Here is How Blockchain is Changing Loyalty Programs
Thu 10 06 2021

Throughout the past years, organizations were competing to keep their customers as much as possible. There is one way for doing so that has been adopted recently by many companies and it has encouraged the repeated support organizations received from their customers, through loyalty programs.

The customer loyalty programs are made to reward clients in exchange for support and trust. They get encouragements for staying with an organization rather than leaving it for its competitor and that is done by the accumulation of rewards. Customers receive loyalty points for their purchases or contributions, which can, later on, be converted into other types of rewards such as discounts.

While these programs are deemed important today to help maintain a customer base, they consist of many issues for both the organization and the customer.  Customer loyalty programs can be ineffective in applying conversions as they can be forgotten by the customers themselves. Usually, an average customer takes part in many loyalty programs which he redeems a few of them only, if not none. If the organizations decided to set up and run the programs they will be faced with huge costs that can negatively affect them especially if the clients still don’t redeem their points. Furthermore, there are security problems that have led the clients to feel discouraged to participate in them.

These problems can be solved by the use of suitable technologies. For this reason, Blockchain has proven its effectiveness in being the most suitable technology in changing customer loyalty programs. Blockchain is used to fix the issues that have been recognized in traditional loyalty programs.

These are some ways in which Blockchain technology can change customer loyalty programs:

1. Transparency

Incorporating blockchain in loyalty programs means that tokens that are interoperable through platforms can replace traditional tokens. Blockchain tokens are public, however, organizations can’t remove them the way they wish. These also have an extended validity period which can further encourage customers to participate in solving the problem of unredeemed points. Applying Blockchain to the organization’s loyalty program can improve the customers’ trust. This is because the terms of the program are stated explicitly. Furthermore, organizations have no authority to change the terms and conditions.

2. Security

Blockchain is a synonym to secure transactions that can improve the results of customer loyalty programs. These transactions are time-stamped which is a feature that prevents any manipulation of the transactions. Blockchain improves security for the organization and customers by forbidding unauthorized access to information and stores.

3. Flexibility


Customer incentives’ flexibility is achievable with blockchain and leads to more attractive programs in the eye of the customer. They allow customers to make redemptions when they want rather than obeying rules that they might not like.

4. Efficiency

Blockchain offers clients many options when it comes to their accumulated points. The tokens can be used across stores and are interoperable(able to exchange and make use of information). They can also be converted to cryptocurrency. Rather than collecting points from different organizations, customers can obtain a universal token and redeem it whenever they like.

5. Cost-effectiveness

Running loyalty programs with blockchain can save organizations a lot of money as the cost of running these programs is lower than running the traditional programs.