More than 16 trillion loyalty points are issued each year across billions of consumers, making loyalty programs a lucrative $360 billion industry. As business owners know, however, it is much more difficult to retain a customer than to attract a new one. The digital asset blockchain offers a way for brands to improve customer experience, build trust, and establish long-term connections through a more accessible, useful, and cost-effective customer loyalty program.
The Problem with Traditional Loyalty Programs
While 54% of consumers claim to stick with their preferred brands, more than 40% dislike rewards programs due to the inconvenience of carrying cards and claiming the rewards.
On top of these, implementing existing loyalty programs is hard for retailers as well because of:
- Low redemption rate of earned points
- Costs of implementing and securing loyalty rewards programs
- Customer frustration over a complicated sign-up process
- Oversaturation of rewards models in the market
There is also the issue of “breakage” or unredeemed reward points. Experts peg breakage, which stays as liabilities on the brand balance sheets until the day they expire, at more than 30% at any given time.
Traditional customer loyalty programs are also under fire due to their immense security vulnerabilities. In 2017 alone, over 11% of financial attacks were directed at loyalty accounts.
With its decentralised ledger and ironclad transactions, the blockchain market presents an opportunity for brands to turn their customer loyalty programs into more profitable and meaningful assets.
Top 3 Ways the Blockchain Can Improve Customer Loyalty Programs
Brands need to establish B2B communications when setting up loyalty programs to facilitate correct accounting of loyalty points. This requires all parties to audit and secure the loyalty program’s data. It is considered as one of the most expensive and complicated parts of establishing a rewards structure.
Blockchain technology is uniquely designed to address these technical challenges. It provides a way to facilitate shared transactions and implement interchanging rewards program rules through verified public ledgers and fraud- and cheating-protected smart contracts.
Here are three other ways Bitcoin can enhance customer loyalty programs:
- Introduces cost-cutting efficiencies
Since it does not require third-party participation, the blockchain requires lower transaction costs compared to traditionally managed programs. It also cuts down on system management costs with automised smart contracts, removing the need to rely on manual labour.
- Encourages points redemption and customer engagement
Traditional rewards systems introduce loyalty at the point of purchase. Digital asset blockchain, meanwhile, can do so at the very beginning of the customer journey. It allows clients to instantly exchange points inside the brand, between brands, or for fiat and cryptocurrencies.
The blockchain also helps businesses create a rewards ecosystem between different programs for greater reward variety and value —all of which can motivate customers to participate actively.
- Fortifies security
Every transaction on the blockchain is secured cryptographically. This means that all parties have their own private keys or unique digital signatures to create an auditable yet tamper-proof record of all point transactions. Customers will never have to worry about sharing their private data and executing transactions with their rewards points.
Upgrade Your Business with the Power of the Blockchain
The blockchain offers incredible opportunities for businesses to level up their operations and drive up customer engagement and satisfaction. Learn more about the power of the blockchain by staying updated on cryptocurrency news and learning about digital asset management with Key Coin Assets. Contact us NOW and start to invest in yourself!