Promoting Your Business with Blockchain
Every business, no matter the size, needs to attract and keep customers. Tried and true promotional methods that have long proven effective for retail and e-commerce businesses include coupons, gift cards, and rewards or loyalty programs. These promotional tools come in many shapes and sizes; you could even think of a subscription service like Amazon Prime as a kind of loyalty program.
These solutions not only keep a company’s customers coming back, but they can also create growth, or can even take a business from a mere provider of goods and services to the status of cultural icon. In the United States, there are more people subscribed to Amazon Prime than there are people who voted in the last presidential election. Of course, the vast majority of small businesses can’t put something like Prime into action, but there are lots of other creative strategies they can use to attract customers.
Many of the most common platforms used today face a number of issues in the form of cyberattacks, cost, scalability, future-proofing, and general value and attractiveness to customers. However, by using blockchain technology to enhance the traditional coupon or loyalty program model, these problems can be solved.
We’ve talked a lot about the potential and importance of enterprise blockchain technology for the future, but on the topic of loyalty programs, we’re in good company. The topic has been swirling around blockchain and B2B media for several years now, and both Oliver Wyman and Deloitte have recently published analysis highlighting the benefits of using blockchain in corporate loyalty and reward programs. Even Starbucks is already exploring tokenization in its own popular program.
Why use blockchain?
A fair question to ask before we go any farther is “why complicate the status quo with a new technology like blockchain?” Loyalty programs, coupons, and gift cards have all worked fine in their different capacities forever, so how can a new technology make something so simple and so ingrained in our lives any better? It’s a good question; we aren’t suggesting that this is something every company needs. On the contrary, the benefits from using blockchain or tokenization will only apply to certain kinds of products or certain kinds of companies that can afford to implement them.
But perhaps the best argument to be made for using blockchain in these cases isn’t for today, but for a more digital tomorrow. The Metaverse might seem like a long way off, but in many ways, it’s already here, and companies are racing to get their foot in the door. In January, 2022, even Walmart announced that it was doubling down on the Metaverse and NFTs. Tokenized coupons or gift cards, and blockchain-powered loyalty programs offer customers the ability to use credit and get rewards in both the physical and digital worlds, all without issues of fraud or double spending that can cost companies serious money. For businesses, using blockchain offers huge security upgrades, a frictionless real-time ecosystem, as well as future-proofing and brand new business opportunities.
How does all this work in practice? To answer that, let’s look at the two most common types of promotional programs: coupons and gift cards, which can be thought of as credit, and loyalty or rewards programs.
Coupons & Gift Cards
Startups and SMEs can benefit from a blockchain-powered coupon or gift card system in a number of ways. First of all, as a new technology, it brings with it a certain amount of inherent marketing value, which should not be underestimated. But as with any new technology, customers have to be convinced it’s worth using. Fortunately, using blockchain doesn’t mean ditching methods customers are familiar with, like email coupons or physical gift cards.
While big enterprises have the means to exploit all benefits of using blockchain technology, smaller companies can still bridge the gap between the physical and digital world by using and distributing physical tokens. As these can come in any form and shape, they can look exactly like a standard physical gift card, just with some cryptographic details printed on them. A Token Card would be one example. These work just like a normal gift card, storing value that can only be spent at your business.
Behind the scenes, the card is actually a wallet for tokens, opening the door for future digital use and company scaling. A convenient advantage of tokens is that you can program the value of tokens to reduce overtime, like inflation, so that there is an incentive to spend them earlier, for example to encourage usage during a fire or seasonal sale, or if you need to clear out inventory or get people in the door quickly.
Another simple solution would be to just distribute token coupons via email with a QR code; customers can still expect their usual promo and coupon emails, while the business can easily set and manage the token’s rules on their dashboard. This prevents issues like double-spending, coupon forgery, and enforces promotional rules like expiration for seasonal events.
Because of this built ability for granular control, companies also needn’t worry about a loss of “breakage,” which is essentially revenue that companies gain when coupons or gift cards, which can be thought of as credit, are not redeemed, either because they are lost, expire, or simply aren’t spent. For companies, this is free money and an important part of making sure that promotions are sustainable. Rules like expiration date or item/campaign/store specifics can all be easily programmed into the token itself, so that businesses don’t have to worry about employees accepting expired coupons, or accepting too many. It’s simply a more secure coupon that removes the possibility for human error and helps companies save money.
Using tokens in these cases opens up completely new business models. For example, one model, inspired by coupon clipping, would be collecting and selling tokens for various businesses on a coupon exchange where customers could trade their tokens for others when needed. And with technology like CoreLedger’s TokenWARP, these business-specific tokens can become a true digital asset that can be sold on secondary marketplaces, giving users the ability to trade coupon tokens for other different stores; one may even emerge as a universal coupon.
It’s worth noting, however, that while the ability to exchange one company’s coupon tokens for another’s on a secondary market is really exciting for customers, it isn’t ideal businesses. This might be one of those cases where the hype and potential all point to secondary marketplaces for company tokens, but the business reality doesn’t make sense. Only time will tell if companies are willing to make it work.
