From 'Shop to Earn' to 'Participate to Earn' : Starbucks Odessey Team's thoughts on Web3

Original title: From 'Shop to Earn' to 'Participate to Earn' : Starbucks Odessey Team's Thoughts on Web3

Original author: Star's Decentralized Brief

TL; DR

Three months later, Starbucks finally launched Odessey Beta, and 50% of what we thought was possible has been realized: enhanced member experience, digital merchandise, and lower accessibility to NFT.

Meanwhile, Bankless's NFT podcast Overpriced JPEGs is conducting an in-depth interview with Forum 3, the leading team behind Odessey, titled Most Important NFT Project This Year, including:

Do Forum 3's vision: Reinvent the brand loyalty program through web3 and turn shop-to-earn into participate-to-earn

Why Digital Collectibles Matters, the use of NFT/Digital Collectibles becomes a game changer

Customer strategy first

Lead other web2 brands to enter web3

The podcast lasted more than an hour, and I took notes of more than 5,000 words while listening. To my delight, many of the thoughts in it coincide with my previous analysis. At the same time, I have to say that the boss's narrative ability and depth of thinking are really strong, which is also a learning and summary for me, and worthy of the attention of all web2 brands.

Let's start with a quick recap of what we predicted for Starbucks three months ago, then take a look at what's in the Odessey Beta, and finally share the thinking of Forum 3, the leading team behind it, as well as talk about the next bull market:

Still open by Digital Collectibles?

A strong integrated infrastructure such as Polygon/Nifty Gateway will play an important role

New forms of community will emerge

Three months ago, Starbucks announced plans to launch Odessey into web3, combining members with NFT. At that time, I wrote two articles, one was a detailed analysis of Starbucks' plan and its impact on the industry, and the other was a discussion of why the brand wanted to do web3 from Taoism to technique.

1. Why is Starbucks joining NFT at this point in time?

Have to do, break the challenge of brand aging and epidemic offline business decline.

2. What will Starbucks do?

Membership card +metaverse+ digital goods + community brand

3. What impact will Starbucks have on the NFT industry?

Reduce the user threshold to use NFT, NFT industry users increased by 10 times

Establish cooperation with existing web3 brands to enhance the rights and interests of NFT stock users

Establish innovation benchmark in all aspects and encourage more web2 brands to enter web3

Building the Soul of the web3 Brand 3 Questions -Why, What,How

1. Why: Why is web3 necessary for brands?

Because only web3 brands can meet the trinity needs of "consumption + assets + digital identity" of "sovereign individuals". web3 brand is not only a change in marketing methods and income structure, but also a change in mindset to meet the new needs of new users. It is to build or reconstruct a brand based on the original mindset of users.

2. What: What kind of category is suitable for web3 brand?

Community-driven category that requires a lot of testing. To be more specific, clothing, food (beverage), drama are perfectly consistent with the category.

How: How to create web3 brand, including mindset change/Skill tree/case analysis  

Odessey Beta

Summary of the Beta

Previous speculation:

Membership card +metaverse+ digital goods + community brand, reduce the user use of NFT threshold

Has been realized so far

Member experience enhancement

Digital goods

Reduce the user access to NFT threshold

Member experience enhancement

The enhancement comes from two aspects:

Gamified Member Experience  

NFT tradability

Gamified member experience

C. Stamp C. journey C. stamp C. journey C. stamp C. journey C. stamp D. journey Stamp is actually based on polygon's NFT, but Starbucks used the term stamp instead of NFT on the product interface, making it cheaper for users to understand. Meanwhile, Starbucks designed Journeys, which are actually a mix of interactive games, activities, and purchases.

Members earn points by completing the journey, which can then be redeemed for stamps (500 points). There will be at least two trips available at any given time, currently Coffee Heritage and Holiday Cheer.

