How blockchain can make loyalty reward programs more efficient and provide consumers with more choice and easier access to rewards.
Blockchain based loyalty programs enable operators to offer crypto tokens to customers instead of miles or points. A crypto token is a cryptocurrency just like Bitcoin but is used for a specific purpose or application – in this case to reward customers for loyalty to a specific brand or brands.
Customers register on the blockchain, make purchases and receive tokens that they could then use to buy products and services. Well, so far this sounds pretty similar to existing programs. But there are a number of important benefits to building loyalty programs on the blockchain.
Firstly tokens could be redeemed against a much broader range of goods and services than currently points and miles can. Plus they can be traded for other cryptocurrencies such as Bitcoin, or even converted back to cash.
With a blockchain solution there’s much less likelihood of the program operator manipulating the value of the rewards, which has happened before. And there would be no central store of data for hackers to target. Adding new partners to a blockchain based loyalty program would be much less complex and less expensive. And customers would be provided with a clear, comprehensive and near real-time record of their transactions.
Finally, under currently loyalty schemes, unredeemed loyalty points are treated as a liability for accounting purposes. Tokens would be treated differently potentially improving the balance sheet significantly for operators with large numbers of unredeemed points.
Blockchain based loyalty programs enable operators to offer crypto tokens to customers instead of miles or points. A crypto token is a cryptocurrency just like Bitcoin but is used for a specific purpose or application – in this case to reward customers for loyalty to a specific brand or brands.
Customers register on the blockchain, make purchases and receive tokens that they could then use to buy products and services. Well, so far this sounds pretty similar to existing programs. But there are a number of important benefits to building loyalty programs on the blockchain.
Firstly tokens could be redeemed against a much broader range of goods and services than currently points and miles can. Plus they can be traded for other cryptocurrencies such as Bitcoin, or even converted back to cash.
With a blockchain solution there’s much less likelihood of the program operator manipulating the value of the rewards, which has happened before. And there would be no central store of data for hackers to target. Adding new partners to a blockchain based loyalty program would be much less complex and less expensive. And customers would be provided with a clear, comprehensive and near real-time record of their transactions.
Finally, under currently loyalty schemes, unredeemed loyalty points are treated as a liability for accounting purposes. Tokens would be treated differently potentially improving the balance sheet significantly for operators with large numbers of unredeemed points.
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Francisco Gimeno - BC Analyst Loyalty programs in blockchain/crypto/token programs will be a new normal. In fact the customers, and even members of the blockchain based program will ask for it, as they trust on the value of the token based rewards to grow. The advantages are clear.