Although some organizations are still evaluating the potential impact of blockchain technology, it is quickly emerging as a powerful disruptive force, particularly in relation to loyalty programmes and rewards.
High-tech businesses might have already advanced to the pilot stage in order to explore this use of technology for a variety of non-financial tasks.
These companies might also consider creating a blockchain-powered loyalty network, which would completely disrupt the current customs of loyalty programme administration.
The limitations, inefficiencies, and improved customer experience with instantaneous and safe redemption options from several providers.
This article addresses and illustrates how blockchain technology can help close some of these gaps.
How Blockchain Enhances Reward And Loyalty Programmes
It’s a fact that there are an excessive number of loyalty programmes, each with its own method for accruing and using points.
Customers may become irate as a result, and many points may go unused.
Nonetheless, companies may use blockchain to decentralize their loyalty programmes, and customers will be able to benefit from all the features of this new technology.
The following are some ways that a blockchain loyalty program is enhanced using blockchain technology.
A More Protective Environment For All
As one might anticipate, clients’ top concern is security. Considering the volume of personal information at stake, brands cannot afford to take security lightly.
Customers can exchange tokens for rewards on the blockchain without risking their personal data. Data is not centralised in one place since blockchain is decentralised.
In addition to safeguarding customer information, smart-based contracts can lower errors and fraud.
Transparency is increased and everything is traceable because of the blockchain ledger’s immutable, timestamped, and cryptographically secured transactions.
Blockchain’s real-time programme execution capabilities allow businesses to reduce personnel and administrative expenditures.
Potential For Innovation
Using blockchain technology has the ability to greatly simplify and improve the safety of the loyalty programme.
Companies can create rewards systems that allow consumers to take charge of important tasks like building trust and keeping records, which reduces errors, saves money, and gives customers more authority.
How Do Blockchain Loyalty Programs Operate?
Undoubtedly, creating a blockchain loyalty programme will cost a lot of money. Experts from Deloitte advise against doing this, stating that “loyalty incentive programmes based on blockchain technology should reduce system maintenance expenses.”
By using smart contracts that can communicate clear, safe, and traceable transactions to older systems, errors and fraud-related costs can be reduced. Below is a quick rundown of how a blockchain-based loyalty scheme works:
It has a loyalty token that holds value and a digital signature that doubles as identification.
A loyalty token is generated by an algorithm used by the blockchain protocol whenever a loyalty transaction is initiated (issued, redeemed, or traded).
The basis for all incentives, including points, is this token. Then, each participant’s ledger is updated to reflect the presence of unique IDs and loyalty tokens, which are then visible to all network users.
platforms that hold many firms’ loyalty networks and programmes, allowing for easier communication between them, especially with regard to conversion and point redemption.
Can Blockchain Affect The Way In Which Customer Loyalty Programmes Run?
Customers’ complaints about rigidity, fraud, and clutter in traditional rewards programmes could be alleviated by using a decentralised, secure blockchain ledger.
Blockchain-based programmes that reward loyal clients are continuously growing. However, it will be interesting to see if this trend takes off and is adopted by companies all over the world in order to make their loyalty programmes stand out and attract more customers—particularly millennials and Gen Z.
The issuance, redemption, and exchange of loyalty tokens, among other loyalty programme transactions, can be made easier by using blockchain technology.
Every transaction is recorded in an encrypted, unchangeable record on the blockchain. Only members possessing the appropriate digital keys are able to access the information contained in those records. The blockchain cryptographically links each block to the one before it to produce a safe, nearly unhackable solution.
Consequently, loyalty points can be globally accessible and securely stored on the blockchain. Its primary advantages come from making it extremely functional and reducing administrative expenditures. Over the next several years, it won’t be shocking if an increasing number of domestic and foreign companies employ this technology for their loyalty programmes.