Author: Li Jin Source: X, @ljin18 Compiler: Shan Ouba, Golden Finance< /p>

Seemingly overnight, the points system has become a hot topic in the crypto community, and application developers have taken advantage of it to increase user stickiness and engagement. From Rainbow Wallet that rewards users for earning points for using Ethereum, to Friend.tech building an entire user interaction loop around points, to NFT marketplace Blur’s new L2 Blast program that incentivizes users to move funds through Blast Points (since November With total value locked in TVL exceeding $800 million), the list goes on. Some cases imply that these points may evolve into fungible tokens with actual economic value, while other cases require users to judge their future value by themselves. This trend coincides with the crypto space’s broader search for product-market fit and ways to attract users during a bear market.

Outside of the crypto circle, points programs have long been standard in consumer applications, from games to brand loyalty programs, such as Sephora’s beauty expert program Or the Starbucks Rewards program. Essentially, points programs reward users for completing specific actions with points that can be redeemed or used in a variety of ways, designed to motivate users to further engage.

The Shopkick Experience: Lessons Learned for the Web3 Points Program

Ten years ago, I He has participated in the development of a web2 mobile shopping application called Shopkick, which has 3 million monthly active users and has cooperated with national retailers such as Macy's and Best Buy. The app rewards users for actions such as visiting physical retail stores, in-store product interaction, and in-app browsing. We built a program where users can earn in-app points through these activities, which can be redeemed for gift cards at multiple merchants.

This experience provided valuable inspiration for the project to develop the Web3 points program:

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Any form of external incentives will distort user behavior

1. Points program Will change the type of users who decide to use your app

2. Keeping the value of points ambiguous gives you flexibility

Next, we'll explore each of these points in more depth, incorporating additional explanations and examples to provide a comprehensive understanding of designing effective points for Web3 projects plan.

By incorporating these lessons, the Web3 Project can develop points programs that truly increase user engagement and promote long-term success, leading to an exciting time at the intersection of AI and Web3.

(1) Under the influence of the points system, user behavior will change in order to obtain rewards.

Due to the rules of our points system, users will start to engage in unnatural behavior when they want to receive rewards. For example, some people frequent stores in order to earn points, a behavior that is unlikely to occur without external incentives. To combat this, we've taken a number of steps, including limiting the number of points that can be earned on certain activities and implementing anti-fraud measures.

Even for users who are interested in your product itself, the existence of points may distort their behavior. Think of it like waiting for certain products to go on sale at reduced prices at retailers that frequently discount them, and these stores have cultivated the habit of customers never buying at full price. Points may also encourage users who don't like to collect wool to develop the habit of collecting wool. Although user activity may increase in the short term, it may actually cause damage to long-term business health. These long-term adverse effects can take years to manifest and can be difficult to address. For example, JCPenney’s “everyday low prices” strategy failed after years of steep discounts and coupons.

Because incentives can distort user behavior, Shopkick must carefully manage its profit model as a startup and track key performance indicators (KPIs). Because our revenue comes from retailers and brands who want to drive user engagement, it’s important to deeply understand the value of user behavior. Incentives change the value of walking into a store or interacting with a product, so it becomes critical to close the loop and track key performance indicators (KPIs) that ultimately focus on, such as conversion rates and revenue growth among user groups. Therefore, founders building points programs should be careful to define those KPIs that are directly related to their core purpose (North Star Goal) and not just metrics related to motivating behavior.

(2) Setting up a points system will change the type of users who use the application.

Points not only change user behavior at the margin, but actually change the composition of the user base. Many developers are looking to points to increase user retention and engagement, but more fundamentally, a points system will change who decides to use your app in the first place. While we designed Shopkick with shopping enthusiasts in mind, the presence of points appeals to the type of user who hunts for bargains and uses extreme coupons, similar to a Web2 version of “airdrop farmers.” This reflects research in psychology on how financial incentives crowd out intrinsic motivation.

If users attracted through external incentives have a reason to stay (e.g., ongoing incentives or strong underlying product market fit), or if they are interested in your If it is still a net added value for a specific business model, then this change in the user base is acceptable. For example, consider users who maximize credit card points or airline miles programs. For our part, we have a sustainable business model that can fund the continuation of the points program. However, any app that is unable to provide incentive funds over the long term should proceed with caution and realize that when the incentive ends, users who are just there to earn money will be lost, and they were never the target users of the core product.

(3) Maintaining uncertainty about the value of points can provide flexibility.

If you plan to tie your points to actual financial value, one of the best practices is to not specify the exact value of your points. This approach gives you the freedom to adjust the value of points to manage costs and test incentives, while also maintaining user interest. For example, restaurant loyalty and rewards network Blackbird issues $FLY tokens to users (these tokens are not on-chain) but keeps the exact value vague, describing it in the app as: “It can be redeemed for incredible amounts of money. things like free cocktails and special benefits."

Explicitly equating an action with a specific amount of money may reduce user motivation, especially when the amount When it was smaller. In the case of Shopkick, the points earned by users can be redeemed for various gift cards, but the redemption ratio between different rewards varies. When users walk into a store or perform other actions that earn points, they often don’t think about the dollar value of those actions (as that value may be trivial), but rather think about it in terms of points, which makes more sense.

Points are meaningful

I hope that in the crypto world, points on the chain can Bring interesting experiences to developers and users. While the points system I worked on at Shopkick was limited to our app, using blockchain to track points allows an entire app ecosystem to be built around points. This can lead to fascinating new user experiences. When it comes to shopping, it’s not hard to imagine other brands and retailers also wanting to know who are the most loyal customers at other stores and target offers accordingly, something that already has precedent with airlines’ identity matching programs. For users, the added value of points across multiple apps may make accumulating those points more attractive, relieving each individual app of the burden of creating its own points utility.

The on-chain implementation of points in the crypto world has the potential to bring exciting experiences to developers and users. While the points program I worked on at Shopkick was limited to within the app, using blockchain to track points could allow an entire app ecosystem to be built around points, leading to engaging new user experiences. In a shopping context, it's conceivable that other brands and retailers would want to understand which shoppers show the highest loyalty at other stores and target them with offers accordingly, similar to what already exists with status matching programs in the airline space. For users, the added value of points across multiple apps may make accumulating those points more attractive, relieving the burden on each individual app developer to create their own usefulness.

While I have emphasized the pitfalls of designing point systems for Web3 applications, I would also like to emphasize that they can bring many benefits. In the case of Shopkick, we use the points system in a targeted way to incentivize users to move through the funnel and change their behavior in the real world. For a small amount of money, we had a huge impact on long-term user retention and referrals. The key to successfully implementing a points program is in the details, requiring ongoing experimentation and iteration, modeling of economic impact, and rigorous tracking of key performance indicators.