How Digital Enterprises Can Boost Sales via Tokenized Networks
Decentralized networks ala cryptocurrencies are all the rage nowadays — yet their real-world practicality remains severely limited if nonexistent.
Having recently assisted a substantial e-commerce platform in integrating a “tokenized network”, in this piece we’ll explore how such a network is practical for existing digital enterprises who wish to increase churn and ultimately sales volume.
For the majority of online businesses, such as e-commerce platforms, there are no shortage of ways (through SEO and PPC campaigns) to drive site traffic and ultimately increase the number of paying customers.
Additionally, there are a plethora of ways to increase business from existing customers via “cash back” and loyalty points program initiatives.
Dare I say it — online businesses can also integrate tokenized networks to boost platform incentives in lieu of loyalty points or cash back.
Simply switch the loyalty “points” or “cash back” with a said enterprise token that is redeemable on a secondary market for cash. The token can then be traded/speculated and potentially redeemed for a higher value. This speculation potential of a digital token as opposed to points or cash discounts can drive new business to the platform as well as increase sales volume of existing customers.
Here’s how (in brief) -
We must discern a few key variables:
(1). Total Token Supply
(2). Inflation Rate
(3). Initial Token/Fiat Value
Token Supply
Because there already are existing sales volume (revenue) figures as well as growth (unlike any decentralized platform out there), we can use the so-called “cash through-put” (or total sales volume) of the platform to calculate our token supply as well as inflation rate.
Thus, let the total amount of sales (i.e. revenue) in a given year constitute the total token supply.
Inflation Rate
With the onboarding of additional customers, the sales volume should (hopefully) increase — this annual revenue growth rate should constitute our token inflation rate.
Token/Fiat Value
Our enterprise token needs to be redeemable — thus the token needs to be listed on an exchange where consumers can trade in their token for cash.
Discerning the listed fiat value of the token can be done utilizing the total supply of the token (calculated as the total sales volume), the average purchase value, as well as the initial cash back percentage per purchase.
The token value does not necessarily need to be “pegged” although there are methods to incorporate this should the enterprise desire to ensure a specific value range to prevent volatility.
Ultimately the initial token to dollar value should be roughly equivalent to a valuation that prevents rampant speculation/hodling while the platform remains devoid of actual users — the fate of practically all decentralized/tokenized networks currently.
The consequences of a token whose value hovers closer to $0 than $100 are easier to mitigate (see below) — especially for a platform whose end goal is increased churn and sales volume.
Additional Notes
The token can still function as straight cash back/loyalty points — consumers can get discounts on future purchases as well as amass tokens to qualify for loyalty points initiatives — the incentive kicker is that instead of points or cash they are holding a speculative digital token that can potentially go up in value.
To prevent drastic fluctuation of the token value, the platform operators can toggle the cash (token) back rate (i.e. when the token is worth relatively little — offer a higher rate, and vice versa) — similar to the relationship between the federal funds rate and total money supply for those familiar with Monetary Economics.
Brian Koralewski is the Managing Member of Austere Capital — a Digital Asset Hedge Fund and Token Advisory Firm. He can be reached directly at brian@austere.capital
