Customer loyalty rewards programs can often be the difference between the success or failure of a company. From a company perspective, a loyalty rewards program represents a strategic investment, whether it comes in the form of a tiered points program through to an upfront fee program, to name but a few. The Wall Street Journal recently reported that enrollment in loyalty programs across multiple industries had increased to 3.3 billion by 2015, more than triple the number recorded back in 2013.
The problems behind loyalty programs
While the memberships for many loyalty rewards programs are growing daily, recent statistics have revealed that many of these are not used regularly. The 2016 Bond Loyalty Report study on North American loyalty rewards revealed while consumers belonged to an average of 13.4 programs, they are only active in around 50 per cent of these.
Some of the reasons that consumers have highlighted for not using the loyalty programs range from an inability to accumulate a high number of rewards – because the points are spread over too many programs; prolonged waiting periods on being able to access rewards; and lack of consistency in experiences with different programs. These are all issues that can affect the success rate for loyalty rewards providers.
To overcome these issues a potential solution has been identified, which is to integrate all of these programs into an interlinked network. There are concerns that have arisen regarding this solution, such as whether interlinking would be difficult because of the inconsistent digital framework of these programs. Other concerns range from how complex it would be to remove any partners from an interlinked network and whether providers would be able to protect customers’ personal information in an interlinked network.
But many believe these issues can be fixed by using Blockchain as the secure interlinked network. Blockchain’s distributed ledger technology offers new opportunities to manage transactions and maintain records, which is ideal for integrating rewards programs.
Why Blockchain is the answer to linking loyalty rewards programs
Blockchain enables customers, loyalty rewards providers and administrators to operate within the one system without breaching privacy. It also allows loyalty rewards program providers to be able to streamline program execution, for savings in both administrative and staffing costs. Blockchain also offers other benefits for loyalty rewards, such as it can be connected to and interact with social media and digital wallets. Blockchain technology for loyalty rewards has already been trialled by the Royal Bank of Canada and has proven successful.
Blockchain will link everything (e.g. member, credit card, gift card, bank, airline loyalty programme) together
Limitations with Blockchain
While Blockchain can solve many issues with linking rewards programs, there are concerns it could also have limitations. For example, with the introduction of Blockchain platforms for loyalty program interlinking, this adds an additional transaction layer for consumers, merchants and program operators, which would likely result in a per transaction cost. There is also the danger of currency devaluation because it is essentially points trading in an open marketplace.
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