Amidst growing sustainability concerns and the evolving landscape of the global economy, a paradigm shift is underway in the world of brand-consumer engagement. Remember the classic “less is more” adage? Today, it's not about selling more products, but channeling your inner Marie Kondo and doing more with each product you sell.
This transformational approach centers on offering high-value product-based services, engaging with customers on a deeper level, and providing personalized offers. All of this is made possible through a new CRM tool for brands: digital product passports.
In this article, we will explore how digital product passports are turning their owners into brands' most valuable allies by facilitating direct engagement and deepening their connection with the brand.
What are digital product passports?
Have you ever misplaced a bag and wished you could easily find it? Perhaps you've donated clothing and wondered about its new owner. Or maybe you've sent a luxury watch for repair and felt like it vanished into a void, leaving you in the dark with no updates and an endless wait. We've all encountered these scenarios, yearning for a way to connect with our belongings more effectively.
Enter the solution: digital product passports (DPP). Generally speaking, this concept revolves around associating each physical product with its unique digital identifier, containing essential information about the product's origin, history, ownership, and other relevant details. DPPs can serve a myriad of purposes, including product track and trace, authentication verification, and furnishing consumers with comprehensive insights into the products they purchase.
Digital Product Passport as a requirement of EU regulations
The Digital Product Passport Regulation is a crucial part of the European Union's sustainability efforts, aligned with the European Green Deal's goals. It aims to reduce CO2 emissions by 55% by 2030 and make Europe climate-neutral by 2050.
This regulation mandates that all products entering the EU market must have a digital passport, accessed via a unique product identifier, for instance a QR code or an NFC chip. This passport provides vital information about a product's environmental and sustainability aspects, promoting more sustainable practices and better recycling across the EU. You can find more information on the regulation here on this DPP FAQ.
Going beyond regulatory requirements
DPP isn't just about what it can do for the European Commission's transparency efforts. It's like a Swiss Army knife for brands, offering businesses and their consumers five valuable tools:
- Easy access to product information
- A way to confirm the real deal and prove ownership
- A tool to manage a product throughout its life
- A new CRM capability
- A virtual representation of physical objects
As brands and their partners continue to incorporate additional valuable features into the DPP, its appeal and utility are poised to attract a growing user base.
The loyalty challenges faced by brands today
Transactional Loyalty: Today's loyalty programs often prioritize economic transactions over genuine brand loyalty. A 2022 Salesforce study found that 71% of consumers switched brands in the past year for better deals, product quality, or customer service.
Shallow Rewards: Current loyalty models offer rewards for simple actions like social media follows or purchases, attracting less committed customers primarily seeking rewards.
Loyalty Fatigue: Consumers belong to multiple loyalty programs, suffering from program fatigue. The average U.S. household is in 17 programs but actively uses less than half.
Personalization and Privacy: Personalization is crucial, but brands struggle to provide it effectively. Overcommunication can overwhelm customers, requiring strategies to re-engage inactive members while respecting data privacy regulations like GDPR and CCPA.
Technology Challenges: Modern loyalty programs rely on technology, and integrating systems for a seamless user experience can be complex. A 2021 KPMG report revealed that 42% of loyalty program managers face technology integration issues.
How can DPPs turn consumers to super users?
Having a vast pool of consumers who don't engage with your brand is essentially wasted potential. It's like having a giant net with lots of fish, but most of them slipping through the holes. On the other hand, having a smaller, highly engaged consumer base is like using a finely woven net that catches every fish.
These engaged consumers are not only more likely to make purchases, but they are also more likely to become brand advocates, spreading positive word-of-mouth and driving organic growth. Hence, they are often referred to as “super users”.
Enhanced Consumer Trust
In a world where skepticism about brand claims and corporate responsibility is on the rise, DPPs offer a way for consumers to verify the authenticity of a product's claims. When consumers have access to detailed information about a product's supply chain, fair labor practices, and environmental footprint, they are more likely to trust the brand that provides it.
DPPs also double as a tool for quality assurance. When consumers can track a product's journey, they are more likely to have confidence in its quality and authenticity. If a brand consistently delivers on its promises and maintains high product quality, DPP owners will become brand advocates, sharing their delightful experiences far and wide.
