Multi-brand memberships in a composable Web3 World

Transcript

[Music] thank you foreign welcome everyone my name is unionisto

I'm the CEO and founder of unlock protocol and today we're going to talk briefly about 15 minutes about multi-brand memberships in a composable web 3 world first of all welcome as I said my name is Julia I'm the CEO and founder at unlock I'm French but I live in the US and so if there's anything that's unclear feel free to interrupt me raise your hand I think this can be very participatory if you have questions um so let's look at a quickly about um a key concept uh in business which is acquisition versus retention um if you think about the web at this point it's about 25 years in and the big Big Driver of growth on the web over the last 25 years has been acquisition basically people bringing people coming

online and the big winners in that market have been things like you know search engine marketing and SEO uh where basically you know again 20 years ago the cost of acquiring customers was pretty almost free but the FCI work at it since then because basically you know our time online is is now very very busy and I found numbers online that date from a couple weeks ago uh where basically the cost of acquiring customer went from nine dollars to 29 uh around e-commerce which is pretty big increase um at the same time some very interesting uh data emerge as well um is that about 80 percent of the profit for e-commerce companies come

from a small subset of customers about 20 of loyal customers customers that are coming over and over to the platform and this is the thing that will was obviously uh um uh come come back uh during this presentation the growth is driven by multiple things obviously as I said crowded space so you're competing with more people to acquire uh customers um the advertising costs have been increasing for some reason uh it's really because on the other end it doesn't feel like when you're publisher it doesn't feel like you're making more money from ads I guess the Platforms in the middle are taking more and more but also the regulatory pressure as well as the pressure that Apple puts have made ads performing less well in practice being more costly to convert so for for example I'm sure you know this but Apple

recently about two years ago now announced that they're blocking third-party cookies which means that ads convert not as well which mean that advertisers have to pay more to convert people here similarly in Europe and in the US you probably have heard of gdpr CCPA which are regulations put in place designed by governments not companies that want to act as Governors to make it harder to track users and arguably even though this is not fully proven yet make these ads less you know likely to convert and less profitable however one really interesting thing to realize like you know customers are already brand peeled I see in the audience here I can probably find five different brands just

by looking at your glasses your t-shirts your shoes uh your laptop so you can see what kind of laptop I have and so that means that we as consumers are already kind of very much you know loyal to some Brands we're willing to advertise for them uh oftentimes for free you know or even pay to advertise like I paid this laptop very a lot of money to actually show a logo to everyone when I have a conference I'm sure Tebow bought a very expensive shirt to actually show everyone what kind of a shirt he's paying uh you know airline companies will give you little tags to put on your on your luggage especially when you're loyal and they're literally you know using you as a as a as a moving ad for their um for their brand so we are doing

this and I'd say even further uh some of us and especially in you know younger generation will go very long ways to show some of the brands that they affiliate with uh whether it's you know clothing brands or even sometimes you know affiliation that they care about very much um however one thing that is very interesting is like our judicial life are still mostly you know clean from that perspective your your Facebook avatar doesn't have a Nike logo on it or or any of that and when you go online in the virtual world like we've seen the previous position oftentimes you don't actually have brand you're actually actually you're not doing marketing and so that's kind of interesting to realize like as much as in the physical world we are very much a brainpilled in the digital world we're

still mostly um clean from an advertisement from a marketing perspective on that point um a couple years ago um Zuckerman guy will Brenda marketing firm came up with a pretty clear framework around the idea of memberships the idea of okay how do how do people kind of um relate to brands or to organization uh through three different actually four different things uh first one status it's a badge it's a an avatar it's something that shows that you belong to a group and so obviously when you are an airline a loyal customer you have a card that actually shows that you

are one of these loyal people um the second one is what they call Access taking on the the airline uh thing the obvious access that you get is the you know the fast track Lane no need to go through the heavy check-in uh or even access to the lunges another type of access is discount codes like oh you get these things and it's kind of a sense of exclusivity here um that makes you feel like you're part of a group um an interesting one that is not completely used in many cases but I think has a ton of potential when it comes to the online lives is the idea of power what kind of control do I have what kind of co-ownership do I have on the brand on its marketing on its design process and how do I influence what the

brand is going to do in the future this is actually very interesting uh in a negative way I'm sure people believe in the US have heard about the Budweiser uh challenge I'd say um so for those who don't know budvisor um I had a lot of marketing around transgen transgender transitional issues recently and they've alienated a lot of their existing customer base partly the the average Midwestern white guy is not a huge fan of the concept of transgender and trans identity and I create a massive backlash and in some way they took control of the governance I mean in a very abstract way of of of of advisor in that way

um I learned recently that Budweiser is not the the must uh drunk but a beer brand in the US anymore after that which is kind of really really fascinating when you think about this and so in some way the population the members of the Budweiser group I guess for like a better world cult have decided that uh this is not the direction that they want to go to and the fourth way to think about the the stuff that we get on on as part of the membership is stuff literally it is you know a mixed bag of thing that goes from swag so you know getting these taking on on the airlines uh little uh you know pouches with your you know a toothbrush in it that shows that you

