They say that money can’t buy love, but in the world of business, it’s common for brands to try to earn the loyalty of customers by showering them with gifts.
Even so, the loyalty program is far from the perfect solution for customer retention issues, and there are growing calls for cryptocurrencies like Bitcoin and blockchain tech that facilitate them to be embraced as an alternative.
So why is this movement gaining traction, and what makes it suitable for businesses that are looking for a way to increase loyalty among customers?
How loyalty programs are failing companies and customers alike
Using loyalty programs to dole out rewards to customers who stick with companies they trust in the long term has more than a few flaws.
For example, many rely on the accumulation of points to determine which rewards are unlocked, and yet millions of people simply don’t bother to redeem what they’ve earned. This can be because the redemption process is too persnickety, because the rewards themselves aren’t that appealing, or because the points are non-transferrable.
Why Bitcoin can overcome these failings
Regardless of the recent rise and fall of Bitcoin’s value, the concept of the blockchain on which it’s based is ideally suited to stepping into the space currently occupied by loyalty programs.
Rewarding customers with crypto assets instead of arbitrary, brand-specific points, makes every incentive more valuable and innately transferrable.
By extension, storing loyalty data on the blockchain will allow every organization to feed into the same unified scheme so that incentives can be accumulated in one place and redeemed in different contexts without all the red tape.
There’s also the growing familiarity with buying and selling Bitcoin among consumers to take note of. Services like SoFi crypto trading mean that millions of people recognize the value that digital assets represent, and so they’re more likely to be interested in loyalty programs that provide them as rewards.
The importance of efficiency
So far, our main focus has been on the advantages that customers will get out of the blockchain stepping in to shake up loyalty programs, and yet the business case for making this leap is even stronger.
Closed-off, centrally-controlled projects of this kind are simply not efficient. They cost a lot to keep ticking over, and the administrative overheads are also significant.
Switching over to a decentralized, universally accessible equivalent where points earned are stored on the blockchain and made tradable and redeemable like any crypto asset will seriously streamline every aspect of this process.
Furthermore, the data on customer behaviors, preferences, and habits that this will open up should allow brands to better target their ideal audiences and preempt their needs with the goods and services they offer.
While the idea of businesses working together to share loyalty points and make them redeemable even if they are earned elsewhere might sound like a conflict of interest, the proponents of this movement argue that it will be mutually beneficial for those companies that sign up. Customers of one company will percolate over to partners elsewhere that accept blockchain-based loyalty points, and vice versa.
It’s already an approach that has proven effective with brand-agnostic loyalty programs that exist today. Bitcoin is poised to improve upon this model, rather than eliminate it entirely.
It will take time for enough brands to get behind any blockchain loyalty scheme, even if some companies have already given away Bitcoin, altcoins, and NFTs as incentives for customers.
In the future, earning loyalty points that are housed on the blockchain could be entirely normal, and it will be exciting to see how this tech progresses.