Loyalty inside the block
What does the future hold for the relationship between the shoppers and merchants’ loyalty programs?
Close relationships are important not only on a personal level. Customers’ satisfaction will play an increasingly important role in business success. These relationships will further evolve with the emergence of the blockchain technology.
We will face more personalization and customized offers. Every reward that we receive as customers will contain information for brands, which will use this data to shape a more precise value proposition. The rewards will also be easier to redeem and inherently more valuable.
Blockchain loyalty platform will also represent the loyalty points stock exchange. Distributed ledger and smart contracts will allow merchants to “upload” rewards/bonuses onto the platform and stipulate different events or conditions to these bonuses. Based on these events and conditions, the other merchants will be able to allow certain situations for redemptions, thus facilitating sales, giving an opportunity to buy for less to the customer, and efficiently writing off the points liabilities.
For example, a passenger received the miles for flying Virgin Airlines to New York. These miles appear on the blockchain platform and Wendy’s decides that they can be spent in its chain for a breakfast, because it wants to drive a certain social graph, at a given time of day, to specific locations. The traveler receives a great and convenient offer, Virgin writes off liabilities at a discounted rate and Wendy’s attracts a new customer from its target audience.
With that, all the merchants can in real time segment the customers, partner with other brands or operators, set amounts and exchange rates of the points and rewards, as well as stipulate other factors that can influence the decision making:
Customers’ segmentation
Customers in a merchant’s loyalty program can be rated by their importance. For example, VIP clients’ bonuses can be set as inaccessible to 3rd party offers (because the original merchant wants to transact with these clients themself).
Customers’ personal data remains accessible only to the customers and the original personal data operator. No one in the blockchain receives the sensitive information about other users.
Rewards and bonuses segmentation
The value of the rewards can be adjusted. For example, points earned for the purchases made by referrals can be redeemed by a customer for cash or cryptocurrency, but social actions such as shares and likes will only give merchant-specific points.
Reward points from different merchants can be exchanged at a real-time exchange rate or traded in for cash.
Gamification will be used more often in the relationships between the merchants and customers.
Partners
Every platform operator (typically a merchant) can select with whom they want to partner, excluding direct competition or brands that do not match their target audience. Multiple operators can create coalitions and set up the rules for accepting the new players by the consensus of the current partners. For example, 10 different restaurants and cafes in one neighborhood agree to reward and redeem each other’s points. If a new restaurant wants to join their loyalty chain, it should secure support of at least 6 current participants. At the same time, the new player can exchange their points privately with anyone from the chain.
Obstacles to blockchain loyalty
Implementation of blockchain into day-to-day business practices is hampered by numerous factors, the major of which are:
- absence or incompleteness of legal base and financial practices
- the technology is immature and many of its aspects are still developing
- scalability problems — low number of processed transactions in a given time
- inertia and the lack of understanding of the technology by the majors
- interaction with legacy legal systems — one cannot dispute the smart contracts in a traditional legal field, as that will compromise the essence of the technology
However, there is no doubt distributed ledger and smart contracts will secure a solid place in the business environment — loyalty and rewards concepts are bound to change with the application of the blockchain.