Loyalty & Rewards Programs
Larger enterprises with more customers can benefit more directly from the next level of tokenization: token economies. While there are some differences between loyalty and rewards programs, they both essentially involve brands creating their own “currency” that loyal customers can earn through their business and spend later on goods and services, some of which may be exclusive. Many large enterprises, such as airlines or hotel chains, combine elements from both types of programs and allow customers to collect and spend points without using blockchain. However, there are a number of specific benefits to using the technology in this particular use case.
The first is control. The biggest loyalty & rewards programs are actually small economies, and using tokens allows companies to more reliably and securely control the “tokenomics” of their own little economy. You can set the rules of the token, such as value, amount, inflation, expiration, etc. You can also prevent fraud and double-spending which, if the goods and services are valuable and sought after, can be serious problems. Using tokens also makes it much easier for a conglomerate or group of companies to accept the same tokens.
Using blockchain also makes it much easier for businesses that are not part of the same group or conglomerate to collaborate, as the ultimate governance and accounting of the token is on blockchain and there is no single entity that has control. For example, a grocery store chain may have a loyalty program agreement with a gas station chain that allows you to spend tokens earned through shopping on fuel. The ability to simply and securely set up campaigns and incentives with tokens is a major benefit for brands interested in attracting a new and diverse customer base and forming partnerships with other brands.
Another major benefit of using a blockchain-powered system is security. One of the biggest, and most publicly embarrassing, problems with traditional brand loyalty programs is their vulnerability to fraud and cyber-attacks. For example, Dunkin Donuts point’s based rewards program was hacked multiple times starting in 2015, compromising customer data and losing their collected points. Ultimately, the company was sued by the state of New York for failing to secure their customer’s private information and money. Those points represented real value to customers who had spent actual money, often lots of it, to accrue those points that were lost in the hack. Blockchain, because it is a distributed ledger, is virtually un-hackable, while tokens themselves are practically immune to manipulation. Customers are also increasingly more conscious and protective of their privacy, something that privacy-focused tech companies have turned into a business advantage.
Another benefit is flexibility and integration with customers’ lives. As companies look towards a future in the Metaverse, the intersection of physical and digital business will get even more complicated than the e-commerce revolution. One of the reasons why blockchain can be thought of as future-proof is that tools like tokenization can securely cross the physical/digital divide. Big brands like Walmart, Ralph Lauren, and Gucci are already leaning into the Metaverse as a future for their business, so having a loyalty program that functions securely and seamlessly both in your local store and in your virtual neighborhood is a big draw, especially for younger customers.
Practically, this means customers have more options to use the value stored in their tokens, without danger to the business that still sets the rules for their tokens. Reward points/tokens represent something of greater value for customers who aren’t just locked into using them in one physical place.
For e-commerce and large retailers, a blockchain-powered loyalty or rewards program using tokens makes perfect sense. It not only provides a huge security upgrade to protect customer data and simplifies point and account handling, but it also opens up new opportunities and features both now and in an increasingly digital future. For companies already eyeing their place in the Metaverse, the benefit of this future-proofing cannot be understated.
What does this mean for the average consumer?
Both corporate programs and coupon promotions should sustainably and effectively attract customers, not frustrate them. But as we’ve all experienced with a badly designed website or overly complicated app, the fact of the matter is that in the rush to use technology for its own sake many companies have alienated customers.
CoreLedger is all about making blockchain technology easy to use so that people can benefit. That’s why we offer simple solutions like Token Cards as an easy way for customers to start using digital assets in a familiar and comfortable way; essentially, using blockchain-based coupons and gift cards shouldn’t feel any different.
At the moment, one of the big conversations in tech is privacy, and here blockchain offers significant upgrades over conventional corporate loyalty solutions, something that every customer can appreciate (especially if they don’t need to do anything different on their end.)
Big companies that have both physical, e-commerce, and virtual spending options have the most to gain with a “future-proof” solution. And while the potential (and customer excitement) are there, it remains to be seen whether companies will allow these tokens to be sold on secondary marketplaces, or redeemed as a kind of universal coupon.
As the world slowly opens up again and starts to recover from the pandemic, businesses are looking for new ways to attract and keep customers. And, as digital innovations like the Metaverse increasingly look like they will change the way we do things, companies are looking for forward-looking tools that also meet their needs today. It’s both a challenging and exciting time for businesses and these tools will help make or break their future.
At CoreLedger, we believe that blockchain is a practical technical solution to improve and solve a wide variety of issues across industries and sectors, which is why we try to cut through the hype and focus on real world applications, not just what’s technically possible.
CoreLedger’s mission is to help businesses of all sizes quickly and affordably access the benefits of blockchain technology. From issuing a simple token, to enterprise- grade token economy solutions, we have all the tools you need to quickly and affordably integrate blockchain into your business whether you’re a new startup or a big multinational enterprise.
Interested in our results-focused, real-world approach? Then visit our website for more information, or get in touch with us directly to discuss your project.
