Quest Thesis

The next wave: Influential moments, human experience. Interactive loyalty 2.0 -> Gamification 3.0 -> Human interaction: Hook Model 2.0

The Tailwind: Rising CAC

With a 60% increase in CAC and a 40% drop in lifetime values, fostering customer loyalty is crucial. Customers today seek engagement over mere transactions, looking beyond transactional, point-based systems.

Additionally, as social media platforms have become infinitely more crowded and competitive, and Apple’s recent privacy regulations have restricted customer targeting across digital channels, customer acquisition costs have skyrocketed in recent years. In fact, CAC is estimated to have increased 60% since 2018 and 222% since 2013.

This has caused endless difficulties for DTC brands who relied on social media advertising as a primary form of customer acquisition, and share prices of the top 10 DTC apparel brands have fallen as a result – 70% in 2022, compared to a decline of only 32% for the MSCI World Consumer Discretionary Goods Index in the same period.

Traditional approaches lack innovation and fail to keep pace with evolving consumer expectations. With common issues like lack of personalization, transactional nature, limited engagement, and ineffective brand-consumer interactions…

Brands are looking for new ways to engage their customer base and most loyalty programs do not extend beyond the point of purchase.

62% of consumers believe that gamified loyalty programs influence their purchasing decisions (Nielsen)

More than ever, brands and retailers are looking to play a meaningful and multi-dimensional role in the lives of their members. We observe that the most innovative and experimental loyalty programs look to build meaning through:

• personalizing interactions and experiences,

• building extended loyalty ecosystems, and

• creating community and belonging

🚀 From Gamification to Questing: The Future of Engagement

If gamification was the initial hook, questing is the evolution—transforming customer journeys into a powerhouse of growth.

At Quest, we're not just observing the future; we're building it. Our journey is about reimagining the way brands and consumers interact in a dynamic digital landscape. We believe that the future lies in creating meaningful experiences – or as we like to call them, Quests – that redefine loyalty and engagement.

If Gamification was V1, Questing is V2, and a powerful growth lever being baked into all future customer journeys, and here's why 👇

Quests are a part of the modern flywheel and the next evolution of UGC and are designed to make flywheels turn. Quest software was able to take users' actions and turn them into engagement loops that helped build long-lasting loyalty.

Simply put, Quests turn ordinary tasks into a game.

🔍 Discoverability: They're easy to find and participate in

🎮 Engagement: Players feel accomplished as they progress

🏆 Reward: Players receive instant gratification

🎯 Interconnected & Interoperable

Quests can be baked into any moment or channel IRL or URL. Quest platforms are good for kickstarting flywheels, but once you have users you can bake quests into any moment on any channel. The key is to ensure all quests, on any channel, can be connected together unlocking a new era of omnichannel experiences. Quests aren't just a user acquisition tactic—they're about building and sustaining momentum. They invite users to interact with your offerings in a meaningful way, laying the groundwork for long-term engagement. We're leveraging the power of Web3 to transform loyalty programs from isolated islands into an interoperable archipelago. Your loyalty actions are not just a transaction but part of an ecosystem where every interaction is valued, every engagement is recognized, and the rewards are as limitless as your participation. Built on Web3's interoperable nature, questing fosters a cohesive ecosystem engagement. By incentivizing actions across different platforms and partners, quests create a symbiotic network that amplifies value for all involved.

🔗 Omnichannel Personalization

Say goodbye to fragmented experiences. Quest is connecting the dots across all digital and physical channels, creating a seamless omnichannel universe. Whether you're online, in-store, or on the go, Quest ensures that every interaction is part of a cohesive, personalized journey. Questing solutions are omnichannel and interoperable as they are often based on Web3 tech, enabling them to unlock ecosystems of value. For example, in a quest maybe you have to open an account on X, make three trades on chain Y, and go to partner site Z to claim your reward. Each of these businesses is a part of an ecosystem and driving engagements across them creates greater value for the whole. This also enables an ecosystem of partners to work together on quests.

2️⃣ Elevated UGC

UGC is just about creating content, but Quests can be anything. From creating content, signing up for a service, and taking a specific action, to proving things you've done in the past. This is a world of engagements beyond just creating content which opens up a new world of how we think about engaging our audience and using these actions to drive growth. User-generated content (UGC) has evolved. Quests go beyond content creation—they encompass an array of actions from service sign-ups to proof of past activities. This diversity in engagement unlocks new growth strategies and user interactions.

Why Web3

Web3 is leading the way, but soon you'll see quests baked into all-digital experiences because of their ability to acquire new users without having an audience, can be baked into any moment to keep flywheels turning, enable omnichannel experiences across ecosystems, and users like doing them!

Web3 companies are unique in that they all start as big data companies from day 1. Ethereum has 1B+ transactions and growing, and that's just one chain. All of this data needs to be indexed efficiently to build new use-cases on top of it. These hard technical challenges will be the difference between success and failure for web3 companies.

…But this data is public

Sure, the data is 'public' in that it's probably on-chain. But teasing out which function on what smart contract called by which address corresponds to the in-game action that's the core of a certain experience, that's less easy. Also, disentangling the correct acquisition cost or monetization for a given wallet, given the novel and convoluted economics at play in many organizations, is still the murky territory of custom dashboards. Never mind that the data infrastructure in the blockchain is embryonic and hard to use.

…But there are existing solutions Sure, there are blockchain API providers that try to solve this problem. No single blockchain API provider had all the data. Some providers surprisingly had stale NFT ownership data and none of them worked out of the box. Due to the need for more complex queries, we still had to build our own data stores and keep them in sync and most companies have to build their own backend systems and data infrastructure that reads from these APIs and transforms them in a way that is more useful for their use-cases.

In Web2, some of these infra solutions have been commoditized. This will take time in web3 and the blockchain providers will have to evolve significantly to get there. In the meantime, successful companies in Web3 will be ones that can comfortably go up and down the stack to build the right user experience, especially in robust web3 environments such as the metaverse where “engineered serendipity” separates the leaders from the losers.

More Adoption with Gen-Z The current growth of the social commerce market (30.7% CAGR from 2022 to 2030) is largely being driven by Gen-Z (to no one’s surprise). The stats are, at this point, well-known, yet still shocking – 97% of Gen-Z turn to social media as their main shopping inspiration, 58% of Gen-Z make most purchases based on recommendations from content creators (of all sizes), and 61% have purchased items from ads on TikTok. For these young consumers, shopping is, and has always been, an inherently social experience in which the people wearing the products provide context and a sense of narrative. The products themselves, however, have lacked a similar identity – until now.