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For over a quarter of a century, I have been a loyalty consultant to think, to speak and to write about customer loyalty. In this article, I want to break through the blockchain hype to focus on what it can and can not do for your business.
As participation in loyalty programs continues to slow down, interest in the possibilities offered by a blockchain loyalty program is growing. There are both opportunities and challenges associated with decentralized accounting books. First of all, we will examine the opportunities:
Reward Redemption
Blockchain-based loyalty programs address a number of issues that typically take customers away from traditional loyalty programs. Among these there are problems with the redemption of points before they expire and keeping track of more loyalty programs.
Low ransom rates are a big problem for loyalty retailers. Members who are not redeeming are not actively involved in the loyalty program. The downside, the members who redeem the points are more engaged, spend more and they are more satisfied with loyalty programs.
Blockchain allows a customer to store all the points in a single portfolio rather than trying to manage multiple programs. There would be no separate rules for acquiring and redeeming points from different loyalty programs as it currently does.
This lack of friction, in turn, allows customers to exchange chips for a variety of different companies and discounts or rewards. In a global loyalty study, 79% of the participants stated that choosing between different types of rewards is very interesting for them. & nbsp; Program providers still maintain control over how points are assessed and dispersed and other elements, but their profitability depends less on customers who redeem less points.
More flexibility
When it comes to loyalty programs, customers appreciate flexibility. & nbsp; With blockchain loyalty programs, customers should no longer wait to get points, but could potentially receive and redeem them in real time. In addition, blockchain rewards are easier to track and can be redeemed in smaller increments. There are also wider involvement opportunities, including local campaigns, partner offers, biometric authorizations and targeted content.
The data stored in the general ledger are safe, structured and abundant. It is the perfect source for targeted content driven by big data analytics using artificial intelligence (AI). For example, artificial intelligence can be used to create personalized messages for each customer with the right offer, the right reward and in real time.
Reduce fraud
If companies have sensitive private data, this information will not be stored on the blockchain but will remain on legacy systems with which the blockchain can interact. For members of the network, all the necessary information is stored in the ledger. All this could lead to a reduction in loyalty-related fraud.
Reduce program costs
A barrier to the expansion of loyalty programs is that doing this takes time and money. With a distributed ledger, this cost would be much lower. Savings can be transferred to the customer in the form of requesting a lower minimum balance for redemption of reward points or for more valuable customer experiences.
The challenges
Many companies are already exploring the possibilities that a blockchain loyalty platform could offer. However, like any new technology, there are still many unanswered questions and elements that need further development or investigation.
An emerging trend
There are a number of startup companies – such as Vexanium, Gift Jeenie, Qiibee and Loyela & nbsp; – implementing blockchain loyalty programs. But overall, this type of program is still in its infancy. So far, some big brands are experimenting with blockchain technology.
At the start of this year, Singapore Airlines & nbsp;launched KrisPay, which allows members to transfer their KrisFlyer points to partner merchants using a digital wallet that is accessible in real time. & Nbsp; American Express is also capitalizing on the transferability of the blockchain to allow merchants to tie American Express reward points into their products. Under that umbrella, the online Boxed wholesaler is the first trader to test the blockchain-based rewards.
E & nbsp; Chanticleer Holdings, which owns burger restaurants like American Burger Co., BGR and a handful of Hooters restaurants, wants to allow customers to redeem Merit, his & nbsp;cryptocurrency reward, on any of their brands or exchange with friends. The company intends to offer its members more control over their loyalty program to improve their customer experience.
Data privacy
Steps will need to be taken to protect customer data and not just keep pace with the general data protection regulation (GDPR) of the EU on data protection. Only limited information can be stored on a shared network. The rest, which requires the customer's authorization to be collected, must be kept separately.
Consumer Learning Curve
Millennials tend to be interested in Bitcoin and other digital currencies and may be more open to a premium encryption program. We know that customers do not always use and participate fully in loyalty programs as they are, and while blockchain should eliminate some of these obstacles, it remains a significant learning curve. Customers will also need to download their digital wallet and set up their accounts.
scalability
At its current level, blockchain technology can cope with demand. With Bitcoin, only three or four transactions per second are possible, and even Ethereum can only manage 15. The existing infrastructure may not be sufficient for a large-scale blockchain loyalty program.
Being an emerging technology, blockchain loyalty platforms have enormous potential together with disadvantages. Expert business leaders should be well informed about what happens with companies that are driving blockchain loyalty programs on the performance of these programs compared to traditional loyalty programs.
