The Risks and Challenges of Using Blockchain to Power Your Customer Loyalty Program
In our previous article of Blockchain for Loyalty Reward Programs, we looked at how this powerful technology (blockchain) can help realize the full value of customer loyalty programs. Nearly a dozen companies from around the world believe that blockchain technology, due to it’s distributed and secure nature, offers a solution to many of the problems that many large customer loyalty programs face right now. Issues such as complexity, the integration and alignment of a large network of suppliers and partners, the calculation of balance sheet liability as well as data protection and security issues.
As such, they see great potential with blockchain in the customer loyalty space but caution that there is both a lot of hype in this space right now and that the tools for managing blockchain and the technology itself are still immature.
In this article, we will explore further on “ The Risks and Challenges of Using Blockchain to Power Your Customer Loyalty Programs”.
Risk and Challenges
- So. Much. Hype. Many of the announcements are not fully deployed systems, but rather a promise. In general, the blockchain space is brimming with more press releases than at-scale deployments (most enterprise blockchain projects are in PoC today). Some of these large companies are likely following the popular trend of tech startups launching ICOs (initial coin offerings) to raise funds.
- Token fatigue, sigh: Consumers may soon feel overwhelmed by all the token offerings, and eventually become apathetic (as many have of current, disconnected loyalty programs)
- “What’s Blockchain?” steep learning curve: Customers like loyalty programs — it’s unsure if they’ll see more value in a blockchain or token-based loyalty program.here are multiple steps to educate customers, as well as encourage them to download, setup, and manage token wallets and accounts.
- But will it scale?: This remains an issue, particularly involving public blockchain networks or programs with high volume transactions, including other charges against the scaling issues with blockchain as an overall industry.
- Hands off my data. Brands will have to collect less personally identifiable information (PII) data for these programs. Not only because of GDPR, and inability to scale, but will have to limit how much PII can be put on a shared network. This also means data aggregators and brokers become less relevant to loyalty programs.
In conclusion, there is no doubt that there are still a range of concerns that need to be addressed surrounding the use and application of blockchain technology. These include everything from environmental concerns to the maturity of the technology to the standards employed. However, we have no doubt that that these concerns will be addressed and it is only a matter of time before we see blockchain technology applications deliver value to both businesses and customers in the loyalty program space.
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