Blockchain, known for its transparency, is the best alternative for traditional e-commerce loyalty programs.
FREMONT, CA: The evolution of marketing methods in different channels, including mobile, websites, in-store, and apps, increases competition among the retailers to interact with the customers. These customers are the most valuable assets of retailers, and it is their primary duty to retain their customers. Loyalty programs are one of the oldest marketing tricks for getting customers to stick to a company/brand and its products. An effective loyalty program should not be confined to retain and reward the customers but ensure that the customers keep the brand at the top-of-mind. Successful retail CIOs support practicing best customer-loyalty programs by adopting new technology, thereby, inspiring customers.
While traditional e-commerce loyalty programs are subjected to issues like low redemption rates, few customer incentives, and security concerns, blockchain technology can effectively address these issues. Blockchain whose applications are limited to financial services has now broadened across the retail landscape. It offers a transparent platform for both the customers and the retailers for building trust, and establishing brand loyalty. Loyalty programs designed with a strong foundation laid by blockchain deliver rewards in many ways.
All the blockchain rewards are stored in a digital wallet in the same place, providing easy visibility and access. It can be either cashed out or saved as per the customer’s wish for future use. Blockchain allows customers to exchange tokens for rewards earned from different stores under a unified reward that can be applied to all partners.
No date of expiry
Blockchain has no expiration date for rewards unless the retailer himself wants to set it. Not like points, the benefits derived from blockchain-based rewards are real, and instead of reward points, they offer cashback incentives. These can be redeemed whenever the customer wants to use it as it is stored in a digital wallet provided with no time-limit.
As participants of the global loyalty program focus on earning rewards, they do not consider the channel of the reward, whether it is in-store, online, mobile, and so on. Blockchain eliminates the need to wait, unlike in most points-based programs, because the rewards are made in real-time, and the points can be accessed via smartphones whenever a transaction takes place.
Blockchain, originally known for its secure nature, offers a means to notably decrease the risk of data leaks. It avoids the complexity of keeping data privately by taking additional steps during the token exchange for valuable rewards. Also, blockchain is a decentralized platform where data is distributed and is not stored in a single location, and this structure is difficult to hack. Each data block is arranged on top of one another, and attempting to make a change is virtually impossible. All transactional data are stored on the immutable blockchain ledger.
Loyalty through Blockchain
Although the application of blockchain in retail programs is in its infancy stage, the technology is gaining attraction among the retailers. Blockchain strengthens customer loyalty in retail for all forms of rewards, whether it is a proprietary token system or an existing cryptocurrency.
An example would be KrisPay, popular loyalty program launched by Singapore Airlines. It allows the members to transfer KrisFlyer points to their partner retail merchants. Points are redeemed in real-time across several retailers, including food and beverage, beauty, gas, and more. This can be done by scanning a QR code at the register where the points are read as regular cash through a digital wallet. It also provides an additional advantage that the rewards can be either partially used or fully used or accumulated. Extending the utilization of rewards beyond travel bolsters customer loyalty and trust.
Recently, this year, American Express has announced a blockchain test program with online wholesale retailer Boxed. AmEx then created a private system using blockchain framework for Boxed, such that whenever a customer purchases on Boxed, the transactional data is stored in the blockchain. Later these transactional details trigger smart contract creation that awards points in a backend loyalty system.
Being an extremely transparent platform, blockchain offers a new method of increasing customer loyalty, while providing flexible rewards, paving the way for businesses to embrace the blockchain technology.