Challenges of blockchain loyalty programs

Mehdiestavidadehpardazco
3 min readJan 19, 2021

Challenges of blockchain loyalty programs

Does blockchain increase the need for loyalty programs? Despite false reports, customer loyalty is not as stagnant as it has been advertised. A recent survey by American Express shows that 58% of customers say they will continue to buy from their former brands regardless of other issues. It may come as a surprise, but teens are also keen to keep buying from their previous brands.

Of course, this is good news. The bad news is that creating a sense of customer satisfaction is not an easy task. An innovative way to build a strong relationship with a brand is loyalty reward offers. The details of these proposals are different, but their structure is usually very similar. The more customers buy, the more points they earn. Of course, the reward, in addition to points, can be several kilometers of free travel or goods and incentive plans depending on the geographical location. When the customer points reach a certain level, they may receive a free discount or gift or access to exclusive experiences or privileges. These rewards are reasonable and are interpreted as fundamental behaviorism, which of course applies to retailers. That is, if you want someone to do something (for example, buying from a brand) over and over again, reward them every time they do it.

However, customers do not like loyalty rewards programs as much as the discounts that retailers give them. Of course, this does not mean that customers have a problem with discounts, specific services or free tickets, but they just complain that managing all these loyalty rewards programs is not commensurate with the rewards and in many cases is not worth it at all.

As Chris Shalchi, CEO of BigCommerce, points out in this article, many loyalty programs offer discounts and membership fees to customers, which complicates things quickly because managing each of those programs is hard and time consuming. “Having a separate membership account for each airline agency, each with its own discounts, or supermarkets offering separate discounts for each sandwich and wanting to manage all of these programs, is a time-consuming and tedious task,” he says.

According to him, blockchain technology can easily solve this problem by providing a single, transparent and easily searchable access point for all loyalty points. Instead of joining dozens of different loyalty rewards programs, companies can join a network for every business the customer has been loyal to. Purchases from brands on that network will be rewarded with prize tokens. These tokens do not expire and cannot be retrieved. These tokens can be used not only for one business, but for all businesses in a network. In this way, the customer will have all his points in one place and also will have various options to spend those points.

With the blockchain approach to loyalty programs, not only do businesses enjoy all the benefits of these programs, but creating and maintaining these programs will cost them less than traditional methods.

Mehdi Estavi

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Mehdiestavidadehpardazco

CEO and Member of the Board of directors of Dadehpardaz Pooyaye Sharif Knowledge-Based Company