The Loyalty Program industry is already prospering with a mammoth value of over US $360 billion. Yet according to Colloquy Loyalty Census 2017, sadly 57% of the surveyed consumers did not even know their point balance. Around 53% of the consumers weren’t even interested in the type of rewards offered.
All these facts point in a direction that the Loyalty Program today need a revolution to eliminate the stagnation in the industry. Blockchain can bring a breakthrough in the Loyalty Program industry by revolutionizing how loyalty program rewards work.
A Blockchain Loyalty Program would address numerous issues that would lure customers away from traditional loyalty programs.
Issues of Customer Loyalty Program
Customer loyalty and engagement can be a groundbreaking thing for an organization. Customer loyalty programs are ailing due to numerous inefficiencies like low customer retention and redemption rates etc. Customers find redeeming points before they expire and keeping track of multiple loyalty programs very cumbersome. Low redemption rates are a big hurdle for loyalty marketers.
Customers wish for more flexibility in the Loyalty Program system so that they can choose among several types of rewards offered. In traditional Loyalty Program system program providers maintain control regarding how points are valued and dispersed and other elements. Customers wish for independence on how and where they use their reward points. Harvard Business Review stated that setting up a Cross-border loyalty program would increase the customer acquisition rate by 50%.
Blockchain Loyalty Program
Blockchain can be truly transformative for the Loyalty Program industry with enhanced efficiencies, reduced costs, and enhanced brand loyalty. A number of startup companies like Vexanium, Gift Jeenie, Qiibee and Loyela are already implementing the Blockchain Loyalty Program.
5 Things to know about Blockchain Loyalty Program
Decentralized Loyalty Program with Blockchain – A decentralized, trustless ledger would actually centralize the customer’s loyalty programs. This Blockchain Loyalty Program would give Loyalty providers the ability to decide how and with whom the customer uses these rewards. The customer will have the ability to access and manage the ledger with no friction.
Cost cutting efficiencies with Blockchain Loyalty program – Loyalty programs are expensive and tedious, demanding a significant investment of time and money on both technical implementation and cost of rewards. Blockchain incurs upfront expenses on three major levels–system management, transactional, and customer acquisition. A blockchain-based loyalty program would reduce costs associated with errors and fraud by using smart contracts which would ensure secure, trackable and transparent transactions.
A real-time Blockchain Loyalty Program – One of the inherent features of Blockchain is that it enables the transaction to be recorded and accessed by multiple involved parties in near real-time. This makes the process of coordination between loyalty rewards program provider and consumer more efficient and instantaneous. With Blockchain Loyalty Program, customers won’t have to wait to be awarded points but could potentially receive and redeem them in real time.
Increased security leading to enhanced customer loyalty – Transactions on a Blockchain ledger are cryptographically secured. Every transaction ever made on the Blockchain are immutable and time-stamped, thus transactions are easily trackable. No transaction made is irreversible, therefore preventing double spending, fraud, abuse, and any other type of manipulation of the transactions.
A sea of new opportunities for businesses – With an interlinked loyalty network, large loyalty rewards program providers will have unique opportunities to offer value-added services to other businesses. A Blockchain Loyalty Program would no longer force customers to spend their loyalty points with a specific brand. Customers can even sell their tokens for fiat and spend the money in the real world!
Though Blockchain Loyalty programs come with few drawbacks like the issue of scalability yet the technology has tremendous potential. Companies who embrace this change will remain relevant while the ones who resist it will fall behind their competitions.
Blockchain Loyalty Program would give Brands an opportunity to expand their loyalty exponentially in a fraction of cost. Smart contracts would make transactions auditable to the micro level while a Blockchain enabled platform will overcome all the complex legal and geographical hurdles. This would ultimately make customers more happy and loyal to their brand.