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So you have a fantastic product, have a great marketing campaign in place, customers are flowing in and the cash registers are ringing, but to have these customers coming back is the real challenge. According to a Bain & Company study, as much as 80% of the self-proclaimed happy customers do not bring back more business to the company that catered to them in the first place. So, no matter how impressive your product or service be, the key to sustainable business is through active customer engagement, a task perhaps best served through customer rewards and loyalty programs. Over the years, customer engagement and brand loyalty have emerged as the key metrics to gauge the success of any organization. With loyal customers being worth up to a whopping 10 times their first purchase, as stated by the White House Office of Consumer Affairs, companies across industries are focusing on building on brand loyalty.
According to the 2015 Colloquy Loyalty Census, an average household in the U.S. is enrolled in 29 loyalty programs. Major players across sectors have banked on teaming up to share their client base, by providing cobranded loyalty cards to create incremental value. However, lack of a unified cross domain platform for consumers to redeem their loyalty points has been the Achilles heel for the conventional form of loyalty programs, leading to loss of interest of consumers for such programs. Major brands too, despite their meticulously planned loyalty programs, have been unable to fully capitalize on this highly lucrative, yet
rather inactive client base. This is largely attributed to low redemption rates and time delay in crediting of loyalty points, apart from limitations of redeeming loyalty points from very specific participating merchants in the loyalty program. A report by CrowdTwist further confirms this, as 38% of brands covered as part of the exhaustive study stated their inability to measure the conversion rate of their loyalty management programs. Unused loyalty points also contribute towards major balance sheet liabilities, as revenue attributable to the value of the loyalty points needs to be deferred till these are redeemed. Deployment of blockchain based crypto loyalty tokens promises to be the panacea to all these maladies ailing loyalty platforms.
Blockchain-based loyalty programs can be built from the ground up or around existing programs, with the core focus being on catering to customer needs of instant redemption of loyalty points acquired across programs on a single unified platform. Service providers and product manufacturers too would benefit from entering into client sharing through strategic loyalty program partnerships, without any complexities of high costs associated with development and maintenance of conventional loyalty programs. This would ultimately translate to seamless redemption options for consumers and low balance-sheet pressure for retailers. Blockchain-based loyalty programs would enable participating players from across various industries to choose to allow transactions of consumer loyalty points while retaining highly valued consumer data. Apart from their high cost-effectiveness, blockchain-based loyalty programs, by virtue of being based on crypto loyalty tokens, the program points can be potentially transferred between customers and also traded in for other cryptocurrencies. Crypto loyalty tokens offer four main advantages:
Crypto loyalty tokens allow for highly secure verifiable transactions and are mainly termed as digital assets, this dynamic currency can be used across sectors and could help form strategic and highly lucrative multi-brand coalitions. These partnerships can be easily scaled up as required, without any major cost or infrastructure addition. This translates to frictionless streamlined operations across the relationship network from retailers to consumers and also back up the channel.
These crypto loyalty tokens would effectively address some of the burning issues associated with most loyalty programs, that of fraud and double spending, through the deployment of smart contracts. Near real-time transactions through these crypto loyalty tokens would also make for a more enjoyable customer experience, while helping companies do away with additional costs associated with back-end tasks of manually updating loyalty program records.
Crypto loyalty tokens can potentially provide a fresh lease of life to the highly fragmented consumer loyalty programs currently on offer, through superior interoperability, which further creates a highly secure unified channel for transactions, without relying on a single gatekeeper.
Crypto loyalty tokens rely on virtually tamperproof distributed ledgers, ensuring a highly efficient and secure method of carrying out transactions. This also does away with the need for third-party intermediaries such as banks and brokerage firms, as all records are accessible to participants across the relationship network.
While the technology is still very much in its nascent stage, it promises to bring about a disruption across a myriad range of industries, one that would ultimately benefit both consumers and market players. Market players could leverage this revolutionary platform by working closely with blockchain solution providers to define currency exchange rates and rules pertaining to transferability while ensuring the platform remains unbiased. As is true for any fledgling platform, its success would completely hinge on the number consumers and retailers that give it a chance to prove its mettle.