Take Coffee Heritage, a journey inspired by the history of Starbucks that includes a series of missions, including:

Interactive games such as First Store Scramble, learn about the history of Starbucks through the jigsaw puzzle at the first branch of Pike Place Market in Seattle

Events such as Coffee Farm Tour 

Consumption such as Try Our Iconic Drinks

The stamps unlock special experiences and are divided into three levels

Online experiences (such as a virtual course on how to make espresso Martini)

Unique artist merchandise

Real-world experiences, like special events at Starbucks' exclusive roastery and even a trip to the Starbucks Hacienda Alsacia coffee farm in Costa Rica

In the future, Starbucks will allow custom Starbucks cards with NFT stamps to be printed on other items.

It can be seen that Starbucks hopes to use gamified experiences to enhance members' sense of participation and emotional connection, and form a Flywheel through special experiences.

But the experience does have a lot of room for improvement. To quote one of EROD's beta users:

It "s good, but it could be much better: It" s good, but it could be much better: The tour, puzzles, and quizzes felt like a chore, and the requirement to purchase drinks to complete a journey undermines organic brand interactions. 

That's good, but it could be better: the Tours, puzzles and quizzes feel like a chore, and the need to buy drinks to complete the journey ruins the organic brand interaction.

NFT tradability

The NFT will be able to buy or sell on the Odyssey Market when it launches in 2023. This is partly supported by the Nifty Gateway, and NFT ownership is secured on the blockchain.

The significance of this should be obvious to those familiar with web3. Points can be converted into NFT, and NFT can be traded. Essentially, the points in users' hands can be priced and mobile, and become real personal assets. In traditional customer loyalty programs, points can only be consumed by themselves, which leads to the fact that many large customers have no chance to use their points, and the return rate of points is actually decreasing. Once tradable, the user's idle credits are immediately realizable, greatly increasing the value of their assets to the user.

On the other hand, in traditional customer loyalty programs, points, as a liability of the brand, are calculated with the idle rate taken into account. Once flowing, brands also need to redesign their entire points system to incorporate tradability.

Digital goods

Stamps also offer a potential source of income. Starting next year, Starbucks will issue limited edition stamps that members can buy to support various causes. The artwork on the NFT was created by Starbucks and outside artists, and a "portion" of the sales will support causes chosen by Starbucks employees and customers (Starbucks did not disclose how much of the remaining revenue it will keep). The limited edition stamps will be issued four to six times a year.

Here's where things get interesting. Starbucks gets paid, artists get exposure and income, utilities get supported, customers and employees do social good, four birds with one stone. Some NFT artist platforms are doing similar things, but Starbucks can take it to the next level because of its brand power.

Reduce the user access to NFT threshold

As mentioned above, Stamp is actually based on polygon's NFT, but Starbucks used the term stamp instead of NFT on the product interface, using the familiar to reduce the cost of understanding for users. At the same time, Starbucks does not require members to have a cryptocurrency wallet, own cryptocurrencies or have any knowledge of the underlying web3 technology, significantly lowering the threshold for users to use NFT.

Internal rhythm

On Dec. 8, the first invitations to the beta were sent to a small group of waitlist members. In January 2023, Starbucks will begin sending monthly invitations to more waitlist members. The heavier and more loyal the members, the sooner they will be invited. This also reflects the "They got a formula, loyalty program is baked into how to get into the loyalty program" mentioned in the Forum 3 team sharing below.

Team thinking

After seeing the Odessey Beta, let's take a look at the thinking behind the leading team Forum 3. The title of This blog is The Most Important NFT Project This Year: Starbucks Odyssey. You can see the host's comments on this project. Before we share, let's recap the three co-founders of Forum 3:

Adam Brotman: Former Chief Digital Officer of Starbucks (2009-2018), where he led efforts on the APP, which reached 50 million users worldwide and became the second largest mobile payment app in the U.S. market (31 million users), behind Apple Pay(43 million).

