Last year I got a text from a friend that stated ‘This Changes Everything’ along with a link to a Tim Ferris podcast, where he interviews tech VC titans Chris Dixon and Naval Ravikant, on the Wonders of WEB3 and the untapped potential of NFTs. As a footwear designer and a fashion entrepreneur for the last decades, it was an invigorating jolt that I haven't felt in quite some time. After several listens, I had a better understanding of blockchain technology and NFTs, which opened my mind to all the possibilities there were for new strategies, new concepts and new companies to completely upend the fashion industry.
According to the Godfather of Disruptive Innovation Clayton Christensen, ‘disruptive technology’ theory or the next big thing usually gets dismissed as a fad, an embarrassing ‘toy’ or something that is just plain ‘crazy’. I really believe that is the case here with NFTs. We all hear these crazy stories of people paying ridiculous sums for simple jpegs as well as these nightmare scenarios where others are losing a fortune. In regards to the Fashion World where many are starting to experiment, we see that many brands have been following the same generic playbook around a NFT project. First, they claim theirs is different or the first of its kind and then launch something uninspiring/self-serving while they go ahead and try to promote the hell out of it using traditional media channels. Now that this first wave has passed, I believe it’s time to reset our thinking about NFTs. Particularly, how and when to utilize them.
I believe it’s time to reset our thinking about NFTs. Particularly, how and when to utilize them.
It's not a question – NFT’s will forever change how fashion brands and designers interact with consumers and communities. Brands are constantly testing new ways to interact with audiences – via rewards, communities, and loyalty programs. Usually through the lens of ROI: ‘How much value can we extract from our customers?’ It’s an outdated model. Here are a few ways that NFT’s offer a more holistic approach that has the potential to upend the entire industry.
The number one rule is that incentives between brands and customers must be aligned. That means real and tangible benefits for communities. No cash grabs, no PR/marketing ploys - brands get insights and loyalty, and customers get increased power and rewards. Those that succeed will kickstart a growth, retention, and innovation flywheel that will soon become the baseline for the industry as it moves towards WEB3.
NFTs can accomplish this in ways that old systems cannot, creating entire economies in the process. Imagining NFTs as simply ‘unlocking access’ or incentivizing customers to purchase is short-sighted.
Here are seven examples of utility that brands should start considering to build stronger communities and win customer loyalty. Which, IMHO, is the key to WEB3 business success.
1) R&D - Brands exchange NFTs for insights on product development: pain points, marketing claims, new categories, colors, materials, and more. Participants receive NFTs granting early access to product releases and even potential profit sharing. Brands easily track and maintain these key relationships.
2) Education and Customer Experience - Upon demonstrating exceptional knowledge of a brand’s product or history, you can receive NFTs in exchange for onboarding new members into the community or providing customer support. As influencers have shown us, this can be exponentially more impactful than a brand employee doing the same.
3) Content Submission - Want to collect an NFT? Submit content in exchange. Not only could you receive an NFT that represents your contribution, but rights can be programmed into the contract so that the use of your content in advertising could yield a percentage of future profits to you.
4) Voting and Governance - Customers deserve more than just ‘input’ on key decisions like product roadmaps or distribution strategy. Why not let them vote? Make it gated only to holders of specific NFTs or open it up and reward any participant with a proof of participation trophy.
5) Customer Cohorts - Imagine you received an NFT for being one of the first Air Jordan customers, and how valuable that might be today. How the brand might reward you, years later, with special access or product. Cohort NFTs are a way of certifying engagement within groups.
6) Airdrops - More powerful than any SMS marketing text, getting a surprise NFT in your wallet will pique any customer’s curiosity. Better still, it can unlock real utility, like pre-order access. But, whatever you do, don’t airdrop customers with a tacky discount code.
7) Lotteries and Raffling off NFTs means that members have an opportunity to receive rewards without the hurdle of participating regularly. It lowers the barrier to joining communities for those who are curious, but not quite committed to engaging. Besides, who doesn’t love a good raffle?
Whatever the path forward, NFTs promise a displacement of the old ‘top-down, command-and-control way of doing business.
Case in point is the digital fashion brand RTFKT (pronounced Artifact) that in 2021 alone has gone from unknown digital start up to being recognized as one of the most influential brands in the world to being purchased by Nike, with an evaluation of US$33 million, all in less than one calendar year. With THREE people no less. They understood the power of starting a company with the question, What can I do for my community? Then they employed strategies such as raffling off a chance to buy their first drop sneaker as an phygital NFTs which led to selling 10,000 pairs in seven minutes for US$3 million. This gave all the early holders a chance to buy into their Clone X Avatar NFT project created with world renowned artist Takaski Murakami. According to coingecko.com, the project consists of 19294 NFTs with 9283 unique owners and a total market cap of $540,214,910.56. Now, if that ain’t shared value! Then they follow this up by Airdropping a free Space Pod NFT to give their communities a starter home in the Metaverse so their favorite NFT artworks and collectibles can be displayed. Their approach seems to be more about world building than traditional brand building.
Whatever the path forward, NFTs promise a displacement of the old ‘top-down, command-and-control way of doing business. The elevation of customers into participants or even shareholders. A more equitable, transparent ecosystem, with real rewards and agency for communities that deserve it.
David Giordano is a Brand Developer, Designer and Entrepreneur that has been disrupting the fashion industry for over 20 years. He is a born and raised New Yorker who has held Executive positions with several Global Fashion Houses and has been on the founding team of multiple fashion start-ups that have gone from ideation, creation to exit. Most recently David completed his MBA at the Stockholm School of Economics in Sustainability and Innovation and is currently obsessed with WEB3 and how it will shape our future.