Brand Loyalty And Blockchain

By Ian Clausen, VP of Technology Strategy

I’m writing this post because I made a bad decision… to not jump on the Bitcoin bandwagon back in 2013 (when our own Adam Pflug told me about it). At the time, I told him something along the lines of, “Meh, that’s just funny money” — which I suppose still holds true because it would be pretty funny if I was driving a Lambo right now. For those of you new to the subject of cryptocurrency and the underlying blockchain technology, there is a great primer here.

The TL;DR on blockchain is essentially this: the blockchain enables a “trustless” immutable ledger, which is dev-speak for a written-in-stone, sealed-in-blood record that is infinitely available everywhere. Once something is written to a blockchain, it’s replicated across all nodes of a network and cannot be changed. If you start to marinate on what you could do with such a technology, you soon realize that it has far more potential than just implementing a cryptographic currency.

I’m going to basically hypothetically riff on this article from Deloitte which describes building a customer loyalty program on the blockchain. The article proposes using the blockchain to log customer transactions that can earn abstracted “loyalty tokens” stored in a customer digital loyalty wallet; the customer can then choose to redeem those loyalty tokens for goods and services from participating companies (kind of like getting reduced rates for in network providers in the medical insurance space). This is somewhat analogous to earning points on your credit card and getting rewards such as airline tickets, cash off your bill, or other perks.

If I continue down this theoretical path, I can see things getting pretty interesting if a few market leading “loyalty networks” emerge alongside massive global brands such as Amazon, Google, and Apple. How a brand associates itself to one of these loyalty networks could start to have significant implications one of which I will try to illustrate, while the loyalty networks themselves will play curator of the companies that they include (I would compare this to console video game exclusives such as Forza on Xbox and Gran Turismo on PlayStation, or TV rights for the NFL). This would likely begin to drive primary purchasing behaviors that could be influenced by secondary “loyalty token” purchases.

Consider the following scenario:

It’s lunch time and you want to go get a sandwich. Delicatus has a sandwich you like marginally better than one at Specialty’s, but you are planning a trip to Europe next summer, and Specialty’s belongs to a loyalty network that happens to have hotel you would like stay at in it. Those loyalty points earned at Specialty’s could help you pay for your room in Europe, which brings us back to the age-old lunch time dilemma (but kind of meta now) — do your taste buds win, or does your wallet?

Whether you consider this scenario food for thought, or just thoughts about food, ultimately rest assured that there are huge revolutionary technologies on the horizon that once implemented may or may not generate profound changes in your lifestyle.

This technology is being piloted in a myriad of industries and if you need some thought starters for said marination here are some places to start:

30+ Real Examples of Blockchain Technology In Practice

Blockchain and Retail: Four Opportunities

Blockchain — What Does it Mean for The Retail and CPG Industry

Rational Ideas is the thought leadership hub for Rational, a digital agency and consultancy based in Seattle, WA.