have a certain status there or when you're part of a you know um for example a subscriber to a New Yorker you get the New Yorker tote bag which is part of that belonging part of that marketing thing that exists there again all of these things if you think of them they're mostly happening in the physical world IRL offline and not very much online an interesting thing as well that I haven't talked about yet in the physical world and I think it's even though it's happening there it's actually very completely to completely to make it happen is the idea of multiplayer memberships one of the obvious or most frequent use cases on that front is American Express it's a payment card that some of us might have in their

wallets and American Express not only is uh you know has a loyalty program that you earn points they also have an interesting thing where every month they introduce new deals with specific vendors and that is a way to kind of create traffic specifically for these vendors so maybe for a while you've got a discount at Ikea you get you know twice as many points or some other uh you know discount code anything like this um what's interesting here is like obviously it's a multiplayer in the sense that there is the customer obviously One customer one American Express brand payment brand but then there's multiple retailers in that scenario that are playing in that it is really really hard to build that kind of thing and only something like American Express can actually build this because they act as the middleman the payments

so they know that you've actually paid for something at Ikea to give you the discount it would be much harder for Starbucks to give you a discount at Ikea because Starbucks has no way to know whether you've actually been to Ikea to buy some some Goods there and we'll see here that obviously uh the digital version of these membership has a messy role to play another example here that works is Airlines and car rentals companies oftentimes you get you know discounts or loyalty programs at hotels and stuff like this it usually works on a kind of self disclosing way like I tell the airline company or rather the car rental company or the hotel company that I have a loyalty program and it is massively abused you probably all I mean I don't know if you do this but I do that sometimes when I rent a car I look for a

discount code from another company because I know that I can get a cheaper price here it gets abused because it's really really hard to reinforce the from a legal perspective but even from a technical perspective it's really hard for the car rental company to actually have the database of customers of an airline would be illegal because of gdpr in many cases but also very technically difficult like these are completely different I.T systems and integrating these two is a nightmare so again hard to scale because there's no shared infrastructure or database and I guess you're seeing where we're going here with the shared infrastructure database obviously blockchains and I guess that's the theme of a place like uh like we are at FCC do provide that shared infrastructure and what's interesting here is like

non-fungible tokens specifically can be very good object to represent a membership between someone and a brand an organization a group of any kind however I want to point that not every nft is good for this specifically if you think about nfts that look like a monkey the collectible use case have a lot of limitations or a lot of characteristics that are actually not very well suited for loyalty and membership the first one is transferability you as a brand if you have loyal customers you don't want them to be able to transfer not just from a business perspective because you would lose business to other people but because it means that they're not loyal and you want loyal customers and so it kind of creates a very strange Dynamic to say my loyal customers I allow them

to not be loyal anymore by transferring the loyalty to someone else feels like it's not about loyalty anymore another key aspect is the idea of exploration you when you have um a membership program a loyalty program you want to make sure that the loyal users are still Loyals if you use a regular you know monkey picture or you know other pfp kind of nft you have no way of of knowing whether this is an actually engaged customer in the last week in the last month or with this some somebody that acquired that nft you know two years ago it was just you know not engaged with the brand anymore so having inspiration uh kind of garbage collection mechanism allows you to make sure that your customers your loyal customers are still

fairly active so that's the two um two limitations of existing nfts I'd say then there is also opportunities to build better kind of nfts through things like programmability so must nft contracts there's two specifications you'll see 721 ERC 1155 they're fairly I mean they are set in stone for sure and they're also not very programmable there is no really way to kind of change the Behavior Uh that would basically you know say something like the price can go up or down on the primary Market there's actually usually not even a primary market for these things it's only you know they've been minted a long time ago it's only secondary markets um we can create better kind of nfts that would have the logic around what happens when a user transfers if they

want to transfer or can they transfer what happens when a user purchases are they getting air dropped you know other loyalty tokens at the same time what happens when uh you know a user's membership expires they're things that become really interesting another aspect that obviously uh is quite interesting in the context of this blockchain is the gamification obviously blockchains are you know there's money but you can think of money as a point system in some way and if you think about point system obviously you can think about gamification of these memberships so okay you want to invite two friends to join the membership program will give you automatically an extra number of points that allow you to do this uh you've checked in with the brand uh you know five times in the last three months

boom you earn more points you earn more Discord discount codes etc etc in a way that could be transparent everybody can see on chain which means that you actually don't have to run that infrastructure it's real you know serverless kind of infrastructure runs on on the Chain so really nfts as a concept are really well suited mechanism but the entities that we've seen so far could be better and that's uh what we discussed so adding time stands to nfts again as I said earlier unlock specifically is a protocol for memberships um that has by default an expiration date on every single nft so when you get a ticket when you get a membership it

has an expiration which means that after that point it shouldn't be considered valid as a matter of fact the contract will actually not consider it valid so that if you try to retrieve the status of someone you'll get you know a status of not member if that membership expired even though they might have had the nft in the past uh in a not explicitly transferred it um it becomes really easy to kind of rank now users by the most active the most engaged ones to the least engaged ones which is not possible with the regular nfts you can see okay this is the cohort of people I actually have no way of doing this another key aspect of this exploration is that you can have recurring membership so you can have a system where people pay every month a good example of this is obviously Amazon

