Remember when you would go to your favourite deli, buy your favourite sandwich, then pull out your loyalty card to get that ‘oh so good feeling’ punch or stamp? Those were simpler times. You may have had a loyalty card for your favourite ice cream store, coffee shop, lunch place, salon, etc. Oh, how things have changed. Its estimated that the average US household now participates in over 29 different loyalty programs. That is a lot cards to keep track of and even more stamps and punches. However, the days of the loyalty card are as good as gone, these days loyalty is digital, and it most commonly comes in the form of an app. It seems like everyone is offering some kind of loyalty program, and honestly, at this point it’s becoming more of a bother than a bargain. Loyalty programs now feel more like loyalty schemes. There is just too much to keep up with and the effort required to attain rewards hardly seems worth it in the long run. Is the loyalty program dead? Are we supposed to revert back to our card-based systems, stuffing our wallets full of cards that usually expire before they can even be filled? Maybe.
However, there is a new technology that seems to be on the tip of everyone’s tongues these days, one that is expected to change the way we think about transactions of any kind. Blockchain has the ability to revamp the loyalty rewards system, saving both time and money for the loyal customer and businesses as well. The Price of Loyalty How many loyalty cards or apps do you have? You have one for your favourite food joint, one for the coffee house you claim has better coffee than any other place, your credit card rewards for entertainment, for miles, for god knows what else. The fact of the matter is, is that there are just too many rewards to keep track of these days. And at the end of the day, what is your loyalty even good for? You buy countless cups of coffee until finally you are rewarded with what? Another cup of coffee, maybe a donut or croissant? Sure, credit cards often offer different reward options, however, the choices are usually limited to the cards partner companies. Plus, what are you working so hard for? Usually, credit card companies offer introductory rewards, such as a, “spend $500 within the first month and get $100 in points in return” option, but after that, reward programs often require participants to spend hundreds of dollars for an unsubstantial return. So, it seems there are three main problems associated with the everyday customer rewards program. One, there are too many options. Two, there is a lack of diverse rewards. And three, the work to reward ratio is severely flawed. What is a loyal customer to do? Blockchain has the ability to provide both businesses and consumers with an easier system. One that provides an industry-wide centralized rewards system, in which rewards are more diverse and therefore worthwhile.
Reinventing Loyalty with Blockchain Blockchain, the technology behind cryptocurrencies offers a variety of benefits through its ability to act as a digital distributed ledger. One of the best things blockchain can do for customer rewards programs is to provide a centralized system which can be shared by multiple businesses through a single point system. Think about it like this, one application shared by all companies that offer a rewards program, making it simpler for both businesses and companies alike. One of the reasons why it takes so long for customers to build points is that rewards programs are often difficult and costly to maintain. Through the use of smart contracts and the perks offered through blockchain, rewards program’s systems can be both easier and more cost efficient to maintain. Blockchain, through automation, greatly decreases the chance of human error. Loyalty programs can often be costly and difficult for businesses to establish, and often require a substantial amount of time dedicated to marketing. Blockchain has the ability to reduce a loyalty reward’s system management. It can reduce costs associated with human error. By developing an industry-wide blockchain, partner companies can be added to the same blockchain, and a single point system established to ease system management for companies, and point management for customers. Customer points will be rewarded in near real-time, making it easier for loyalty programs to coordinate quicker and in an easier manner. Blockchain prevents a double spending problem, fraud, or abuse due to the fact that it is secure and uses an immutable time-stamped distributed database. This is the technology that has securely prompted the transactions of millions of dollars. It is a deep cryptographic system that is not only being developed for rewards programs, but for banking and financial institutions as well. Loyyal and Qiibee Already there are multiple blockchain-based rewards programs. Loyyal is based in San Franciso, and offers businesses blockchain-based reward program solutions.
Loyyal powered rewards programs offer businesses scalability, liability reduction, and more satisfied customers due to its ability to provide more reward options. It is a permissioned blockchain, meaning it is only available to those given permission, rather than a traditional blockchain which is permissionless and thereby viewable by all. Qiibee, founded in 2015, aims to provide customers with one wallet that has the capability to redeem rewards through various businesses. Using blockchain technology, and all the benefits it provides as explained above, the founders of Qiibee, Gabriele and Gianluca Giancola, hope to bring simplicity to the confusing loyalty rewards program space. Obstacles that Need to be Overcome First Although efforts are already being made by Loyyal and Qiibee blockchain will not be able to change the currently outdated rewards system overnight. There are a few obstacles that need to be overcome first. For one, blockchain is still too new. There are more meaningful uses for the technology, and even in these sectors, the technology is still being researched. Also, because blockchain is so new, businesses will be less likely to adopt its use. Rewards programs may seem flawed to consumers, but that does not necessarily mean businesses will rush to revamp their systems overnight. That means that a centralized rewards system will be harder to develop. However, those who get in first will most likely reap the most benefits later. Companies may also be hesitant to join an immutable ledger and therefore an immutable system. It will be much harder for companies to make changes to their rewards programs once they have been established.
Especially if they are partnered with other companies. A blockchain requires cooperation and trust, both of which many companies lack these days. So, in order for blockchain to actually prove useful to both businesses and loyalty rewards participants, it must first achieve industry-wide adoption. From there, businesses will have to work together in order to build a useful and cost-efficient system. Although blockchain can be extremely useful when applied in the right way, at the moment it seems to be more hype than anything else. However, once the technology has been developed further it can provide many benefits, not only for rewards programs but for many others as well.
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