Customer loyalty programs have been around for a long time in industries like banking, travel and general retail. The strategy of loyalty programs involves corporations giving out discounts, gifts, and other products in exchange for points earned by the consumer through the use of the corporations’ products or services. However, due to inefficiencies, the use of these loyalty programs is decreasing, which is why it is suggested that the blockchain technology should be used to improve it.
The blockchain is an open ledger system behind cryptocurrencies like Bitcoin and Ethereum which allows transactions to be performed and shared among a large network of users so that the data remains authentic. The blockchain could be implemented by businesses for their consumers of loyalty programs by sending the points in a blockchain wallet belonging to their loyal customers and these points could be redeemed on a single platform where all the businesses would have their offerings for customers who are part of more than one loyalty programs. This would help the consumers as they would not have to search for each individual programs offers, rules for redemptions and limitations.
Numerous technology companies like IBM are racing towards providing blockchain based solutions to organizations and companies with customer loyalty programs are no exception. A major reason for this is that it has proven so successful in industries like finance and supply chain that the potential applications of the technology have still not been fully discovered.
One of the main benefits of applying the blockchain is to help reduce liabilities which is beneficial to any industry. Customer loyalty programs most rely on partnership and co-branding in order to generate extra revenue by selling points. However, due to the recent unavailability of seats on a plane or hotel rooms the points earned by the customer are left unredeemed which show a large liability towards the consumers by the organization and which cannot be removed until the points are redeemed by the customer. If the blockchain was adopted by businesses than more options for the redemption of the points would be available to the customer which help in points being redeemed and the liabilities in the balance sheet of the organization being reduced.
Another benefit of using the blockchain for loyalty programs is that when a transaction takes place, it is creating a record in the blockchain database which cannot be changed or edited without being known to the entire network as the database is shared among the users in the network. This could prevent anyone from double spending, which is a common problem, as well as any kind of fraud by manipulating transactions. This could also create partnerships and new opportunities with organizations which were reluctant to be a part of loyalty programs due to the risk of transaction manipulation or double usage.
Customers always expect organizations to give them a personalized experience instead of a one-size-fits-all approach in their products and service and more so if they are loyal customers of the brand. Applying the blockchain would enable all the partners offering loyalty programs to be included easily and making trending offers as well as a variety of selections to easily available to their loyal customers through an online system which is seamless.
In conclusion, blockchain technology is being rapidly adopted across numerous sectors due to its advantages even though the potential applications of the technology have yet to be fully discovered. Disruption through technology is highly needed in the customer loyalty program sector and applying the blockchain could be the best option for organizations looking for customers to redeem all the points offered to them.