How Web3 Can Raise Customer Engagement in Rewards Programs

Most consumers are members of loyalty or rewards programs, whether for supermarkets, hotels, airlines, car rental companies, retailers or coffee shops. But these businesses, after enticing consumers to sign up to get a freebie, infrequently or even maybe never hear from them again.

According to Dani Mariano, president of Razorfish, the average American is enrolled in 19 loyalty programs but they actively using only nine. Long a staple of brand marketing, loyalty programs need to be reinvented to raise consumer engagement.

Mariano, one of the panelists at at SXSW 2025 in Austin, Texas, added that consumers are overwhelmed by fragmented loyalty programs that fail to deliver meaningful value.

Can Web3 — blockchain, cryptocurrencies and NFTs — solve the problem?

Blockchain is a distributed ledger technology that enables secure, transparent and immutable recordkeeping. It is best known for securing cryptocurrencies but has other applications. Non-fungible tokens (NFTs) are unique digital assets stored on a blockchain that represent ownership of a specific item or piece of content, like artwork, music or digital goods.

During the SXSW 2025 panel, speakers said Web3 can raise customer engagement on loyalty programs, but it depends on how it is deployed. The approach must be holistic, addressing the whole consumer instead of a transactional relationship, they said.

Chris Outram, head of blockchain at Publicis Media, recounted the example of a well-known brand that launched an NFT project at great cost. But it wasn’t effective because the company was bundling existing benefits into a new form instead of changing the entire rewards program.

Consumers felt they weren’t getting any new benefits, Outram said. “There’s no exclusivity. It just felt like they were repackaging.”

Consumers want brands to know them better, said Nicole Wojtalewicz, vice president of marketing and customer engagement at First National Bank of Omaha (FNBO). It’s no longer enough to offer freebies. Consumers want a deeper connection with brands that recognize them and provide experiences tailored to their preferences.

The speakers’ comments dovetail with PYMNTS Intelligence research that shows a majority of consumers want brands to offer personalized rewards programs and will shop with those brands and merchants that offer those incentives.

In fact, 67% of consumers want rewards from the merchant they last shopped, according to PYMNTS data.

Outram said brands implement these programs to collect consumer data, yet they often struggle to translate that data into long-term engagement. The result is disparate programs that seek greater consumer participation without offering a rewarding experience.

Read more: Retail’s Digital Tipping Point: Payments Plus Rewards With a Lot More Mobile

One Loyalty Program to Rule Them All

“One of the problems with loyalty programs is that they’re very siloed,” said Outram. He said blockchain can break down these silos, enabling interoperability between different loyalty programs and creating a more unified ecosystem for consumers.

Blockchain-based interoperability means breaking down walls between brand ecosystems. Outram described a future where airline miles, retail points and coffee shop rewards exist in a shared network, eliminating the inefficiency of multiple isolated programs. “If we can unify these systems, consumers will see real value, and engagement will increase,” he said.

Vlad Avesalon, CEO of Vennity, said ownership is key in this new paradigm. Blockchain technology allows consumers to own their loyalty rewards rather than merely participate in a brand-controlled system. This shift, he argued, transforms loyalty from a transactional relationship into a genuine asset.

Beyond transactions, brands could also reward engagement, whether through content creation, social media advocacy or participation in brand communities. Outram cited a retailer that rewarded creators for sharing creative content featuring their products, making them brand ambassadors.

The panelists also discussed the impact of digital goods in reshaping consumer perceptions of value. Avesalon said in the gaming industry, virtual assets hold real value, particularly among young consumers.

“More than 60% (of the younger generation) value online goods more than they do physical, so there’s definitely a shift happening,” Avesalon said. This value the young place on their digital life will open opportunities in the future for loyalty programs, he added.

Managing Personalization With AI

A key area of innovation is the intersection of blockchain and artificial intelligence (AI). Outram said blockchain’s transparency could enhance AI-driven personalization, enabling brands to deliver hyper-targeted rewards and experiences. Avesalon envisioned AI-powered agents that act on behalf of consumers, managing their rewards and even interacting with brands to maximize value. Imagine having an “NFT that’s tied to a personalized agent that’s trained on your data and caters to you,” he said.

Despite its potential, blockchain adoption faces significant roadblocks. Brands like Nike have experimented with blockchain-based digital goods, but many companies remain hesitant due to the complexities of implementation, the panelists said.

Regulatory concerns, particularly in financial services, also pose challenges that must be addressed before widespread implementation. Wojtalewicz acknowledged that while blockchain enhances security and transparency, compliance remains a major hurdle.

Scalability is another issue. Avesalon referenced the Starbucks Odyssey Web3 loyalty program, which, despite its innovative approach, struggled with technical challenges and was shut down. Until blockchain usability improves, brands will continue to face adoption barriers, panelists said.

Looking ahead, the panelists envisioned a future where loyalty programs are more interoperable, personalized and community-driven. Wojtalewicz stressed the need for programs to function across multiple brands and industries, rather than remaining isolated within proprietary ecosystems.

Avesalon proposed a model where consumers themselves distribute rewards within a decentralized community, shifting the power dynamics of traditional loyalty programs. Outram underscored the importance of experimentation, urging brands to embrace emerging technologies despite the risks.

SXSW 2025 panelists Nicole Wojtalewicz of FNBO, Vlad Avesalon of Vennity, Chris Outram of Publicis Media and Dani Mariano of Razorfish.