The benefits of blockchain in loyalty programs
The adoption of blockchain is expanding globally and increasing customer loyalty as well as changing the narrative of customer loyalty in a variety of ways.
Loyalty programs are a huge $ 360 billion industry that annually issues more than 16 trillion loyalty points to 7.6 billion consumers. This is an important industry that businesses use to attract costs and customer loyalty.
Loyalty programs are noticeable but fragmented. There are many loyalty programs, each with its own way of earning points and spending. This can lead to customer frustration and a flood of unused privileges. According to a study by Colloquy, an average American has enrolled in at least 29 different loyalty programs. Approximately 50% of these loyalty programs are inactive and 30% of customers never spend a single point.
Most loyalty programs are very limited and this can discourage the customer. Customers can usually spend points only at the same retailer from which they earned points. Putting restrictions on how and where points are spent reduces the overall value of the loyalty program.
Through blockchain, companies can decentralize their loyalty programs and reap the benefits of this technology. This article outlines 5 ways to improve blockchain loyalty programs.
- A more efficient experience
When companies have more than one loyalty program, it becomes difficult for the company and its customers to manage. Lack of a simple customer loyalty program leads to missed opportunities, lost privileges, and frustration. Forbes article examines the use of a blockchain-based system using a single digital coin, such as Bitcoin, across many brands or companies. This decentralized approach makes it easier to manage and track the loyalty program, which saves more time and value to the customer. With this approach, customers have more flexibility and choice, which encourages them to spend more. Although this method is effective, it is not suitable for all jobs. If loyalty programs are managed independently, their outsourcing can be costly. This approach is suitable for larger companies and large assemblies such as Banana Republic, Gap, and Old Navy, or companies that enter into a strategic partnership with other brands from a complementary industry. Such as chain hotels, airlines, and transportation companies. Blockchain shows the future and present of some consumer loyalty programs. Singapore Airlines and Delta Airlines, for example, have recently introduced a blockchain-based loyalty program, replacing cryptocurrencies that customers can use for retail purchases with air miles.
- The reward of loyalty that increases in value
If brands are reluctant to build a global digital loyalty coin shared with other brands, they can choose the next best option, interchangeable coins. According to a report by Kaleido Insights, the ability to exchange these digital reward coins is a business opportunity for brands. Blockchain-enabled digital coins are very flexible and can be exchanged for loyalty points, as they can be treated as currency. The customer who joins these loyalty programs can exchange loyalty coins with several other digital currencies. This gives people more flexibility in how to use digital reward coins, which of course increases the value of the loyalty program and encourages people to buy more of that brand. Digital reward coins can even be exchanged for products or services from other brands because the digital coin goes beyond the company that issued it. The result of this digital coin-based economy is a reward for loyalty that increases in value the more it is used.