget, type of product, how they monetize.
Regardless of what’s happening on that front, it’s getting at least a little harder for companies to grow. Why?
We’re more or less in a recession. As a whole, we are spending less and cutting back.
There’s a lot of competition. Have a killer fitness app idea? Good luck.
There are more growth/marketing related topics I could opine on with the above screenshot, but. must. resist. Lol.
Paid marketing is getting less efficient. I touched upon this briefly yesterday with Apple removing an identifier that pretty much all advertisers used in one way or another. Other platforms are implementing their versions of this in the coming years, making advertising targeting more difficult.
Don’t take it from me though, I came across a Financial Times article earlier this morning (how timely!) that sums up some of the pain felt.
This disproportionately impacts small businesses because 1) they don’t have as much pre-existing user datapoints vs. larger established brands have and 2) at least until recently, one of the quickest ways to grow your customer base is by spending more $ on paid channels like Facebook.
Wait what does this have to do with Apple again?
TPan, it’s just this small change. Stop whining.
You’re right. What if I took away your car’s oil filter. You can still drive the car, but you’ll eventually pay the price by needing to replace the car engine.
Wait…so some of these companies will need to replace their…growth engine?
Not a perfect analogy but sorta! So what is going on with companies and their acquisition efforts? Here’s an example.
This is happening across the board, especially with smaller companies.
Great, that’s your Acquisition 101 lesson. WTF does that have to do with Loyalty?
Loyalty and Retention
So we’ve established that for a lot of companies, it’s harder to acquire new users these days. We’re in a down market, there’s a lot of competition, and previous acquisition channels that were more effective in the past are less effective today.
So what are some companies focusing more on?
The existing customers and retaining them.
In the growth world, many people like to use the leaky bucket analogy.
Imagine spending all this money, time, and resources to acquire users or customers. Awesome right? NUMBER GO UP! What if all those users just pay once and then leave? That bucket is leaky AF and needs to be patched up.
That’s the concept of retention. How do we patch those holes so we don’t waste all that water that’s coming in?
What are some ways to patch that leaky bucket?
Lifecycle marketing: Via e-mail, app, etc
Paid ads on the previously mentioned channels: But targeted towards previous customers or site visitors
Member communities
Here’s an example from Bank of America. I got this e-mail a month ago.
I’m definitely banking with Bank of America forever. They sent me a shitty e-card, what does your bank do?
Random idea/thought: With the slow death of physical bank branches, why don’t banks transition their physical locations to event spaces for their customers for community and customer events? Sorta like how Capital One has Capital One Cafes in select locations.
Also, why the distinction between loyalty and retention? I’m simplifying it but here’s how I think about it:
Anyway, I’m not here to give free advice to banks. I’m here to talk about:
Hang - The future of retention + brand loyalty?
Let’s go back that text thread that started it all. As I looked at Hang more, I thought “Why not reach out to the team and see if they’d be down to chat?”
Maybe it’s due to my world-class meme skills or the fact that this newsletter has 11 subscribers, but the CEO was gracious enough to chat with me. Thank you for your time Matt!
Let’s take a look at their website.
Whoa big statement. Who’s working with them? Wowee those are some big brand names considering how young this space is. Who’s investing?
Again, some big names investing in the company’s Series A. One that stuck out to me was Mr. Beast. Can you imagine him incorporating NFTs for his loyal subscribers? He’s already doing some wild activations.
So it’s clear that some big brands are already working with Hang or investing in the company, or both. But what can you do on the Hang platform?
Build no-code smart contracts (aka your brand can create NFT collections). This removes a big hurdle where finding smart contract developers is a bottleneck.
Create a drag and drop website for your NFT project
Create token-gated access for NFT holders
Manage a NFT membership program in a simple and easily integrated way
This sounds more digestible for a marketing/growth team when the thought of Web3 and NFTs is pretty intimidating already.
What does the Hang platform look like?
Whoa, nice and simple. I like…
You can manage your different programs, not just the individual rewards based on the NFT tiers.
While also managing all the different reward types.
What does the experience look like from the consumer POV?
Also clean and simple.
Consumers always ask “what’s the utility”. With Hang, it’s clearly listed out.
Ok, dope. So I’m a brand thinking about loyalty. What are some existing Web2 comparisons that make me realize this is the same thing, but better when it comes to fixing that leaky bucket?
Beauty - Sephora
Airlines + Airline alliances
And IMO the ultimate loyalty program, credit cards. Shoot I should redeem those MileagePlus points for a flight soon, I keep forgetting to!
Ah ya…versions of this exist everywhere…but why would a platform like Hang be better?
Hang’s post announcing their Series A fundraise touches on two main points:
Liquidity: NFT memberships turn customers into stakeholders. Holders are incentivized for being loyal to earn rewards, unlock new perks, and also increase the value of their NFT membership.
Can you imagine Bank of America had a NFT loyalty program and actually gave me a real perk or benefit vs. some generic e-mail that makes me cry inside? That’d be a gamechanger.
Going back to my loyalty x retention chart, this would start shifting many consumer use cases closer to the high loyalty x high retention quadrant.
This isn’t a silver bullet, but it would definitely help.
Interoperability: Brand loyalty partnership efforts no longer need to be one-off or as gargantuan effort as they are currently.
Here’s an example — Delta and Airbnb have a partnership which probably helps both sides.
I have no idea how long it took to get this program off the ground, but I imagine it took at least months. Same thing with airline alliances.
What if a brand that is integrated with Hang could create turn-key loyalty partnerships with any other brand integrated with Hang? Could there be a loyalty partnership marketplace? 🤔
In fact, why does that brand have to use Hang? Hypothetically this could be turn-key with any platform that has some sort of Web3 integration 😳.
Now things get interesting…
HANG TO THE MOON!
Maybe, who knows.
I think a more reasonable framework with this is the gut feeling that the tried and true retention strategies are employed by most larger brands today. The world of loyalty is due for a shakeup, for the better.
Hang seems to be one of the players that has a good shot at doing that. Who else?
Shopify: Announced token-gated commerce and the ability to sell NFTs through their platform. This complements many of their other initiatives.
Starbucks: More details to be announced next month but they’re doing something…What if they’re partnering with Hang? 🤯 (For the record I have no idea lol. I’ll leave here in case that turns out to be true and I can point back to this and say I’m a genius.)
Cub3: Tackling retention and loyalty more from the angle of engaging with a brand (eg: listening to specific song, or tweeting, etc.).
Many have argued that gaming and music are the next wave for NFT adoption to the mass market. I agree with this, and I believe there are a couple other spaces that should be added to that list.
One of them is loyalty :)
See you tomorrow folks.