What is Blockchain?
Blockchain is a global distributed online database that is accessible to anyone with an internet connection. Blockchain is not only decentralized, but it is distributed, which means that no single person or institution controls the growing list of records (blocks). Blockchain can be adapted across industries from medical to financial to create contracts between two parties. Currently, the most popular application is bitcoin. Thus, rather than transferring money through a bank and losing a chunk to commissions and fees, you remove the middleman all together. You can send money directly to your counterpart, completely commission free. Each block, or section of memory, is then attached to the previous blocks to form—you guessed it: the blockchain! As CNBC’s Tom Chitty explains it, Blockchain is like a giant Google Doc: anybody “can view it or add to it, but you can’t change what’s already there.”
For loyalty programs, we can use the distributed system to merge all our loyalty programs onto one platform. This way, we can create a “token” that can act as a worldwide currency, eliminating the control of the companies and the barriers they set on the versatility of the points. Qiibee is a start-up driving the use of blockchain in the loyalty program industry.
The Big Picture
Now: Blockchain’s main use is Bitcoin exchanges.
Next: Blockchain could be adapted to create single wallets where all your loyalty points could be located.
Future: Blockchain could change the way we view e-commerce as a whole.
Blockchain can be incredibly useful for customers and companies alike when paired with the loyalty point system. Imagine storing all your loyalty points in one digital wallet, rather than just a few points in multiple places. Cool, right? Imagine that they are all converted to tokens which act as a universal currency. They can be traded directly peer-to-peer or traded for real value through other cryptocurrencies and fiat currencies. Your often low accumulations of points with little value become tokens of value to both you and another user or company through trade. These tokens can be sent in seconds to the counterpart on an incredibly secure platform protected by cryptography and a hack-proof chain. This is the intersection between blockchain and loyalty points.
- “77% of consumer participate in some kind of a retail loyalty program,” however, as of 2017, there were $100 billion worth of unclaimed loyalty points. - AdAge
- More than 60% of both younger and older Millennials (Gen Z and Gen Y) who belong to customer loyalty programs agree that loyalty programs make them feel more loyal to the brand.” - Forrester Research
- In 2017 alone, private investments in blockchain companies added up to over $4.5 billion. - Forbes
- Sixty-five percent of surveyed online adults (18+) in the US believe that it is very important for a loyalty program to contain points, miles, or other loyalty currency - Forrester Research
- Blockchain can save the eight largest investment banks in the US $8 billion - $12 billion a year due to the elimination of a middleman - CNBC
Blockchain has the potential to transform the way we transact with each other and with businesses. In terms of loyalty programs, it clearly benefits consumers through the convenience of storing their points in one place and the ability to use them diversely. And for companies, not only do they gain brand loyalty, but they can also keep close track of consumer behavior for stronger and more personalized marketing efforts. While the application of blockchain may not be immediate, it is important to keep it in the forefront of our minds so we can keep our campaigns as functional and current as possible. As blockchain’s applications continue to expand, it is our job as marketers to think about how we can apply this revolutionary technology to different industries and client solutions.