Blockchain technology could provide loyalty programs with several advantages, according to some consultants, and is already in use in one program launched during the summer.
In the blockchain, all the computers in a blockchain network store all the information shared in that network. At the same time, all the computers connect to all the others. Providing one secure, verified system to record and store all network transactions.
Bill Hanifin, Chief Executive Officer for the Wise Marketer Group and CEO of Hanifin Loyalty by Impact 21, will discuss blockchain and loyalty at the upcoming Loyalty Live seminar in Chicago.
A Coin Central article points to decreased costs, better security and other benefits blockchain technology can offer for loyalty programs.
Consulting firm Deloitte points to the following benefits of using blockchain in a loyalty program:
- Cost reduction: Costs are higher in the beginning as the blockchain system gets established, but over time net costs will be lower thanks to lower expenses for system management, transactions and customer acquisition.
- Less friction: Rewards and redemption are conducted via the same digital wallet, so there isn’t the need for cumbersome redemption via gift cards, checks or another system outside of the digital wallet.
- Near real-time transactions: Multiple parties (cooperating merchants, the wallet holder, the program administrator) can record and access rewards and redemptions from a blockchain-based system in near real time, meaning points and redemptions occur more quickly.
- Security: With blockchain, all stakeholders have access to all transactions, which are traceable and irreversible. So double-spending, fraud and abuse are eliminated.
- Unique business opportunities: Blockchain creates a unique ability to provide a unique, interconnected consortium of loyalty partners, such as that developed by Singapore Airlines, KPMG and Microsoft.
Singapore Airlines’ KrisFlyer is the first to incorporate block chain into its loyalty program, according to a company press release.
Under the program, which began at the end of July, the air carrier is using Kris Pay, a blockchain-based digital wallet developed in partnership with KPMG and Microsoft to convert miles into units of payment that can then be used at partner merchants, including beauty parlors, gas stations, the county’s LEGO store outlets and other participating retailers
Customers download a mobile app to their phones, which enables them to convert KrisPay units into merchant payments via a QR code.
Based on the enthusiasm Deloitte, KMPG and other consultants have for the use of blockchain in loyalty programs, Singapore Airlines program could soon be mimicked by others.
Phil Britt is a reporter for The Wise Marketer.