A Mindset Shift Is Necessary for Brands to Succeed in Web3

In recent years, we’ve seen countless Web2 companies dip their toes into Web3, with mixed results. In Japan, where Web3 has become a matter of national economic policy, we frequently encounter companies considering testing the waters but unsure quite how to do so.

Let’s face it: adding a Web3 strategy doesn’t make sense for every company. For example, the Wurth Group is the biggest global supplier of screws, with 17 billion EUR in sales a year. Yet, chances are that an NFT collection won’t get them to 18 billion. As the Naked Collector puts it: “A Web3 approach just for the sake of having one hardly makes sense.”

The companies that would benefit the most from this kind of expansion are DTC brands. However, it’s not as easy as simply shifting their existing offering to Web3 and calling it a day. Companies need to adjust their priorities and expectations, especially in terms of their relationship with their customers. Attempting to venture into Web3 with a Web2 mindset is bound to fail.

Community Members, not Just Customers

In Web2, interactions between consumers and brands are transactional in nature. Customers purchase an item and use it. They won’t interact much further with the company unless something is wrong with their purchase.

Web3, however, paves the way for brand-consumer co-creation and community building. Leveraging tokens, companies can token-gate access to specific experiences, thus luring their community to participate in product development. For example, Nike enables token holders to work alongside designers on mockups for sneakers, and Lacoste offers holders access to interactive conversations and creative sessions.

With the above model, customers are more than just passive consumers of products; they are active participants of a “creative” community, one that has a voice in shaping the product they love; that’s a powerful incentive for any loyal customer. In this light, companies must consider new means of measuring success, focusing less on immediate numbers – which are very heavily tied to market conditions – and more on community engagement, contributions, and outcomes of co-creation.

In many ways, Web3 is an exercise in letting go of a short-term-ROI state of mind and embracing a different, less-CRM-y user acquisition and retention strategy. Come to think of it, Web3 is completing the trend started by social networks of brands needing, for the first time, to let go of attribution metrics and trust that interactions matter even without cash changing hands. When Gary Vee, back in the day, was grilled by a CMO on the ROI of social media, he famously pushed back with, “What’s the ROI of your mother?” Some things you just can’t fit into Excel.

More Than Just a Product You Sell

We’ll say it again — customer interactions in Web3 are not purely transactional, and transactions are not the only measure of success. The exchange of goods and money no longer marks the end of these interactions; on the contrary, the focus should be on what follows.

So far, brands that have gone into Web3 have done so mainly through Metaverse collaborations, NFT collections, physicals, loyalty programs, and community building. Web3 offers a new way to create value, products, and services. Yet, even with these new added value activations, companies will still often rely on their traditional means to measure success, such as immediate ROI and retention rates.

This is wrong and should be avoided since, for example, a metaverse collaboration with an influencer does not generate returns, at least not in the short term (or until monetization features find their way from Instagram and TikTok into the virtual world.)

However, the Web3 universe isn’t completely devoid of monetization opportunities. Brands with a big enough audience can generate profits through NFT collections. Margins are even pretty high since once the digital artwork is created and the infrastructure is set up, it’s just a one-time minting cost, and profits start to roll in; royalties earned on top are an added bonus.

Embrace Transparency and Open-Source Ethos

Another consequence of Web3’s increased community engagement is the focus on transparency. The design, development, and manufacturing stages of goods are traditionally hidden from consumers, who only meet them when they hit the shelves. Web3 is a shift from that, as code is open-source and visible to all. This ethos is firmly established and can lead to backlash whenever companies fail to understand it.

For example, when the German luxury car manufacturer Porsche released its NFT collection, it failed tremendously. NFT enthusiasts blamed this disappointing launch on Porsche’s lack of transparency around utility and a confusing minting process. Funnily enough, after Porsche announced that they’d halt the mint, instantly increasing the collection’s scarcity, NFT degens started aping in (also for the meme value), and the price shot up. Nevertheless, the entire affair left a sour aftertaste.

In contrast, Shinsei Galverse, a Japanese NFT project, has opened up the normally inaccessible process of anime production to its holders. While they are a Web3-native project, they collaborated closely with a traditional anime studio, showcasing the exciting outcome possible when creative forces from across the Web2-Web3 divide collaborate.

It’s often obvious to Web3 users which brands are just trying to get into the space for a little extra cash and which brands are doing it with a more holistic understanding — prioritizing the input, engagement, and experience of their community. Being seen as the former will not do any good to a company’s image–in fact, just the opposite. (If making extra cash is what you’re into, there are much easier ways than venturing into a whole new vertical that has a whole new set of consumer engagement rules.)

All in all, Web3 remains an attractive space for enterprises that are willing to experiment and shift their mindset from building moats and walled gardens to embracing community-driven approaches. Without this adjustment of expectations, companies are unlikely to benefit from this new and exciting technology.

Author bio

Maarten Henskens is the Head of the Astar Foundation. After an initial career in the field of Computer Science, he worked for multiple startups following his passions for innovation and entrepreneurship while also working as a teacher. Eventually, he entered the blockchain ecosystem full-time, joining Astar Network. With his commitment and ability to execute, he quickly became Head of the Foundation responsible for driving the growth and adoption of Japan’s leading Layer-1 blockchain. He had his first interaction with blockchain in 2013 and has been an advocate for the Open Web ever since.