Over the last few years, the NFT market has experienced significant growth and, as a result, brands have begun to take notice. NFTs represent an opportunity for brands to build long-term relationships with their customers, foster brand advocates and create new paths for audience engagement. As an established organization entering the web3 domain, there are many strategic approaches available that utilize the power of smart contracts.
What do we mean by creating ‘exclusive access?’ We’re referring to a practice commonly known in the NFT space as ‘token-gating.’ This is the act of creating some form of benefit that only a brand’s NFT holders can access. In the same way that brands establish membership or loyalty programs using traditional customer information like names, email addresses and phone numbers, they can now do so in a way that is tied directly to a crypto wallet address.
Unlocking the Power of Token-Gating
There’s no single way or reason to use token-gating. There are a myriad of use cases for token-gating (a few of which we’ll explore in another blog post) but some common applications include:
- Events (IRL/URL)
- Physical redemptions
These use cases aren’t necessarily new, but the way they are executed can be. Using NFTs for token-gating gives sovereignty to the NFT owner and allows brands to develop dynamic experiences that otherwise would not be possible. Let’s explore some of the ways that token-gating NFTs differ from traditional brand experiences.
Traditional membership and access programs are usually bound to an individual and the value of benefits associated with membership only accrue to the individual member. The tokenization of membership unlocks more value through sharing, trading, renting, or reselling similar to the value a person can derive from owning property. Entirely new revenue streams and business models are beginning to form around this concept of token-gated memberships.
Over time, audiences can churn due to waning interests or new products and services coming into a market with competitive advantages. Dynamic NFTs can be modified through external data entries, as long as they are defined in the smart contract. This would allow brands to alter the tokens to have new properties or benefits that are aligned with the brand’s current identity to attract or retain their ideal customers.
Token-gating doesn’t have to be a forever thing. Token-gating for specific NFTs can last for one day or two years with predefined expiration dates. The brand chooses how long they want to give special access to specific customer or community segments, adding an element of exclusivity that could raise the stakes with “now or never” engagement.
Token-gating makes managing this much easier by removing the need to keep track of every single individual’s data and membership level. Instead, brands only need to define which token receives access, and how long they want to keep it open.
Smart contracts can be written to allow a brand to revoke memberships if certain engagements or milestones aren’t completed by token holders. If done properly, your community would appreciate the exclusivity and scarcity of owning a specific token that could only be retained through loyalty and action. Even if someone were to buy into your token-gated community, they wouldn’t be able to remain a member for long without performing certain required actions.
Eliminating fraud is one of the great innovations of using blockchains and cryptocurrency wallets for verification. If someone is able to cryptographically sign a transaction to access a token-gated experience, you can be sure that they are in control of the private keys to their wallet. This means that you can be sure that the token-gated content is being delivered to the holder of the NFT you assigned access to.
Creating NFTs for Token-Gating
Brands have many options for creating NFTs for their customers. This process of creating NFTs is known as minting. There are various blockchains that can be used and types of NFTs that can be minted, but your choice should be shaped by who you perceive to be your target audience.
Many brands want to minimize friction in the consumer onboarding process. If you’re wanting to tap into the established NFT community that are educated about cryptocurrency, crypto wallets, gas and executing transactions, you have a lot of flexibility in how to mint your NFT. This is, however, a very friction-filled process for someone who hasn’t had exposure to the NFT ecosystem.
In order to accommodate an audience who is more comfortable with email sign-ins and credit card transactions, you can opt for a blockchain like Flow to create your NFT. This way, you are able to onboard new NFT buyers while still being able to cater for the established NFT community.
To mint your NFT on Flow, you can either develop your own smart contract or utilize Gigantik, a platform that seamlessly allows companies to create branded marketplaces, enable secondary sales and execute advanced audience engagement mechanisms that we’ll dive into in a later blog post.
Developing Token-Gating NFT Strategies
With customizable token-gating technology like Pinata’s Submarine.me and Gigantik, exclusive access can be granted to the holder of any NFT, and in some cases, to the holder of a type of metadata tied to an NFT (for example, restricting access to wallets that own NFTs with a particular trait).
Some brands may take the route of creating a membership-based NFT collection where one of the primary benefits of ownership is the exclusive access. This would be similar to having a physical membership card where each is identical with the exception of the unique identifier (either a barcode or ID number). Others may choose to embed the utility of exclusive access to holders of an NFT that’s not specifically designed for this purpose. This could be a profile picture avatar, piece of art or other form of collectible.
Emerging technologies in the web3 ecosystem allow brands to engage with their consumers in ways they haven’t been able to previously. Giving exclusive access to your audience through token-gated experiences can turn consumers into advocates. In the next article we’ll explore some of the ways brands have implemented token-gated experiences for their NFT holders.