How lessons from Web3 offer solutions for companies’ first-party data problems
Companies need first-party data to survive as privacy measures limit ad-retargeting tools. The good news is that our research shows consumers are interested in providing their data in exchange for community and influence—and Web3 philosophy can help.
Kate Watts is CEO of Long Dash. She formerly founded Faire Design and held the role of president, U.S. at the global agency Huge.
The arrival of Web2 was remarkable because it formed a medium for participation and community-building. While Web1 enabled passive consumption of information, Web2 allows people from disparate places to interact with content in a way that facilitates relationship-building, co-creation, and collective action online and off. Brand communities—loyal brand ambassadors who provide valuable consumer insights in exchange for insider perks and camaraderie—flourished. Yet brands typically consider these communities nice-to-have rather than core to growth because ad-retargeting was always available to replenish audiences at scale.
As companies face a privacy-first horizon and limitations on ad-retargeting tech, brands need to access first-party data to understand consumers and earn loyalty. This also comes at a time when a cultural shift in consumer behavior is brewing. In our national survey, we found roughly half of consumers want to be connected to communities through their favorite brands and influence those brands’ decisions. For Gen Z and Millennials, 71 percent want to be more connected to a community and nearly two-thirds want to influence their favorite brands. In other words, people want to offer insights if it means forming bonds with peers and sharing power with brands. Early frameworks and tools from Web3 offer pathways for brands to do both—if brands are willing to look beyond the speculative hype.
The conversation about Web3 and the underlying blockchain technology often becomes about the inherent value of the technology itself, whether it is a ponzi scheme or a key to unlock utopia. The truth is more mild: blockchain technology is simply a tool that can scale this type of participatory and community-driven commerce people crave. Brands can experiment through pilot programs or time-limited campaigns with or without the use of blockchain technology as we move towards something I have termed “consensus commerce.”
Moving towards “Consensus Commerce”
Today’s consumer wants to be heard and they want the vast digital world to feel more intimate. Consensus commerce is a new model for doing business that recognizes consumers’ growing desire for real influence and community, offering both in exchange for meaningful consumer insights. It borrows from the web3-driven idea of DAOs. DAOs, or decentralized autonomous organizations, are organizations in which members who participate are awarded encrypted tokens that tag individual ownership. Those tokens are used to vote and contribute. Their participation is rewarded with membership benefits and profit-sharing.
Brands can capture a wealth of consumer insight from its core audience in real time—this is first-party data at its finest.
While the goal of DAOs is to be as decentralized as possible, consensus commerce recognizes that companies are designed to have centralized command but can flex to give up some power to consumers in exchange for insights, co-creation, and loyalty. As engagement grows through tokenization and the community gets more incentivized, they become faster to respond, more educated on the product, and generate more value. Brands can capture a wealth of consumer insight from its core audience in real time—this is first-party data at its finest.
Community commerce creates the foundation for consensus commerce
The idea of a brand relinquishing control— even a modest amount —may seem radical, but this can be done incrementally or as pilot programs. The potential and the relative ease to do so is not far fetched when looking at the power of community commerce. Community commerce, or the ability to cultivate engaged communities to validate consumer choices and foster loyalty, has proven to cultivate innovation and growth. By some estimates, brands with active communities experience 4x retention rates and 4-6x higher conversion. Co-creation and sharing brand power is already happening today without blockchain technology.
Legacy brand Harley-Davidson demonstrates the power of this community-oriented ethos. The Harley-Davidson Owners Group (HOG) is a membership organization for Harley owners that hosts local chapter meetups. Deals are secondary to community access. Widely attended festivals become sites for consumer research from willing participants. The loyalty is evident in the numbers: 90% of Harley owners are loyal to the brand for more than a decade and 46 percent of Harley purchases are repeat customers.
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Lego has built a Lego Ideas community, allowing people to submit ideas for new products. Ideas with 10,000 or more votes are reviewed for viability. Programs like these facilitate a direct line to the most engaged audiences, creating buzz and gauging interest before investing time and resources into product design. In the future, building communities on blockchain technology will allow these programs to occur at powerful speeds and scale that will generate even more accurate and useful first-party data.
Brand experimentation with consensus commerce can begin today
Brands can experiment in contained ways, either with or without blockchain technology. They simply need to cultivate an engaged community that reflects their interests and offers some form of ownership.
- Maximizing the power of loyalty programs. Most loyalty programs provide discounts, points, or nominal gifts for spending with the brand. But in a consensus commerce context earned tokens could unlock a new suite of meaningful benefits with greater degrees of customer participation. They could include access to niche communities that benefits members’ own standing in the community. It could also be structured so members can sell points or tokens to others on a secondary market, incentivizing a new level of spend and participation beyond the traditional points framework.
- Voting for new product features or program design. Like a DAO, members can be vetted by a brand community before they are accepted into the community. Once accepted, consumer insights, conversations, and voting on design options are rewarded through a share in the success of a product launch.
- Create an employee-led DAO. For brands that have internal brand ambassadors from within, a community can consist of employees. Brands can test and learn with trusted groups through a DAO with a clear mission like designing a new product. Participation and success of the end product dictates the size and type of reward for each member.
Consensus commerce is not a marketing tool, it is fundamentally a new way to run a business. Companies do not need to be ready to heavily invest in blockchain today, but they do need to be prepared to decentralize aspects of the business to access deeper customer insights and loyalty. They must also understand that cultivating community must be at the center of this strategy. Brands farsighted enough to venture into this new territory will have a way to grow sustainably in a privacy-first world that speaks to the empowered consumer.