INNOVATIVE BLOCKCHAIN-BASED SOLUTIONS FOR MANAGING CUSTOMER LOYALTY PROGRAMMES THAT ARE BOTH SATISFYING AND SECURE
Thousands of companies in various sectors are experimenting with blockchain-based solutions. Businesses in banking, insurance, e-commerce, automotive, and marketing are ready to take the big leap: Gartner predicts that blockchain will generate annual global revenues of more than $3 trillion by 2030. In addition, 10% to 20% of global economic infrastructure could run on systems based on this technology within the same year.
The blockchain is a form of technology for recording and managing data and transactions in a secure and decentralised manner. It consists of a network of computers that share a register (ledger) and work together to validate and upload any new data to the ledger. Before it is uploaded to the ledger, data is grouped into blocks, which are then permanently tagged onto the pre-existing blockchain using cryptography. Once attached, data cannot be modified.
Several blockchains, implementations, and variations have been developed (either as extensions or from scratch) for specific solutions. These range from insuring goods to strengthening trade bonds between countries, from handling migrants – particularly refugees – to simplifying banking settlements. Each implementation is on the same path towards innovation, development, and refinement, thanks primarily to the digital communities that support them.
Several solutions, such as Ethereum (which is rapidly expanding), stand out from the crowd thanks to their impressive flexibility. They are progressively overcoming most of the limitations they encountered in the early stages of adoption, moving ever closer to end users and offering them major opportunities for transparent and secure services.
Ethereum is the perfect technology for creating and distributing truly decentralised applications. It is a blockchain that is programmable through Smart Contracts, i.e. programmes written in a specific language and executed directly by the network, thus inheriting the security, non-repudiation, and traceability characteristics inherent to the blockchain itself. The Ethereum community – comprising hundreds of developers, companies, and users worldwide – is contributing to the evolution of this network and its improved performance on a daily basis. For example, it recently released a major update that reduced the energy required to support network security, making Ethereum more sustainable and less energy intensive.
The impact of adopting this technology is significant and often requires processes to be thoroughly overhauled. One interesting field that can benefit greatly from this technology is customer loyalty programmes. A study by McKinsey revealed that having a loyalty scheme can generate up to 20-25% of a company’s profits but does not necessarily lead to higher customer satisfaction than companies that do not have a scheme in place. This suggests that while these programmes may be profitable, they have the potential to perform even better if they take into account the role of ends customer and the potential impact that enhanced customer care could have on profitability.
Given its high level of programmability, the Ethereum blockchain offers countless possibilities to design custom loyalty schemes, in addition to the option to connect and form partnerships with loyalty schemes developed by partner companies. Businesses can work together, offering cross-brand loyalty programmes and establishing precise agreements between parties that are protected from all forms of fraud or counterfeiting. Compliance with these agreements is ensured using smart contracts. Customers also benefit from these new schemes as they offer automatic rewards and redemptions, in addition to the option to convert points from different loyalty programmes on one platform. End users can also directly involve their circle of friends, exploiting gamification mechanisms for greater engagement. This form of brand loyalty (accumulated points) is a real digital asset with tangible value that is owned by the customer and managed in a secure, transparent, and fun way.
Companies that do not invest in this technology may face potential risks due to the emergence of loyalty schemes based on it.