Andy Sack: Entrepreneur across Web1/Web2/Web3. 2015 as an advisor to Microsoft CEO Nadella to help with digital transformation and related innovation. Start exploring Crypto in 2021

Joseph O'Rourke: A legendary degen. Traditional industry sales director, who was introduced to NFT in 2021 and fascinated by it, was accidentally invited to a top Web3 party but conflicted with work. The guy quit his job, went to the party, met Adam, and started his next business.

Over an hour of podcasts, I took notes of more than 5,000 words while listening, which are summarized into four points:

Do Forum3's vision: Reinvent the brand loyalty program through web3 and turn shop-to-earn into participate-to-earn

Why Digital Collectibles Matters, the use of NFT/Digital Collectibles becomes a game changer

Customer strategy first

Lead other web2 brands to enter web3

Do Forum3's vision: Reinvent the brand loyalty program through web3 and turn shop-to-earn into participate-to-earn

Forum 3's website Slogan is "The future of customer loyalty", the footnote is "We are building the first ever web3-powered universal loyalty platform for the consumers and brands", which is rather grand and vague. This interview is very specific, to change shop-to-earn into participate-to-earn (really admire the ability of Western artificial words) in traditional brand loyalty programs.

The problem of traditional brand loyalty program

According to Adam, brand loyalty is essentially a positive, closed-loop connection that the brand gives back to the user, but the traditional brand loyalty program is a simple shop-to-earn game where you buy more, you earn more points, and then the points turn into discounts. But there are three problems

1. The way of user participation is to buy, which lacks deep interaction with the brand

2. Diminishing returns on credits

The "buy-point-discount" mechanism is Too linear. Even when the points reach a certain level, the rate of return of discount is decreasing, which actually damages the interests of users. A very common example, if you assume that you get 5 dollars for 500 points, you get 8 dollars for 1,000 points

Points can only be consumed by themselves, resulting in many large users' points actually have no chance to use, resulting in the diminishing rate of return of points again

3. Points are essentially liabilities of the brand, and brand loyalty programs require expensive costs to create and maintain

participate-to-earn: Helping brand loyalty programs become more engaging and profitable

1. Engaging customers without relying on discounts is a good way to keep them loyal. Getting users to invest more, rather than rely on discounts, is a better way to keep them loyal (affection is more appealing than money).

2. Change the rough and simple shop to participate in more dimensions. Engagement means being user-centric and interacting with companies and brands. It's kind of like GMV vs DAU, more about user activity and interaction than just the final sales result.

3. Adam further explains that participate includes Storytelling, more fun, programmatic

4. The items included in Starbucks Odessey are Game (interactive game) and Digital Collectibles.

5. Starbucks has a tradition of using narrative and games to enhance user participation and activity. Every year, Starbucks for Life Winter activity allows users to play small games and get rewards to varying degrees.

This year's game is a crystal ball shake, and prizes include a month's, six months 'or 30 years' worth of Starbucks, Delta tickets, 150 stars, 500 stars, 1000 stars, Starbucks gift cards and limited edition coffee infuser and cold brew kit Starbucks for Life games are free to play without placing an order, and can be played more often by placing an order at Starbucks or playing mini-games. Pokemon Go is played by a lot of users (mostly in fun lol because of the low win rate) and has been a learning experience for Forum 3

6. Digital collectibles can be a profitable way to engage customers. Digital collections can be a profitable way to attract customers

shop-to-earn becomes participate-to-earn. In fact, Starbucks in web2 has already done this, but it will be a great reference for other shop-to-earn brands. Let's move on to Why Digital Collectibles Matters and the use of NFT/Digital Collectibles becomes a game changer.

