Loyal customers are one of the essential drivers of any profitable business. By creating loyalty rewards programs, companies aim to enhance the customer experience. However, in many cases, the opposite has happened due to obsolete marketing strategies. The implementation of blockchain with the reward programs can be the next potential strategic investment by companies worldwide.
But why blockchain Technology for customer loyalty programs? Blockchain is one of the trusted technologies because of its characteristics such as transparency, immutability, and security in a distributed database. You can think of it as a publicly shared registry with immutable records of who owns what and who transact what to whom. As the saying goes, “you behave your best if you know you’re being watched.” With blockchain technology, there’s no central control to manipulate or hack into records. The encrypted immutable data is distributed over the whole network with the exact same copy under numerous users’ surveillance. Now, here’s how blockchain technology can benefit customer loyalty programs:
- Expense reduction
Implementation of blockchain sounds pretty expensive, but it is believed that the trade-off cost saving will be effective or even beneficial on three significant parts-customer retentions, economic infrastructure management, and transactions. Blockchain-based system management costs get reduced with smart contracts ensuring transparency, tracking, and security. It won’t take years and thousands to implement and maintain the blockchain loyalty program strategies.
- Enabling a smooth system
Blockchain tokens or coins are in use on various platforms for different purposes. An airline credits a customer’s rewards in the same digital wallet from which the customer redeems them for the hotel. Enabling decentralized technology for centralizing customer loyalty programs stores immutable, transparent data that helps customers trust brands and make coins accessible and manageable smoothly.
- Making the process near real-time
Blockchain enables a transaction to get recorded and accessed by multiple involved parties in near real-time, increasing the chance that loyalty rewards program provider can coordinate with credit points faster and more reliably. It also resolves the complexity of reward programs and provides flexibility to the system.
- Transparent environment
Invoking a blockchain-based tokenization system for a loyalty program places all the recorded data over a public blockchain platform, ensuring transparency. Even the issuing company can’t make their points back dues to internal policy restrictions. Customers also can’t make false and unassured claims. This comes as a win-win situation for both customers and brands.
- Protection and security
Blockchain motivates immutability, transparency on time-stamped distributed databases, which makes the entry of every single transaction ever made and to whom. Transparency makes each transaction and its record easily traceable. Blockchain’s irreversibility prevents double spending, fraud, abuse, and any other type of manipulation of the transactions.
- Creating unique business opportunities
Big loyalty rewards program providers with well-developed programs will provide various opportunities to offer value-added services and features to other businesses.
The adoption of blockchain for loyalty drives companies to make partnerships without adding complexity to the system explicitly. Appending more redemption options to the system, enabling partnerships, collaborations, and networking, accelerates the financial buggy. Blockchain would allow both large and local partners to create coherent relations while virtually eliminating the back-end annoyance of coin redemption for customers.