Through thorough analysis of data gathered from DPPs and customers’ virtual wardrobes/wallets, including purchase history, seasonal inclinations, style preferences, feedback and reviews, accessory choices, or wishlists, brands can customize their marketing strategies and product suggestions to align perfectly with each individual's preferences.
This personalized approach creates a stronger connection between the brand and the consumer, further cementing the DPP owner's loyalty.
Convenience through in-app services
Digital product passports can transform consumers into super users by offering a range of services to enhance their product experience.
Consider Alex, a fashion enthusiast who acquired a premium leather jacket. Her journey was elevated by a digital passport that went beyond a purchase receipt.
Alex's passport, through its intuitive app, allowed her to easily book services like leather conditioning and alterations. It also guided her to nearby service centers with designated drop-off points, providing real-time updates and completion notifications.
Passionate about sustainable fashion, Alex's passport connected her with artisans, offering creative upcycling suggestions. She embraced these ideas, deepening her connection with her jacket. The passport rewarded her for sustainability efforts, encouraging more environmentally conscious choices.
As fashion trends evolved, Alex decided to update her wardrobe. Her digital passport provided comprehensive information about the jacket's authenticity, ownership history, and condition, along with resale price recommendations. Listing the jacket for resale on fashion platforms was effortless, and she quickly connected with potential buyers, facilitating a seamless transaction.
Alex's journey with her leather jacket empowered her as a super user—engaging with her fashion piece, contributing to sustainability, and optimizing resale value. Digital product passports offered more than just a garment tag; they provided a richer, more meaningful fashion ownership experience.
Demonstration of the peak end rule: The most significant impact on perception comes from the high point and conclusion of an experience. Even if an experience is mostly average, if it includes a powerful peak and/or a memorable ending, it will be recalled as more enjoyable than a consistently positive experience with a less remarkable peak or conclusion. In the context of retail, this means selling a product is just the 1st step. Our objective should focus on elevating the quality of post-sale services.
Digital product passports offer a unique platform for brands to weave captivating narratives around their products, connecting consumers with the rich stories behind the pieces, fostering a deep appreciation for craftsmanship and culture.
Brands, no longer shackled by intermediaries, speak directly to their loyal following, pamper them with exclusive privileges like early access to limited editions and invitations to intimate events.
These passports aren't just about fashion; they're personal style advisors, dishing out customized tips and outfit inspirations, making the relationship with the brand a truly personal experience. With digital product passports, fashion enthusiasts don't just wear the brand; they live it.
Product improvement feedback
DPPs also serve as a channel for receiving feedback from the community. Brands can use the data collected from DPPs to identify areas for product innovation. DPP owners, being deeply engaged with the product and its lifecycle, can provide valuable insights and suggestions for enhancements. When consumers feel heard and valued by a brand, they are more likely to remain loyal, even in the face of competitive offers.
To motivate customers to earn rewards while fostering brand loyalty, brands need to offer them actual ownership of the DPP, including the ability to transfer the rewards they've earned. This is possible with tokenized DPPs - DPPs built on blockchain and web3 technologies.
If a customer decides to part ways with a brand, they should have the option to cash in their earned membership. This not only saves the brand from the effort of re-acquiring lost customers but also turns those departing customers into brand advocates who can bring in new customers by selling their rewards.
True ownership also entails that users can utilize the DPP at their convenience, without being limited to the brand's ecosystem. Instead, users have the flexibility to leverage their benefits across diverse platforms and brands. This interoperability significantly expands the reach and utility of the digital product passport, making it a more valuable asset for users.
The contemporary consumer values more than just the product; they seek experiences, personalized interactions, and continuous value. This necessitates a shift toward a value-centric business model.
At Arianee, we connect brands and users through digital product passports distributed respectfully wherever the product was bought, online, offline, first or second hand or received as a gift. This Digital product passport is the first gateway to learn more about the product, follow its life cycle and resell it in full confidence while allowing the brand to have a direct connection to the second hand buyer. Our solutions ensure compliance with upcoming regulations, and future-proof brands through blockchain-based solutions.
You can request a demo here.