The consensus is that loyalty is broken. Recently we’ve seen Avios close its doors, Waitrose dramatically alter its offering, Worldhotels call time on its Peakpoints programme, Coca Cola shut its points based Coze Zone and ASOS axe it’s A-List reward scheme.
Ever since Tesco demonstrated just how powerful loyalty and data insight could be literally hundreds of brands launched some kind of programme to engender the holy grail of marketing: customer loyalty. The problem was that often these programmes failed to deliver. For instance four years ago research showed that 94% of people belong to at least one brand loyalty programme, yet roughly half of those signed up admitted to never actually using them. This reveals that too many schemes struggle to fully engage their members – and thus fully utilise the potential insight and gains to be made from better understanding customers. It’s no wondered therefore that schemes come and go with alarming regularity. Even Clubcard, the doyenne of UK loyalty recently announced some hefty changes which left legions of its loyal members outraged by the downgrading of some of the rewards.
So we’ve reached a bit of an impasse. We know that loyalty schemes can deliver significant competitive advantage, but too often they fail to engage the membership and become a drain on resource rather than the value-adding entity they were designed to be.
However, all this could change as a result of blockchain. Blockchain is still a largely unknown entity. Unlike its famous cousin, Bitcoin, it has yet to have percolated through into everyday vernacular. Of course it is most well-known for the role it plays behind the scenes for cyrptocurrencies. And this is key – because loyalty is by its nature a digital currency. The technology that manages millions of transactions every day for Bitcoin could do the same for programmes like Boots Advantage Card, Intercontinental Hotel Group’s Rewards Club, Emirates Sky Miles and many more existing and as yet unconcieved programmes.
The benefits of applying blockchain to loyalty are sixfold:
1. Blockchain reduces cost: the systemisation of the loyalty process will result in significant savings in the management of the loyalty scheme. This means that smaller organisations will also be able to offer sophisticated schemes and reap the rewards like their bigger rivals.
2. Better customer experience: Blockchain firstly allows instantaneous transactions meaning that points can be issued, registered and therefore used in real time. For instance if a person accrues points on their credit card whilst on a shopping trip and then stops for lunch at a restaurant. They can use their newly accrued points to pay for the meal. A common complaint about loyalty schemes by consumers is how hard it is to ‘spend’ points – this would be eradicated by blockchain and suddenly the loyalty scheme does what it promises to do – reward customer loyalty!
3. Points don’t mean prizes: under blockchain points become tokenised meaning that they have an actual market value. This means that it will be much easier to set up partnerships with brands for point redemption – because you won’t be comparing apples and pears.
4. Greater consumer control: With the advent of GDPR control over consumer data has become increasingly important. Using a blockchain to underpinned loyalty programme hands all the control to the customer. In real time they will be able to set preference rules. Furthermore, with blockchain as a loyalty engine it will be possible and easy for consumers to ‘gift’ or pool their points – have you ever tried booking a flight using the points of multiple members? If not, don’t even attempt it!
5. An omnichannel experience: No matter which channel the customer interacts with the programme through, the experience will always be the same because all transactions are processed in real time.
6. Reduced risk: whilst blockchain is not infallible it is more resistant to fraud than traditional backend systems. This means that the risk of a breach is minimised and it will be harder for consumers to ‘cheat’ the system.
Blockchain is not a loyalty panacea, but given the above benefits it is hard to see why blockchain won’t be the mainstay of schemes in the very near future. If you think blockchain could become a relevant part of your business and need assistance in scoping out the opportunity don’t hesitate to get in touch!
If you want to know and understand more about the way data is changing the world you live in, or would like to know how data can add value to your business, please email me at email@example.com