Loyalty programs require innovation!
Imagine a loyalty program where members earn a cryptocurrency instead of points in return for day-to-day purchases with merchants. A member earning $1 worth of rewards today could find it is worth $10 when they redeem it. Cryptocurrencies have the potential to replace points and become the new dominant loyalty currency. This is where Blockchain will help.
Blockchain has the ability to create a trustworthy digital currency and manages it transparently. The application of blockchain technology and digital currency within a loyalty program transforms points into a value currency, value fluctuates based on supply and demand and openly transferable. Cryptocurrencies have the potential to deliver greater value to members than points, which is the primary driver of engagement with a loyalty program. Members join a program because they believe they will gain value from doing so, and they continue to engage with a program because they perceive they are gaining value. The more value, the more engagement. The more engagement, the more profitable the member is to the brand. Cryptocurrency also will change participant purchasing behavior, customers will adapt their spending patterns in order to earn more cryptocurrency.
Using cryptocurrency, we will solve three key problems inherent in points programs:
- Points are restricted to specific product ranges in contrast cryptocurrencies can be spent anywhere.
- Points expire (a feature designed to boost the profits of major programs) in contrast cryptocurrencies don’t.
- Points have been observed to decrease in value to reduce the liability of large loyalty programs in contrast cryptocurrencies have the potential to increase in value as their popularity rises.
REFERENCES
1. CMO from IDG
2. UNSW School of Computer Science and Engineering
3. Dynamic Business
