Opportunities and Challenges of Blockchain-Integrated Loyalty Programs
Loyalty programs are a great way to maintain as well as enhance the customer base. It is a structured marketing strategy used by companies and retail shop owners to encourage customers to continue to use their services and products.
In recent years, customer’s interest in the loyalty programs is on the wane, encouraging the companies to explore the possibilities of blockchain technology in loyalty marketing. The decentralized ledgers can be a great asset to boost loyalty programs for businesses. Let’s discuss the opportunity and challenges of blockchain technology for loyalty programs:
Reward redemption: Redemption rates have been falling for loyalty marketers. Blockchain-integrated loyalty programs can address many issues that drive the customers away from the traditional loyalty programs. It allows a customer to manage multiple programs in a single wallet. Blockchain-integrated programs also help to streamline different loyalty programs by providing a single set of rules for acquiring and redeeming points from various loyalty programs.
Flexibility: Blockchain-based loyalty programs allow customers to receive and redeem loyalty points in real-time. It can be a great asset for data analysis as the data stored in the digital ledger is abundant. This data can help businesses to get insights into a customer’s buying patterns and their interest in a particular product. The loyalty points in blockchain can be tracked easily and redeemed in smaller increments.
Reduced frauds: Blockchain-integrated programs allow the organizations to store private and sensitive data on legacy systems with which only the authorized customers can interact. The network members are allowed to store information on the digital ledger which can help in general data protection. Blockchain-integrated loyalty programs can help to reduce loyalty frauds to a great extent.
Reduced costs: Loyalty programs take time and money. Blockchain-based loyalty programs can eliminate this barrier with a distributed ledger. It can also benefit the customer as the savings can be passed on to the customers.
Blockchain technology can eliminate some of the barriers of loyalty programs, but there is a scope of improvement. The customers will need to set up their accounts after downloading their digital wallet. The existing infrastructure does not allow more than five transactions per second. This might not be sufficient for the implementation of a large-scale loyalty program.
Blockchain-integrated loyalty programs are still in its infancy, but it has shown enough potential to garner the interest of businesses.