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I recently had a discussion about blockchain based loyalty programs with a local business owner. He was considering the idea of adopting this new technology into his business. It got me thinking: Should other small businesses consider using Blockchain Loyalty Programs? What I found is: YES!!! Your business should consider using blockchain based loyalty programs.
Here Are A Few Reasons Why You Should:
If you are like me, you probably have 10 of these loyalty cards in your wallet or on a keychain right now. As I am sitting here, I have a grocery, airline, gas, hotel, clothing, and credit card card loyalty cards all within arms length. That doesn't include any cards that my wife has for her typical shopping destinations. They are obviously popular, but is there a better way? Blockchain is a great solution for businesses and consumers alike but they are not perfect. Read below for advantages and disadvantages.
Here Are A Few Reasons Why
If you are like me, you probably have 10 of these loyalty cards in your wallet or on a keychain right now. As I am sitting here, I have a grocery, airline, gas, hotel, clothing, and credit card card loyalty cards all within arms length. That doesn't include any cards that my wife has for her typical shopping destinations. They are obviously popular, but is there a better way? Blockchain is a great solution for businesses and consumers alike but they are not perfect. Read below for advantages and disadvantages.
Customer Control: These programs put customers first by giving them more control and many more redemption options.
Higher Customer Engagement:
Business Owners gain the potential of higher customer engagement. Think of a stock portfolio. Don't you pay more attention if you have something to gain or lose? If your customer has a reward token and it represents true value that can be exchanged for items, discounts or money, wouldn't they be more likely to pay closer attention to your rewards?Easier and Cheaper to Set Up and Manage:
Traditional Loyalty Programs are expensive to set up and manage because they generally have to be done through a centralized middle man company. Running your loyalty program through blockchain eliminates the middleman company and also eliminates the need for an employee to manage the system. An added bonus is that it allows for near real time transactions to be displayed on the blockchain ledger as soon as the transaction is verified.Its off the Balance Sheet:
Traditional loyalty programs require companies to keep their points on their balance sheet as a liability. A Blockchain token system is a direct exchange of value to the customer. Once the customer owns the reward token it is off your balance sheet.Improved Customer Data Analysis:
As customers exchange tokens within the reward community your company will be better able to collect useful customer data and identify key statistics or trends. This will allow you to better target your audience and offerings.
How does a Blockchain Loyalty Program Differ From A Traditional Point Program?
Tokens VS. Points: Customers are rewarded with cryptocurrency tokens as opposed to traditional points. Cryptocurrency tokens represent value that can be exchanged for other currencies (crypto or fiat), discounts, or products. This opens up the potential for unlimited rewards for customers.
No Geographical Limitations: When I use my current gas reward points, I am limited to using those points at that one company. If I am on the other side of the country where this gas station doesn't exist I am out of luck. If instead, I owned Tokens which are interchangeable for other items or currency I would now be in luck and could proudly use my rewards.
No Expiration Date or Devalued Points:
Many traditional programs have expiration dates or randomly change the value of the reward points. Programs using a blockchain would allow points to last forever and because of the decentralized nature of blockchain, the value of the reward token cannot be changed.
Increased Transparency:
Blockchain Transactions are posted on a public ledger for everyone to see and they cannot be changed once the exchange is completed. Companies, consumers and the general public can all have confidence that the loyalty program is being run fairly and honestly. Increased trust through blockchain technology is a win for all parties.
Advantages and Disadvantages of Blockchain and Traditional Loyalty Programs
Blockchain Loyalty Program Advantages
- Increased Customer Control
-Increased Customer Engagement
-Easy and Cheap Management
-Off Accounting Balance Sheet
-Improved Data Analysis
-Unlimited Potential Customer Rewards
Traditional Loyalty Advantages
-Increased Business Control
- Proven and Known Results
-Existing Infrastructure
-Can Change Program Rules
-Stable Point Value
Blockchain Program Disadvantages
- Newer Infrastructure
-Can't change Program Rules
-Limited Proven Results
-Token Values are Volatile
-More Competition
Traditional Program Disadvantages
- To Expensive for Smaller Business
-Points Expire or Devalue
-Usually Limited to Small Network
-Difficult to Set Up
-Expensive to Manage
So How Does It Actually Work?
In general, these programs work like many of the loyalty programs that you have probably used before. Log in, find the product or service, and redeem. The thing that may be different is the scope of how many potential redemption opportunities there are as a part of the overall network.
Basic Steps To Register Your Business.
Accounts are simple and free to set up.
Step 1: Identify a blockchain loyalty program that you would like to attach your business too.
Step 2: Register your account.
Step 3: Create your deal or offer.
Step 4: Share with your existing customers.
Some loyalty programs already have an app for you and/or your potential customers to download. This makes tracking your customers easy.
What Are The Downsides To A Blockchain Loyalty Program?
You knew there would be a few trade off's didn't you?
Volatility
This can be both a positive and a negative for the consumer. In general, Cryptocurrencies are volatile and the value of a reward token can change from moment to moment. Obviously, this can be exciting or depressing depending on what is happening in the market.
Newness
Anytime there is a new way of doing things it takes people time to trust the change. There will likely be growing pains for the business owner, so be sure to be patient with new technology. The bugs will get worked out with time but just realize you are on the cutting edge right now.
Competition
Blockchain loyalty programs are more inexpensive than traditional programs to build and operate so there will likely be more competition as time goes on.
Industry Development
This is an exciting new arena and there are many companies trying to develop the best new loyalty programs. As time goes on there will probably be better and better networks that you and your company can be a part of. Just realize that we are early on in blockchain development and the best is yet to come.
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Recommended List Of Blockchain Loyalty Programs
I have personally tested several companies from a consumer perspective and I think the following would serve you well.
P.S. I am not an affiliate and have no personal or financial connection with any these companies.
www.IncentLoyalty.com
www.Dewber.com
Conclusion
The world around us is changing, business is changing and the financial landscape that we are used to is changing. We are shifting to a digital economy where people are incentivized to be a part of loyal communities. Blockchain and cryptocurrencies have a long way to go in their maturation process but they are bringing a wave of change like we have not seen since the internet began a few decades ago. I enjoy being on the cutting edge of this new world and hope that this article helps you and your business in some way. Loyalty programs offer an opportunity to integrate businesses and consumers into the new digital currency age. It will be fun, challenging, and exciting as we discover new opportunities to serve our customers. I wish you the best on your journey.