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For over a quarter of a century, I have been a loyalty consultant to think, to speak and to write about customer loyalty. In this article, I want to break through the blockchain hype to focus on what it can and can not do for your business.
As participation in loyalty programs continues to slow down, interest in the possibilities offered by a blockchain loyalty program is growing. There are both opportunities and challenges associated with decentralized accounting books. First of all, we will examine the opportunities:
Reward Redemption
Blockchain-based loyalty programs address a number of issues that typically take customers away from traditional loyalty programs. Among these there are problems with the redemption of points before they expire and keeping track of more loyalty programs.
Low ransom rates are a big problem for loyalty retailers. Members who are not redeeming are not actively involved in the loyalty program. On the flip side, members who redeem points are more involved, spend more and are more satisfied with loyalty programs.
Blockchain allows a customer to store all the points in a single portfolio rather than trying to manage multiple programs. There would be no separate rules for acquiring and redeeming points from different loyalty programs as it currently does.
This lack of friction, in turn, allows customers to exchange chips for a variety of different companies and discounts or rewards. In a global loyalty study, 79% of the participants said that choosing between different types of rewards is very interesting for them. Program providers still maintain control over how points are evaluated and dispersed and other elements, but their profitability is based less on customers who redeem less points.
More flexibility
When it comes to loyalty programs, customers appreciate flexibility. With blockchain loyalty programs, customers should no longer wait for points, but could potentially receive and redeem them in real time. In addition, blockchain rewards are easier to track and can be redeemed in smaller increments. There are also wider involvement opportunities, including local campaigns, partner offers, biometric authorizations and targeted content.
The data stored in the general ledger are safe, structured and abundant. It is the perfect source for targeted content driven by big data analytics using artificial intelligence (AI). For example, artificial intelligence can be used to create personalized messages for each customer with the right offer, the right reward and in real time.
Reduce fraud
If companies have sensitive private data, this information will not be stored on the blockchain but will remain on legacy systems with which the blockchain can interact. For members of the network, all the necessary information is stored in the ledger. All this could lead to a reduction in loyalty-related fraud.
Reduce program costs
A barrier to the expansion of loyalty programs is that doing this takes time and money. With a distributed ledger, this cost would be much lower. Savings can be transferred to the customer in the form of requesting a lower minimum balance for redemption of reward points or for more valuable customer experiences.
The challenges
Many companies are already exploring the possibilities that a blockchain loyalty platform could offer. However, like any new technology, there are still many unanswered questions and elements that need further development or investigation.
An emerging trend
There are a number of startup companies – such as Vexanium, Gift Jeenie, Qiibee and Loyela – that implement blockchain loyalty programs. But overall, this type of program is still in its infancy. So far, some big brands are experimenting with blockchain technology.
At the start of this year, Singapore Airlines launched KrisPay, which allows members to transfer their KrisFlyer points to partner merchants using a digital wallet that can be accessed in real time. American Express is also capitalizing on the transferability of the blockchain to allow merchants to tie American Express reward points into their products. Under that umbrella, the online Boxed wholesaler is the first merchant to test the blockchain-based rewards.
And Chanticleer Holdings, which owns burger restaurants like American Burger Co., BGR, and a handful of Hooters restaurants, wants to allow customers to redeem Merit, its reward cryptocurrency, in any of their brands or exchange them with friends. The company intends to offer its members more control over their loyalty program to improve their customer experience.
Data privacy
Steps will need to be taken to protect customer data and not just keep pace with the general data protection regulation (GDPR) of the EU on data protection. Only limited information can be stored on a shared network. The rest, which requires the customer's authorization to be collected, must be kept separately.
Consumer Learning Curve
Millennials tend to be interested in Bitcoin and other digital currencies and may be more open to a premium encryption program. We know that customers do not always use and participate fully in loyalty programs as they are, and while blockchain should eliminate some of these obstacles, it remains a significant learning curve. Customers will also need to download their digital wallet and set up their accounts.
scalability
At its current level, blockchain technology can cope with demand. With Bitcoin, only three or four transactions per second are possible, and even Ethereum can only manage 15. The existing infrastructure may not be sufficient for a large-scale blockchain loyalty program.
Being an emerging technology, blockchain loyalty platforms have enormous potential together with disadvantages. Expert business leaders should be well informed about what happens with companies that are driving blockchain loyalty programs on the performance of these programs compared to traditional loyalty programs.