Why Digital Collectibles Matters

Consumers are changing:There is a growing demand for digital goods and a desire to co-create and participate in:

Roblox is used by 79% of American teens ages 9 to 12, and there is a general appreciation for digital goods as well as the growing demand for them

A certain audience has emerged, and there are certain people who spend as much or more on digital fashion as regular fashion because they are buying skins and other things for their gamers

As a brand, you must recognize that your customers want to be more than just a consumer or customer, but want to co-create and participate, and want to be part of your brand story

User perspective:Digital Collectibles can meet the needs of consumers

By combining with blockchain, the NFT/digital collection makes it easier to validate ownership, giving users a more real sense of ownership, and satisfying the needs of "sovereign individuals" (Adam uses the term sovereign several times in his podcast).

The tradability of NFT allows it to be priced and truly become an individual asset

Digital Collectibles offers collectibles with collectibles itself and evokes an emotional connection with consumers, giving them emotional value

NFT itself is a public protocol with strong composability and programmability, allowing users to participate and co-create.

Business Perspective:NFT lowers the threshold for brand/creator collaboration while creating external positivity

Also based on the public protocol and composability of NFT, it is very convenient to cooperate with other brands/creators. There is no need to do high cost technical approval and connection, and more supplies can be generated (students who have done cross-domain cooperation should understand how difficult it is to make API docking).

The commercial value of users becomes public data, and all brands can circle users for airdrops or even vampire attacks. On the one hand, it creates more external positivity; on the other hand, it also gives the brand a sense of crisis

This part of thinking coincides with my previous analysis. I have also shared my insights about digital fashion with Gmonkey. For those who are interested in this part, please click the link to read:

He noticed that kids changed their skins every 15 minutes in Roblox to fit different digital personas, and these kids are so used to spending money on virtual outfits to build their social status in the digital world. Actually stratification and social pressure have been developed for these young generations, e.x. users who don't "t buy skins are named defaults.

To sum up, young consumers have a growing demand for digital goods and wish to co-create and participate, which can be met by Digital Collectibles. At the same time, from a business perspective, NFT brings additional value to the ecosystem by lowering the threshold for brand/creator collaboration while creating external positivity.

Joe also explains why we don't use the term NFT on the product interface:

We don't use the word NFT in our products, just like we don't say we go to Spotify and listen to MP3 players. It should be the actual thing, like a ticket/stamp/receipt. Even so, the cost of education is high.

Of course, some users will be interested in blockchain and NFT. We will also provide relevant knowledge, including self-sovereignty, decentralization, ethereum and ownership. Some users will graduate into web3.

The host also added a jab lol:

Brands that use a lot of web3 languages may just want to cash in on the existing market, rather than talk to their existing customers.

Customer strategy first

The other three founders stress that they see web3 more as a new digital tool for identifying who the brand's customers are and how to conduct loyalty programs. For loyalty programs, the most important thing is "customer strategy first". For Forum 3, it is essentially to help brands with customer strategy:

All the brand has to do is strengthen the connection with the customer

Create a brand access pass, figure out who your big fans are, and create something special for them

Use storytelling and special brand access, not just discount

Let's expand a little bit more on Starbucks' loyalty program formula.

loyalty program is baked into how to get into the loyalty program. Customer loyalty programs are baked into how to get into a loyalty program.

How do you get into a loyalty program, which is essentially categorizing users, who is most important to the brand?

For Starbucks, partners and heavy users are the priority for the brand. For specific features, features from the community are the highest priority. For Starbucks, partners and heavy users are the priority for the brand

For specific functionality, functionality from the community is the highest priority

Any feature will start with a small group, get user feedback, and iterate over time

Again, echoing the participate-to-earn mentioned above

Lead other web2 brands to enter web3

Adam is proud that Starbucks is once again leading the way

Starbucks has been ahead of the curve. It started developing apps in 2009 and has been a leader in mobile apps

marketers have been looking at the use of blockchain technology in marketers

Blockchain also leads to the evolution of consumers, keen nike also announced to open the web3 opportunity (nike.swoosh)

Starbucks' approach will be copied by many web2 brands, which is a good thing for brands to integrate blockchain

The host asked, "Is Starbucks/Nike /Reddit/Instagram coming to web3 a hype?"

