You are not Alone. Globally, $360 bn worth Reward points go unredeemed each Year!
Caption: Loylogic Whitepaper
According to Colloquy 2017 (the go to source for Global Loyalty insights), 48 trillion Reward points worth $360 billion sleep in the customer accounts across the globe. These are the Reward points that are accumulated by consumers like us, who subscribe to different memberships.
Major Reasons for Consumers to prefer not to redeem their points.
- Minimum Point requirement for Redemption
- Stringent Redemption Terms and Conditions
- Limited Redemption Catalogue
- Reward points are not Fungible
- Unknown Balance or Unknown Value of the Reward points
As per COLLOQUY’s 2017 report, below are the facts that resonate with the above reasons.
- 57% of the surveyed consumers did not know their point balance
- 38% among them were unaware of the exact value of their points
- 57% of consumers in a Reward program feel that it takes too long to earn a point or a mile
- 53% of the consumers weren’t interested in the type of Rewards offered
Caption: Millennials Quitting Loyalty Programs (if needed)
Isn’t that alarming? Despite being one of the prime methods to drive acquisition and engagement, loyalty programs seem to be turning many businesses down.
Why does this happen? Let us take a quick look at the two main reasons fuelling this.
- To be, or not to be ? (Identity Crisis)
- Reward Points don’t have a passport (Not truly Global. Are they?)
1. To be, or not to be ?
The “Identity crisis” has led larger Brands to come to a point, where they either run a most expensive Standalone Program or be a part of structured Coalition program that would only protect their interest. This in turn imposes stringent redemption protocols and policies that often don’t give the freedom a consumer desires for: Be it choosing a reward of choice or redeeming it with the merchant of their choice. Afterall, it is their hard earned Reward points and they should deserve to choose their convenient mode of redemption.
2. Reward Points don’t have a Passport
Your are at your liberty to exchange your Bank Balance to a currency of your choice when you travel, you can use your international credit card wherever you go. If this is true, why not your Reward points that come in handy at the country or city you are in at this moment, irrespective of where you earned it? Simple reason, your Reward points are not issued a Passport. They are not truly Global and they are mostly chained down to the program operator’s geography. This is just because of the complex procedures involved in setting up alliances, managing the audits of the points. But, is this a consumer’s problem? No, it’s a problem for the Brands to think and address, especially when Travelling is no more a costly affair and an essential activity for the consumers they care about.
Fact: According to Harvard Business Review, setting up a Cross-border loyalty program tends to increase the customer acquisition rate by 50%
Since we spoke about the problem, what is the solution ?
A decentralized system that runs on Blockchain, would give the Brands an opportunity to exponentially expand their loyalty/redemption in a fraction of cost, skipping all the complex legal and geographical hurdles. Smart contracts will make transactions smooth and auditable to the micro level. This will make a consumer’s Reward points truly mobile and reduce the liability on books for the Brands through increased Reward points redemption.
Introducing ALLOY & Global Rewards Network
ALLOY & Global Rewards Network together forms a Blockchain based Global Rewards Catalog connecting Brands, Publishers and Consumers on one Platform. The Global Rewards Network will allow the Users of partnered Brands and Publishers to link, combine and convert all their Reward points to a local Fiat Equivalent ($/¥/€/₹ etc..) which, in turn, can be redeemed against listed Products and services from other partnering Brands.
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