Companies Applying Blockchain For Better Loyalty Programs

 Customer  loyalty and engagement are among the most important metrics for  measuring modern retail company’s success. To woo potential customers  and reward the long-standing ones for their patronage, almost every  successful business nowadays employs loyalty programs of some sort. Statistically, you, dear reader, most probably have participated in  loyalty programs on several occasions and used coupons, plastic cards  and digital notes which had some value within the network of the company  that decided to reward its customers. And from personal experience, you can probably attest that traditional loyalty programs suffer from an entire host of maladies. To name a few, there is an obvious lack of a unified system which  leads to low liquidity of loyalty points. Rewards are only redeemable at  certain establishments and often not easily so. And of course,  digitization is a must in the modern world. While some loyalty rewards are even now trackable or redeemable  online, still they are not digital assets in and of themselves. And of  course, there is always the necessity to use the intermediaries, like  banks, which by itself increases the costs and introduces additional  security risks. 

Blockchain is the magic word

Those are all very familiar issues to anyone who’s been following the advance of Blockchain  technology in the real sector of the economy. Many industries have by  now experienced the new disruptive paradigm of Blockchain and loyalty  programs could not remain an exception for long. There are industries that can use Blockchain and there are industries  that absolutely need it. Loyalty programs fall somewhere in between.  The benefits are clear and real. Blockchain gives program providers  simple and efficient tools which facilitate unmediated interaction  between customers, managers and individual vendors. We all know by now that Blockchain  is tamper-proof and pretty secure. But perhaps the most compelling  benefit of Blockchain is cost-efficiency. Loyalty programs cost a  fortune to develop and maintain while Blockchain solution can do the job  better at a fraction of the cost. The last thing that has to be mentioned is the tokenization  of loyalty points. Basically, being built on a cryptocurrency token,  loyalty rewards can be freely transferred between people and even  exchanged for fiat or other cryptocurrencies on crypto exchanges. 

Does it work?

To this day a number of solutions facilitating an interlinked loyalty  reward network have been created. Complete digitization provides a  great opportunity for integration of many different loyalty programs on  the same platform and that was the path chosen by most of the existing  projects. Although the decentralized nature of Blockchain compels every project  to create their own financial ecosystem, loyalty programs may become an  exception. As they are not the main business activity of any company,  joining a consortium effort does not involve serious risks that could  mitigate the benefits. One of the most pressing challenges for a new Blockchain ecosystem is  attracting enough participants to the budding market and a seamless  loyalty reward space can be advantageous in accomplishing that task. A  compelling argument not to be brushed aside easily. With just one wallet to accumulate all reward points in an integrated  financial infrastructure, customers would not need to memorize each  program’s rules and redemption options and vendors will not have to  worry about the liquidity of their reward points. The first Blockchain-based customer reward program - Ribbit appeared back in 2014. Since then several other platforms like Loyyal and Blockpoint were launched. The projects are quite similar and simplistic in nature but  invariably we see new iterations of this concept resurfacing now and  again. So is it a trend exploitation or does the market actually need  more of those? 

More of that, please

One would think that joining an already existing large conglomerate  would always be more beneficial for the participants in the end. Not  exactly. Turns out there is still great value in decentralization when  it comes to reward programs. To illustrate why under certain circumstances it is beneficial to  create a completely separate customer loyalty system, one could take a  look at the newest player on the market, BioCoin. This Russian-based startup is not just a loyalty platform designed to  incentivize consumers with Blockchain-based units of value. The  platform’s broader goal is to facilitate the eco-friendly and healthy  agricultural paradigm worldwide. In a nutshell, BioCoin is meant to support eco-farmers and  organic food retailers and allow them to return value right into their  local communities via a system of rewards and discounts. To achieve  this, a separate economy is necessary because it will allow to preserve  and multiply value within the community. To sum it up, there is a clear incentive to build loyalty platforms  encompassing separate industries that rely on positive feedback from the  community. Blockchain today is steadily permeating the loyalty programs  sphere but its success depends ultimately on whether enough retailers  and consumers around the world would dare to adopt this trending but  still unpolished technology.  

https://cointelegraph.com/news/companies-applying-blockchain-for-better-loyalty-programs