Andy's answer is far from hype. This would be a major breakthrough for loyalty programs, and we've bet our careers on building experimental loyalty programs, including unlocking digital collectibles and partnering with Starbucks, paving the way for a wide variety of brands. That "s the mission, and we" re super early.

prospect

Is the next bull market still led by Digital Collectibles?

The NBA Top Shot, the kicker of the last bull market, eschets the term NFT in favour of Digital Collectibles, which allows payment in legal currency and lowers the entry barrier.

Interestingly, Nike /Reddit/Instagram/Coca-Cola's recent official circulars use the term Digital Collectibles instead of NFT. Could the next bull market still be started by Digital Collectibles? Similarly, Azuki founder ZAGABOND recently tweeted about this issue, and I responded with Joe's share above.

If the last bull market in NFT was driven by the Fed pumping water and PFPS initially hitting user demand, the next bull market must be a scenario in which NFT finds a big user volume. Digital collections are essentially a more web2 user friendly term. Collections are much larger than the user base of trading (or speculation) and require a large IP to drive them. History does not repeat itself, but it rhymes. Look forward to seeing innovations and breakthroughs in this area.

https://twitter.com/starzqeth/status/1606324746039492608

Strong infrastructure like Polygon/Nifty Gateway will play an important role in the next bull market

There are two major technology infrastructures behind Starbucks, Polygon and Nifty Gateway. Polygon provides blockchain capabilities, and Nifty Gateway provides wallets, fiat payment capabilities, and NFT marketplaces.

Polygon's motto is "Bring the world to Ethereum" and is behind Nike/Disney /Reddit/Instagram in addition to Starbucks.

Share my take away point from listening to a podcast by Polygon co-founder Sandeep

The Mission of the Polygon blockchain. The mission of the Polygon blockchain. The mission of the Polygon blockchain. The entire web3 ecosystem has to reach 500 to 1 billion users in the next 5 years or everyone will fail. So Polygon's strong BD capability is also born for this, the pattern is open.

The highlights of polygon in the past few years. The highlights of polygon in the past few years. Sandeep argues that the most successful of the past few years has been neither fundraising nor trading volume, But with a large number of web2 brand cooperation (sets/Reddit/Disney, Nike), the more users to the web3, mission and it does. With this goal, polygon will customize blockchain based on the characteristics of each brand, so that the corresponding blockchain can both meet the needs of the brand and be linked together as a public chain. I will share a lot of information about how to customize it later

Wallets are the infrastructure of web3 user products, and the current experience also prevents majority entry, mnemonics, private keys, signatures, ERC20 tokens, gas fees, transaction confirmations... For every additional unfamiliar noun, the conversion rate drops by an order of magnitude. Just as Starbucks doesn't use the word NFT in its product interface, I expect the Nifty Gateway behind it to build a web3 wallet that is comparable to the web2 user experience, which is the key to enabling web2 users to generate value in web3.

In the next bull market, new forms of community will emerge

The importance of community has been analyzed in detail in my previous two articles and will not be covered here. At present, Starbucks 2400w members in the United States are more brand members. They are not closely connected with each other, so to speak, they are scattered and have only the Starbucks brand as their common connection point. If the brand member is upgraded to a community member, the scattered sand will become a network organization with high cohesion. The value of the network jumps from O(n) to O(n^2), bringing power beyond imagination.

BAYC, n, the most valuable NFT community by far, is only $1w, which has given yuga labs a $4 billion valuation. If you multiply this n times 1,000 minus 2,000, it's too beautiful to imagine. Here, too, is all the UGC community worth doing again in the web3 way?

Writing here, I finally understand why bankless called Starbucks Odyssey The Most Important NFT Project This Year, which really set a benchmark for this industry and opened up infinite possibilities.

and we'll end with Andy's saying, that's the mission, we're under the hype and we're super early.

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