How to Become a Rewards (Application) Operator
Sean Dennis, Co-Founder & CHO, Loyyal (@iamseandennis)
First of all, Happy New Year everyone! 2016 is the year of Loyalty.
Let’s kick things off by talking about our Rewards Applications (RApps). This is a non-technical view of our proposed infrastructure (Also, have a look at our previous blog entry on Reinventing Loyalty, which broke down the Loyalty Network stack, for some further background).
The current Loyalty industry is rife with inefficiencies behind the scenes, which means high costs and a lower quality of service for the consumers, both in terms of value and utility.
The customer base has changed from that of previous generations. There is so much choice and access to information, have we all now become less loyal? (The average US Household has 22 loyalty program memberships under their roof — could you keep track of all of them?)
A recent study released by Skift, titled, “Portrait of the Millennial Traveler 2016: A Study in Contradictions” highlights much of the confusion that established brands are going through with respect to the current generation. (Download the report here.)
In the Skift report, Guy Langford (@guy_langford), Deloitte’s U.S. travel, hospitality and leisure practice leader says, “[Millennials are] acutely aware of the rewards that come to loyal customers. He went on to say “The brand that locks in the customer’s loyalty first and wins that race — is the brand that wins that customer, and potentially their loyalty, for life.”
So Millennials can be very loyal, they just want points that are applicable to them and their needs. They want easier to earn and redeem and a broader range of redemption options.
Brian Kelly (@thepointsguy), Founder and CEO of loyalty program website The Points Guy says in the Skift report “Millennials are looking deeper than just points. “They want the experience with the technology, and the in-flight perks like Wi-Fi and entertainment when booking a flight — more so than just saying, ‘Oh, this is my preferred airline.’”
All of this rings true to how we at Loyyal view the industry. Our Loyalty Network helps these companies address these issues and target both the older customer base and the new generation of customers whilst further reducing costs. Our recently released initial demo video for a client we are working with applies perfectly by showing how the customer experience is enriched and how the millennial need for technology experience and inflight perks may be satisfied. (This is only a tiny part of what the Loyalty Network can allow an operator to do, but nevertheless, it is particularly applicable in this situation.)
So, What is a RApp (Rewards Application)?
Loyyal has created a Loyalty Infrastructure Platform. The part that is client facing (as with the Apple’s App store, for example) is the Rewards Application Layer.
Think of the RApps as Applications that hold a set of rules or parameters that can be developed and then used by the owner (for example, a merchant) in order to reward their consumers for a purchase or an action.
We use SmartRewards™ to provide dynamic issuance and redemption of rewards. This means rewards can execute complex rules autonomously based on external triggers. Depending on the situation, these can include behaviour, time, location, and any other parameter or combination thereof the operator can think of. This allows even the biggest operator to target and make their customers feel special in a way that is usually reserved for a small boutique with limited and familiar customers. Complex rules and systems become simple and easy to operate.
The program operator can design and set up a rewards program with as many complex parameters as they like and they are able to share this with operators that they wish to include in their redemption network. They are able to target desired outcomes, specific client behaviour and varying redemption rates in a very simple manner. Think of setting the parameters as something similar to a “If this, then that” workflow.
The technical papers that Loyyal recently released on RApps referred to something called a Token Tree. I’d like to explore that in more depth here from an application perspective, as it really does demonstrate the power of the Loyalty Network and the argument for having one platform that the world’s loyalty operators should be using. At this point, I want to make it clear, that a Rewards Application is controlled and held securely by the owner, and it is 100 percent their own. There is nothing shared with an outside party unless they choose to. Information is held on their servers, not ours or anyone else’s. It is simply a platform for sharing rewards, like the internet is a platform for sharing data, or SWIFT (soon to be improved by blockchain!) is for sharing money.
A Token Tree basically allows an operator to create a network. I’d like to illustrate three potential use-cases. Let’s start with our recently announced client, mobile payment processing network Boloro as a use case.
Boloro is well established, and is expanding into at least 15 new countries in the LATAM and MENA region this year. They want to be able to differentiate themselves from competition as they do so in order to gain a competitive edge.
We are developing a RApp with them so that they effectively become a loyalty program operator. (They will set the parameters on how an eventual customer will earn points, i.e., a transaction using the Boloro payment processing network.) The merchants that sign up to the Boloro payment processing network will then be able to offer their own branded loyalty points to their customers based on the Boloro loyalty platform (RApp).
This means that customers of “Luigi’s Pizza Place,” for example, (assume they are on the Boloro Network), will receive “Luigi’s Rewards,” so the merchant can benefit from their own brand loyalty. A Boloro ‘wallet’ will hold these rewards, and be shared with other merchants in the network. This provides merchants with access to a network of consumers receiving rewards on the same Boloro platform. This is something that the payment service provider industry is not currently offering their merchants, and it allows the merchant to operate a loyalty program that has traditionally been the reserve of large merchants only.
One application that I am particularly excited about is the potential for use of our Loyalty Network within franchise-type operations. Currently, the liability for points owed for many franchise operations sits with the parent company. Using our token tree, the franchisor is able to set certain parameters for a master RApp that all the franchisees will follow. They can brand on the back end to be unique to their franchise, but still within the franchise group redemption network. Because the point has a unique franchisee identifier, that franchisee may be able to offer special redemption offers to their returning customers, and more importantly, the franchisor may be able to assign some or all of the liability to the franchisee (depending on existing agreements).
One other use case we have discussed is with that of a shopping mall. The owner may create their own RApp. (Let’s call it “Shopping Mall XYZ.”) This would allow the retail merchants within that shopping mall to create their own branded loyalty programs under the set parameters of the parent RApp. The Shopping Mall XYZ wallet would hold all the branded points with in it for ease of use for the customer, and the retail shops would be able to decide whether they want to limit redemption of their rewards to their own store or whether they would like to become part of the Shopping Mall XYZ redemption network. Liability could be assigned to the individual shops in the redemption network based on their sales per square foot, so no participant is penalized. This is a great tactic to create loyalty to both the shopping mall and the individual retailer.
Corporations might want to create RApps and tokens with a few base rules that are then used within branches across the world. Each branch might have their own special uses for their tokens. It could further be applied to the infrastructure of existing networks such as a redemption network, payment network, wholesale or retail marketplace/mall, franchise organization or supply chain, etc. This tree structure allows this to take place easily.
As mentioned in technical papers, the thing that might not be immediately apparent is the power of the RApp. By abstracting the value distribution rules from the Distributed Ledger and placing it in the application development level, we allow program operators to determine exactly how their reward points, coupons, tickets, cards, etc., operate. This includes the ability to programmatically specify breakage rules, (points that are never redeemed), circulation rules, redemption rules, p2p exchange rules and more. Among other benefits, it also opens up the ability to offer shared liability and instant value clearance between partners. Most importantly, this allows any number of rewards programs with independent sets of complex rules to efficiently coexist and interact on a single universal platform — something never before possible!
RApps will work with both new and legacy systems. At the point of sale when shopping, with a wearable device when jogging, with a telematics device when driving, with a smart A/C on the IoT, or at any other point of confirmation of use, a dedicated plugin will communicate the details of a transaction or action to the RApp, and therefore, the LoyaltyNetwork.
How do I build a RApp?
For the technical breakdown on how to build a RApp, please check Loyyal’s technical papers or contact us.
Thanks for listening everyone and please get in contact with us if you’re interested in creating or changing up your loyalty program, or even if you have innovative ideas on how to take rewarding loyalty to the next level. We’re friendly and we’d love to hear from you!
Co-Founder & CHO