GATCOIN is Blockchain’s Answer to Loyalty Programs
Liquid, tradable loyalty incentives solves the problem of “dead points”
Imagine if your dead loyalty points could be converted into crypto currencies. How much would this be worth to you?
GATCOIN takes a revolutionary approach to customer loyalty. Rather than issuing loyalty points, merchants will issue crypto currencies instead.
Liquid Digital Tokens are the Answer
The global incentives and rewards industry is estimated to be worth around US$320 billion in 2017, and is growing at 6% per annum.
However, there is a shocking level of under-utilization. Although the average consumer is a member of at least 30 incentive programs, 76% of consumers simply do not use their shopping incentives¹.
The reason so many incentive programs are simply ignored, is because all programs generally look the same. Each provides, to varying degrees, some form of bonus, some form of discount, or some sort of privileged access. With an average of 30+ programs to track, it is not surprising that consumers have difficulty utilizing their points.
While some economists may argue that low points utilization is good for the merchant, we think this is terrible. There is no meaning, in our view, of issuing thousands of points to consumers who routinely ignore them. This is an incredible waste of resources.
Unfortunately, the industry’s best answer to this problem is to urge enterprises to try harder to come up with “better” rewards — bigger lounges, more lavish gifts, more privileged access.
The problem with this approach is that any new program can easily be copied, making it incredibly difficult for rewards programs to “stand out”. In a world where reward programs are becoming increasingly undifferentiated, consumers just don’t have the time and energy to discern the true value of one program over another. And the consumer passes judgement in mere seconds.
Valuing Rewards
In the commodities world, there is a useful tool that helps buyers determine the true value of a thing. That is “price”.
What if all loyalty points had a price? Customers would now be in a position to calculate the monetary value of their incentives within seconds, and decide what to do with them.
What this means for merchants, is that no matter how good (or bad) their incentive program is, consumers will always pay attention. Receiving US$1.00 worth of incentives or US$100 of incentives — it is still real money in the hands of the consumer. What will never happen, is that incentives will simply be ignored.
The size of the reward is not nearly as important as communicating the value of what you are giving
Re-thinking Loyalty
As you can see, the real problem with today’s loyalty programs is not necessarily the attractiveness of the rewards on offer, but rather the inability to effectively communicate their true value to consumers.
Allowing loyalty points to have a real world “price” gives merchants the most powerful tool available to communicate the worth of their incentives. And the effect is instantaneous.
Crypto-currency markets now give merchants a once-in-a-lifetime opportunity to transform their loyalty points into digital tokens. Digital tokens have a market price, and hence an immediate discernible value.
The market capitalization of all crypto currencies traded in the open markets today is an astounding US$130 billion, and doubling every year. Earlier this year, Burger King in Russia, issued the WhopperCoin, a crypto-currency operating on the Waves platform.
This trend will continue for one simple reason. It is far more effective to reward customers with crypto-currencies than it is with abstract loyalty points.
The GATCOIN Solution
GATCOIN is the first system designed specifically to enable merchants to conveniently issue branded crypto-currencies to a mass consumer audience. Discount coupons, loyalty points, and gift rewards will be “token-ized” and airdropped as crypto-currencies to customers on the GATCOIN blockchain.
The key feature of the GATCOIN system is that branded merchant tokens can be freely traded for GAT Coins, a public crypto-currency like Bitcoin or Ethereum. Customers can now take GAT Coins to any exchange in the world, and trade them for real cash.
The ability to convert incentive points into real money frees the customer from any single loyalty ecosystem. It also allows consumers to achieve 100% utilization of their disparate incentive points.
Why is this good for Merchants?
Crypto-currencies are always valuable in the hands of customers. Therefore, no matter how good (or bad) a merchant’s incentive program is, digital currencies will always deliver tangible value to the consumer. This is a whole lot better than today’s state of affairs where unused incentives are viewed as simply worthless.
In the new world of crypto-currencies, it really does not matter if a Starbucks coin is worth US$100, and a Burger King coin is worth US$1.00. It costs nothing for a merchant to issue these coins, and all coins in the hands of the customer are worth something. The price of a coin simply reflects the market’s perception of the value of the products that can be exchanged for those coins. And it will be up to the merchant to enhance their product offerings if they desire a higher token price. This makes the entire rewards industry incredibly transparent, allowing incentive programs to compete on their merits on a level playing field.
But I must reiterate that a higher merchant token price is not the primary goal in today’s competitive loyalty landscape. The goal is simply not to be ignored. And any branded crypto-currency will do this trick.
* The author Simon Cheong is Founder and CEO of GATCOIN, a blockchain engineering company that enables mainstream enterprises to issue branded digital currencies to a mass consumer audience. Cheong is a former Senior Counsel of the World Bank’s International Finance Corporation.
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(1) Note: Survey results are global and based on more than 30,000 consumers. Source: Code Broker, The Nielsen Company
