One of the most divisive topics in today’s retail and business ecosystem is the subject matter of loyalty programs. Businesses view loyalty programs as a reliable tool for measuring customer satisfaction because it provides data on the volume of repeat customers. Some customers also love loyalty programs because of the benefits such as discounts, free merchandize, and access to exclusive offers.
On the flip side, customer loyalty programs have been vilified for being invasive, because the store gets hard data on your shopping patterns. Other shoppers hate the idea of loyalty programs because it manipulates the customer into thinking that they are getting a great deal whereas the program is coy marketing gig to increase corporate profits.
The arguments against the idea of loyalty programs are valid and can’t be discountenanced. Yet. It would be myopic to write off the pros of loyalty programs for both businesses and consumers.
Thankfully, blockchain technology with its disruptive nature is bringing a new lease of life to the highly controversial concept of customer loyalty rewards programs. This piece examines 3 ways blockchain technology can help businesses crystallize value on loyalty programs.
Here’s how blockchain technology could help you rethink loyalty programs
1. Rewards customers with cryptocurrency
One of the biggest innovations that blockchain technology can bring to loyalty reward programs is to give customers valuable rewards that will incentivize them to deliver objective feedback. Many of the loyalty systems in the market right now don’t usually give decent returns since it often takes a lifetime of accumulating points before the points can be redeemable for anything meaningful. In other industries where you can redeem your loyalty points for something useful such as flight tickets, it often takes lot of patience and hard work to understand how the loyalty program works.
With blockchain technology, customers can be rewarded with cryptocurrency in full units or subunits to remove ambiguity about what the points are worth. The immutable nature of blockchain technology means that the calculation of loyalty points is provably fair and transparent.
Sandblock, a blockchain based startup is working on a solution in which businesses can use cryptocurrency as customer loyalty reward points. Businesses can start by purchasing certain amounts of Satisfaction Tokens (SAT) (a tradeable cryptocurrency used on the Sandblock ecosystem). The merchant then gets to create their own branded token (cryptocurrency) as a subunit of the Satisfaction Token (SAT).
For instance, Walmart can buy SAT and create its own WalCoin where 100 units of WalCoin equals 1 SAT. Costco can choose to buy its on SAT and create CostCoin where 200 units of CostCoin equals 1 SAT. The merchant has the freedom to brand its token and assign an arbitrary value to the token in relation to SAT.
2. Eliminates the sense of being locked by facilitating exchange of reward points
Many consumers detest loyalty programs in their current form because they are designed to lock customers down to patronize a single merchant. For instance, you can’t use reward points from Delta Airlines to fly on a discounted Virgin America. Hence, the reward points you accumulate with a merchant are designed to keep you stuck with the merchant since the reward points will be useless elsewhere.
However, with blockchain technology and cryptocurrencies, customers can be rest assured that they’ll find it easy to withdraw their reward points for use on other platforms. On the Sandblock platform for instance, customers can exchange branded tokens from one merchant for branded tokens from other merchants within the ecosystem. Customers can also withdraw their branded tokens for SAT and they can trade the SAT token for other cryptocurrencies in the market.
Merchants in the same industry can also create a network through which they can verify customer identity to know the accumulated number of points they have with any one merchant without them needing to lug around plastic loyalty cards. The fact that cryptocurrencies also prevent double spending of value in turns ensure the integrity of the loyalty system to prevent people from gaming the reward points.
3. Helps businesses access reliable and objective customer feedback
Businesses often invest a great deal of time, energy, and resources into trying to understand their customers, create perfect products, and gauge the level of customer satisfaction with existing products and services. The problem however is that customers who have paid for a product/service don’t have a compelling enough reason to deliver feedback unless there’s an incentive to provide the feedback (see 1 and 2).
Unfortunately, when customers do give feedback, the feedback often comes from two questionable sources. On the one part, customers who are dissatisfied are most likely not coming back, so the business never quite understands what pissed them off. When they do leave feedback, it is often vengeful and without much room for discourse that could enable an easy resolution.
On the other hand, customers who love the product could because exuberant in their feedback to the point that their review sounds fake. The fact that satisfied customers also conflate all the information with superlatives makes it hard to discern to discern an objective slant to the review.
With blockchain technology, businesses can be confident that the feedback that they’ll receive will be frictionless without being overly boring like surveys or complicated with analysis from digital supports and customer claims. Business will also find it easier to obtain important customer information without being invasive or breaching data confidentiality regulations.