Several blockchain experts at the recent Loyalty Live seminar in Chicago discussed the advantages the loyalty industry could achieve by using the technology.
Today’s loyalty programs are very inefficient, said Maleea Alvi, co-founder of Eatonomy Corp., a company that offers a decentralized blockchain as a service program designed to enable brands and retailers to build interoperable, engaging loyalty programs on the Stellar blockchain. As evidence, she pointed out that only 16 billion of loyalty points earned annually are spent.
“There are too many different programs, too many cards and it takes too long with too many [programs] to earn a reward,” she said. “I don’t want to wait until I earn 1,000 points to get a muffin.”
Millennials, in particular, are looking for instant gratification, she added. They want personalized offers based on what they like. That could mean a coffee in the morning, something else later in the day and perhaps the ability to gift some of the points to a friend.
By using a blockchain to store, track and disperse loyalty tokens, loyalty programs can offer this capability as well as several others that will mean less breakage of rewards and abandonment of loyalty programs, according to Alvi.
“Engagement is the key,” said Julie Lyle, former CMO of Walmart. “Marketers often chase the next shiny object.”
While blockchain might seem like that “next shiny object” to some, it instead offers simplicity (no multiple cards, multiple loyalty programs, etc.) to track, Lyle said. “Genius can come from simplification. That’s what Amazon did.” By simplifying the supply chain, Amazon increased the speed and cut out much of the cost of the supply chain.
Al Burgio, founder of DigitalBits, called blockchain a win-win for loyalty program providers and customers. “It eliminates the friction that exists with programs today. It can move things faster, eliminate friction, enhance liquidity and increase the perceived value of the programs. The old programs cost too much in terms of time and money. Those with the most open minds will win.”
Burgio added that by using blockchain to enable customers to use loyalty for different rewards at different merchants, customers will demonstrate to program providers those rewards they most value. As a result, program providers can tweak programs to make sure they are providing those types of rewards.
Customer engagement suffers in many loyalty programs today because customers are dissatisfied with the current loyalty program ecosystem, said Nadine Rubin, director of operations for RewardsOps. However, getting companies to accept blockchain could be a challenge, because many see a stop sign any time a new technology is involved. But the open business system that blockchain can create for loyalty offers many benefits.
Beyond the above advantages of connecting blockchain and loyalty, others were discussed in an earlier article in The Wise Marketer.
Phil Britt is a reporter for The Wise Marketer.