Web3 Breakdowns Ep 49 - Adam Brotman: Web3 Loyalty Programs
Primer: Starbucks has entered the Web3 scene with Starbucks Odyssey. Why did they pursue such a digital strategy? Get the first-hand information from Adam Brotman, the former Chief Digital Officer of Starbucks, in this episode of Web3 Breakdowns.
Background
Started working at Starbucks in 2009
Was the Chief Digital Officer till 2018
Currently, he’s the CEO of Forum3
Challenges Turning Starbucks Digital
In 2009, the great recession was happening
Howard Schultz, the CEO, brought Stephen Gillett and him to build something digital for Starbucks
“There was a willingness to be entrepreneurial and that really came from Howard and Steven, both of them and they were encouraging me to think about things from the perspective of what would Silicon Valley do.”
- Adam Brotman
Wrote the strategy and implemented it
What Inspired Him
Looked at what Jack Dorsey was doing at Square and Twitter
Amazon, Square, Google, and Apple were all platforms
Thought about Starbucks’ digital relationships with its customers as a platform. Thought about the network effects and flywheel effects
First thing they did was to offer free WiFi
Built a content network on the back of the landing page
“My stomach was in knots every time we did anything. There wasn't an example of like, oh, yeah, this one was so easy and obvious. It was a lot of incrementally pushing the boundaries.”
- Adam Brotman
Has always built with the customer in mind
Getting Into Crypto
His long-time best friend, Andy Sack, told him that he is going to create a VC fund of funds in the blockchain space
Andy invited him to be a special limited partner
Started his journey into crypto. Went from Bitcoin to Ethereum, to DeFi and, finally, to NFTs
Realized that NFTs can be used to build a more immersive, interesting relationship with fans
In Summer 2021, they started a company called Forum3
Relationship Between Brands And Fans
Brands give utility in the form of convenience and rewards
Customer reciprocates by giving frequency
Tuning The Economics Of A Loyalty Program
Marketers call this concept incrementality
When brands set up loyalty programs, they have to think about the economic and programmatics of incrementality
For example, there’s a cost to Amazon when they give away free shipping
It’s a loss leader in the sense that you are making an investment into it and not getting an instant payback the same day
Thoughts On Loyalty Programs And NFTs
Consumer brand loyalty has become very stale — it’s all about coupons
Consumers have changed. Millennials and Gen Zs do not want it a transactional relationship. They want a participatory relationship
A digital merchandise has collectability built into it
Starbucks Odyssey
What Is It
A web app that rewards members
Users log in with their Starbucks Rewards credentials to play a game
The purpose is to get as many points as possible so that you can level up and access perks
Will have a built-in marketplace
Why Does Starbucks Need A Blockchain?
Blockchains enable consumers to own their digital assets
What Are Brands Hesitant About?
Most brands don’t even understand what they are talking about
Don’t think that brands are worried about other brands vampire attacking them
The good brand marketers are learning with a beginner’s mindset and looking at what others are doing
Working On Other Projects
Have been focusing on Starbucks Odyssey for the last 6 months
Don’t want to be a consulting firm. Wants to be a service firm and a platform to help brands get into the space
Helping brands to collaborate with one another through tokenized relationships
Examples Of Collaboration From The End User’s Perspective
A fast casual restaurant chain creating an additional layer on top of their loyalty program
They collaborate with a major sports team that also tokenizes their relationship with their brands
Consumers could get a limited edition experience and merch that's co-branded between the two brands
Most Excited To See Built
Within the next 6 months: Starbucks Odyssey and Forum3
In the next 6 years: What kind of consumer experience can be built across brands
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