Loyalty and Marketing News: The effect of blockchain on loyalty rewards programmes Its ability to disrupt many industries is undeniable. As for its p
Loyalty and Marketing News: The effect of blockchain on loyalty rewards programmes
Its ability to disrupt many industries is undeniable. As for its potential to bring significant changes to the loyalty rewards landscape, the future certainly looks auspicious. Blockchain technology can deal with the challenges in the loyalty rewards industry. Although it is not a panacea for every single problem, there is definitely lots to benefit from if you do decide to adopt the technology meaningfully.
What is Blockchain Technology?
Don & Alex Tapscott, authors Blockchain Revolution (2016)
The Pain Points in Loyalty Programs
For businesses focused on finding and implementing effective ways to retain customers, loyalty programs are an option worth considering. Whether they succeed in building an attractive loyalty program that will allow them to engage with their customers, though, is an entirely different story. According to statistics, almost 50% of consumers that register for a loyalty program never use it. It seems that the overwhelming number of various loyalty programs available brings a lot of confusion, which eventually makes consumers leave the programs. Plus, there are intermediaries in the rewards delivery and redemption process that cost businesses quite a lot.
The whole point of having a loyalty program is to improve customer experience and consequently merchant sales and revenues. At the moment, the industry is significantly fragmented, has become dramatically ineffective, and lacks room for interoperability. It is no wonder consumers see no substantial benefits from the different loyalty programs on offer. Merchants, on the other hand, are also called to deal with the burden of liability that comes hand in hand with running a loyalty program.
But, what would happen if there was a uniform management system in loyalty programs? A system that would allow transactions among multiple parties using a broadly-accepted currency? What if we could access several loyalty programs on a single app that could manage the points we have collected? It is beyond doubt that having a universally-embraced loyalty currency will indeed encourage consumers to spend more and more often.
This is where blockchain technology comes in, providing a tool that can help cut out intermediaries and allow the creation, redemption, and exchange of reward points securely and instantaneously, across a wide range of providers, programs, and, why not, industries.
Blockchain and the Future of Loyalty Programs
There are many colossus companies around the world already developing blockchain-based systems to trade loyalty points and to work on new ways blockchain technology could power loyalty programs (i.e., Ribbit and IBM).
What is more, the technology even has the potential to give consumers options as per how to spend their points (i.e. in a dining facility, to upgrade a flight ticket, etc.) while the rewards may also be collected, redeemed or transferred from merchant to merchant, merchant to consumer, or even consumer to consumer.
The key to the success of a loyalty rewards program is the use of a global cryptocurrency and secure digital payment system. You have probably read and heard a lot about Bitcoin, which was the first player in this game. However, having a product or service monopolizing the market can never mean good news for the consumers. In fact, the presence of competitors gives way for more pioneering, more customer-centered, and more advanced techniques to provide the solutions people need, faster, cheaper, more accessible, and more efficiently.
Examples of Cryptocurrency
Elements is the new cryptocurrency that offers a unique perspective on the way merchant loyalty programs are being implemented at the moment. “Elements” saves merchants from loyalty program liability issues and offering consumers a greater variety of options (and incentives to use Elements coins) when transacting with merchants across a broad spectrum of industries, from travel and leisure to hospitality and retail. It offers great flexibility in the way a merchant can create tokens and gift cards for their customers while allowing SME (small and medium-sized enterprises) with an already (well) developed loyalty program to provide value-added rewards to other businesses, which helps move their loyalty program to the next level.
However, the solution is not attractive only to the big players. Small business owners with no loyalty program up and running can get access to an interlinked network of other businesses and start offering loyalty points to their clients; points that could be redeemed in any other merchant in the network. This also gives more flexibility in managing collaborations and deals. Plus, it allows businesses to tailor their rewards to their individual clients.
Let us not forget that merchants (in fact, practically everybody) can mine ELMs (Element coins) for FREE and acquire coins, which is a huge deal for all parties involved.
Finally, customers see more liquidity in their rewards and get to choose exactly how they wish to redeem their points. They also have a saying as per which of the offered wallets suits their needs the most. With Elements, they could use the points earned to make a new purchase or even exchange them for fiat currency (i.e., USD, Euros, etc.) or cryptocurrency. For merchants, adopting Elements will help increase customer satisfaction, sales, and visibility; all vital components of every marketing strategy.
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