Prime it's a membership program it's one that actually creates some really really interesting Dynamics for Amazon and we'll talk about this in a second but the fact that it expires either every month or every year depending on what you choose means that you have to keep paying to actually maintain that status which is a massive opportunity for uh for Amazon um let's look at you a bit more about Amazon for three consecutive years 2018 19 and 20. Amazon's profits were exactly the sales of Amazon Prime so basically you could say Amazon the only way they can make money was actually to sell these memberships which are 100 margin obviously it doesn't cost them anything to actually sell this membership rather than actually sell goods and actually creates engagement I don't have the numbers here but they show that on

average an Amazon Prime customer pays seven times their Prime Membership in fees every year so basically the idea that you get a good deal with prime is maybe you do but actually Amazon gets a much better deal here um unlock protocol we are a protocol that actually creates memberships in the form of nfts and allows anyone really Technical and non-technical a pretty simple dashboard to create uh or a lock a membership program a smart contract and these membership can be used for you know subscription recurring ticketing ticket to application uh token gate into application media subscription Etc it is fully open source it is community governed by the community of people that

you know use the protocol and we've built a bunch of application libraries in devtools I founded the company in 2018 so a couple years ago now and we have a different diverse team of people from Google Facebook already and others cool um today there's already a bunch of loyalty platforms and applications that are using unlock under the hood you can see some examples here Chasm is a company in the US that has a loyalty program for a pretty popular exchange with a unicorn not that one the unicorn horse I think it's a horse I don't know another one they think of the other one and it's pretty cool Beyond Club is a company in Japan that actually is

building similar membership program for Brands and you collect me actually just announced today out of Italy that they're creating a loyalty for web3 creators using unlock under the hood and I think that wraps it up for today any question but if you have any questions just raise your hand and we will give you a microphone I'm curious if you thought about transferability as a feature not a bug from the perspective of like airline industry right there's billions of dollars in liabilities that's carried over year over year on their balance sheets and if you unlock a secondary Market where people can actually like

time to deploy that benefit from a loyalty perspective is shortened then they might see significant value in that right yes um not about it it's definitely one of the questions and each brand might consider this to be either a loyalty or um sorry an opportunity or a threat what's interesting about Airline and what they do today is their matching programs so they don't actually you know a third party Airline might actually know that you have a high status with their competitors and will give you without you transferring because they don't actually have a way to transfer that other company a status based on this I actually think this is something that we'll see often as well and one thing that I didn't really allude to here in that multiplayer approach not all of the players have to be opted in I can decide to offer you a benefit based

on the fact that you have a membership that I think is attractive without the author the membership knowing about this so maybe you know I love I mean somebody could come to me hey I know you have an Apple laptop that means that you care about X and Y and Z I'm going to offer you some specific things here without actually asking Apple's permission here the transparency of the blockchain really shines there's actually a tangible example of this um I think one coffee shop uh if I remember correctly offer discount to people that were able to prove that they have one of Starbucks uh nfts which is really really funny in practice because they obviously don't have a relationship with Starbucks in that example yeah thanks a lot for the whole presentation I have a question

maybe um I think as you know consumers and builders in this space I think we see obvious benefits to transparency and composability that's brought by blockchain and the act of transferring all those Legacy loyalty programs onto the chain but if I put myself in the shoes of a company like isn't there an issue with the lack of incentives of a company to transfer all that CRM basically there's definitely a big risk there um there's two things that I want to say here a couple years ago actually the televitarian wrote a blog post data as liability I think more and more companies are realizing that that data might actually be harder to collect gather on by themselves then keeping it open and obtained for

users so in that scenario basically the company is not the one that are disclosing or storing information in that example I also think it works both ways and for me it reminds me the holidays of the web where companies were really afraid of getting linked to I mean there's still debate there I think there's a couple weeks ago there was another company suing another one for linking to their websites like you can't sue someone for linking to you and I think it's the same kind of Vibes like what happens if in practice I mean Amazon Prime I'm sure is really happy about having whatever hundreds of millions of members in the US I don't think they would lose anything if say Netflix were to offer a discount to Amazon Prime subscribers it would make the Amazon Prime membership even more valuable to end users saying hey

not only I get benefits with Amazon but I know get benefits with with Netflix I'm not saying this is an easy sell and we when we talk with Brands oftentimes they're like but I do think that this is something that is over that is oh it's the right way rooted in our existing thinking about data about relationships and in my I mean My Hope will not actually represent a real threat but actually might represent really big opportunities uh down the line thank you very much now we if you want to answer any questions feel free to come to the speaker now we will go to the next topic nft beyond the hype thank you very much [Music]