How Blockchain Is Beginning to Increase Customer Loyalty
According to Forrester Research, most online retailers invest around 80% of their online marketing budgets on acquiring new customers. However, most people reading this already know that it costs five times more to secure a new customer than it does to keep an existing one.
Customer acquisition vs. retention is a debate that has continued to rage for decades. But in a digital age of personalized experiences, customer loyalty is once again a very hot topic, and an increasing number of companies are turning to blockchain to finally disrupt and bring the loyalty business into the 21st century.
Although it could be described as the epitome of first world problems, many of us don't want to download an app on our smartphone for every airline we travel on. We have unwittingly created a never-ending list of exchanging points from a myriad of program partners and it's cumbersome at best, and it shouldn't be. Thankfully, there seems to be a wind of change in the air and blockchain technology is already beginning to prove it's much more than another buzzword.
Airline Loyalty Programs Go Crypto
When thinking of blockchain and cryptocurrencies, you could be forgiven for thinking of pie in the sky projects built on empty promises that never come to fruition. But, maybe we should be thinking differently, especially now that Singapore Airlines is introducing a blockchain-based loyalty program and even replacing its air miles with cryptocurrency.
It seems that we are moving into a phase of real-world adoption and although this technology is still in its infancy. We are looking at the radical transformation of traditional loyalty programs as we know them. The current system does not work and is leaving many people with a strong sense of loyalty program fatigue.
What if Blockchain could provide a frictionless system that was both cost-effective for both brands and customers. It would be much easier to increase engagement if you could store all of your collected points in a singular digital wallet. The good news is that this could be one of the many reasons why some of the worlds most prominent airlines are replacing air miles with crypto.
In July, Singapore airlines launched KrisPay and proudly declared that it was the world’s first blockchain-based airline loyalty digital wallet. The technology behind the new system was developed in collaboration with KPMG Digital Village and Microsoft.
"By creating a miles-based digital wallet which integrates the use of miles into their daily lives, KrisFlyer members have yet another way to use miles instantly on everyday transactions.”
—Singapore Airlines CEO, Mr. Goh Choon Phong.
The Blockchain Loyalty Platform Happy Hour
Elsewhere, qiibee, the decentralized blockchain-based loyalty ecosystem, is aiming to provide a loyalty platform and developer interface on which every loyalty application can be tokenized. But, it is attempting to revolutionize the loyalty industry and refreshingly not with promises of technological innovations, but with partnerships and real-world adoption.
Germany´s leading cocktail bar and restaurant chain, Sausalitos is already on board rolling out a new loyalty program. Elsewhere in Europe, Swiss coffee brand Lattesso is also releasing a blockchain-powered loyalty program on the qiibee ecosystem, but this is just the beginning.
Italian Retail Association Confimprese recently formed a strategic partnership that will bring together relationships with some of the world’s most renowned brands across multiple industries. Confimprese’s members include KFC, Disney, Pandora, and petrol station network Agip, with over 6,000 points of sale in Italy.
Although it's unclear at the moment at which brands will be taking part, the Swiss loyalty token protocol is already helping brands around the world run their loyalty programs on the blockchain. But, this is just a handful of examples of how customer loyalty programs are on course for inevitable transformation.
“Customers worldwide are familiar with air mile programs and loyalty points, and although these are important practices for retailers and brands, customers are limited and restricted in how they can utilize their points and rewards. Now Lattesso customers will be able to exchange their loyalty points for cryptocurrencies from their smartphones.”
—Gabriele Giancola, Co-founder, and CEO of qiibee.
There are many more examples of how the worlds biggest brands are beginning to rethink customer loyalty using blockchain. Now that we all know that it's merely a decentralized ledger that is unchangeable and fully transparent, maybe the buzzword itself can be retired so that the tech can become invisible.
By providing greater transparency to consumers and more control over their loyalty programs to improve the customer experience. Early indicators suggest that loyalty points will eventually be replaced by tokens that enable users to transfer between friends or redeem for purchases.
It will take several years for this technology to truly enter the mainstream, but with the world's biggest airlines already embracing it, maybe the future is much closer than any of us realize.