Blockchain is a trustless distributed ledger in which different agents can interact. Participants are:
They can interact in one system without intermediaries or third parties.
For loyalty rewards program providers, It is considered that blockchain has the potential to facilitate the implementation and management of their programs with complete transparency, resulting in significant cost savings. For loyalty rewards programs that currently have a competitive advantage, including their level of interconnected networks, joining a blockchain-based network is beneficial. We believe it’s a compromise because you can control how your customers interact with their rewards program or other loyalty programs.
Selling to existing customers costs significantly less for your brand than gaining new customers. This is the reason behind why over 90% of companies have some sort of loyalty program. Rewards points are the most practical methods for boosting customer loyalty and earnings. For example, the Starbucks loyalty plan is one of the most successful worldwide rewards programs. It attracted about 19 million members, with the redemption of points responsible for almost 50% of company revenue. Starbucks utilizes Starbucks Rewards to align with its business objectives in a manner that adds value and increases customer engagement through a fun, gamified strategy.
Starbucks’ method demonstrated that an effective loyalty program is not a one-size-fits-all solution, but a carefully tailored program can do astonishments for revenues, engagement, and retention. Due to the elaboration of digital assets, brands are now able to offer their consumers a unique and exceptional experience.
Undeniably, loyalty and rewards programs are essential components of the consumer-brand relationship; however, they have limitations. Namely, Complexity, lack of liquidity, and interoperability are some of the main obstacles to expanding loyalty and rewards programs. The unclarity of program rules causes much value left as a liability.
According to Clarus Commerce, 75% of consumers chose to be rewarded for engagement exceeding their purchase. It signifies the need for innovation and creates a massive opportunity for brands to revolutionize their loyalty programs.
Most points and rewards are usually limited to their respective brand ecosystem, which consumers cannot employ for another company’s offers. These programs lack interoperability, and points are trapped behind a walled garden, restricting value movement. Restricted value transfer and lack of communication between programs result in lower customer engagement.
If points systems more closely resembled cash in their ability to be spent, they would be much more successful. Despite these varying degrees of liquidity, what appears clear is that brands embracing this change are looking to grab consumer attention by introducing as much flexibility as possible in the usage of points currency.