How blockchain is disrupting loyalty

The loyalty market is ripe for disruption, according to a number of brands who believe blockchain is the answer to building trust and improving customer experience in the long term.

blockchain loyalty

There has been much discussion about the rise of cryptocurrency and the potential of blockchain when it comes to increasing transparency in the digital advertising ecosystem given its open ledger format. But perhaps less talked about is the way these new technologies could impact the future of loyalty and CRM.

Startup Trippki is collaborating with nine hotel groups across South America, Europe, Africa and Asia on a blockchain-powered loyalty system that rewards guests in cryptocurrency.

During their stay, guests will be able to collect Trip Token rewards, which are sent to their personal cryptocurrency wallet app on their phone. Alternatively, users can cash out on a secondary exchange and trade Trip Tokens for cryptocurrencies such as Ethereum or Bitcoin.

Trippki founder and CEO Edward Cunningham believes blockchain technology will transform the smart rewards market. “With this system each hotel would set their own business rules, so for example they could say you get X amount of Trip Tokens on your first night’s stay or if you stay three nights or more, or write a review and share it on social media.”

The smart contract means that guests will be eligible to write a review only if they have stayed at the hotel because the ledger registers your visit, guaranteeing reviews come from a source with experience on the ground.

Blockchain streamlines transactions between parties by facilitating trust, increasing transparency and removing unnecessary intermediaries.

Darius Eghdami, FansUnite

Trippki plans to hold its ICO in June and is already promoting the sale on Telegram messaging app. Whereas in 2016 there were only a few ICOs taking place, by early 2018 that number has rocketed to hundreds a month, says Cunningham. He has seen the cost to advertise on cryptocurrency exchanges like Coin Market Cap rocket from hundreds to thousands of pounds.

“Two years ago, there were virtually no conferences on [cryptocurrency and blockchain], now it seems like there’s one every day. It’s a bit like the Gold Rush days; you have people rushing to get the gold and you have people filling shovels,” he adds.

READ MORE: Gimmick or game-changer? Behind the hype of Bitcoin and blockchain

Tokenising social

Canadian messaging app Kik integrated its own cryptocurrency into its platform in 2017. Known as Kin, tokens are available to use by the app’s reported 300 million users on the Ethereum blockchain.

The idea behind Kin is to give users the chance to earn and spend within the Kik platform. This means brands can reward users with small amounts of Kin for completing simple tasks such as answering questions in a survey or creating themed content such as stickers or GIFs.

Alec Booker, Kik B2B communications manager, explains that as a consumer-tech company, the received wisdom says you have to monetise your user base through adverts, but this does not work for everyone.

“This ‘centralised’ business model put advertisers directly in conflict with users on our platform – advertisers want you to view ads to make money; users don’t want to see ads,” explains Booker.

This was the reason the messaging platform first started experimenting with digital currency in 2014, launching the Kik Points pilot programme to test user appetite to earn and spend using a crypto-coin. The resulting points programme generated a daily transaction volume three times the size of the then global volume of Bitcoin, suggesting the community was ready to adopt a crypto-coin.

Kik went live with its ICO last September, raising nearly $100m (£72m) from more than 10,000 people across 117 countries.

READ MORE: Why marketers need to get to grips with blockchain

Prioritising transparency

Another brand that believes strongly in the growth of cryptocurrency and blockchain technologies to create better customer experiences is American betting company FansUnite.

The startup aims to create a more fairly-priced betting model that offers increased transparency and security for customers by storing all their betting information on a blockchain, removing the risk of bets being reneged upon post-match.

All payouts are made using FansUnite’s Ethereum-based token Fan, which will be launched widely with an ICO expected to take place imminently.

Blockchain

Co-founder Darius Eghdami is convinced of the power blockchain tech has to build trust and improve customer experiences.

“There has been a knee-jerk reaction in the court of public opinion to dismiss the influx of capital being poured into cryptocurrency as naive and unfounded; however, the blockchain technology underpinning crypto possesses an incredible amount of potential,” he states.

“Blockchain streamlines transactions between parties by facilitating trust, increasing transparency and removing unnecessary intermediaries.”

Eghdami hopes to inspire other brands to focus on incorporating blockchain technology, with the customer in mind every step of the way. He argues brands should embrace blockchain not only because it offers cost savings to businesses, but because it has the potential to make a positive social impact.

“We’ve already seen ambitious projects attempting to democratise inefficient, archaic and non-inclusive areas like banking, insurance and lending,” he adds.

“In spite of recent unrest surrounding regulations and predatory ICO practices, I have no doubt that over the course of the next decade people from all walks of life will benefit from the creative applications of blockchain being thought up today.”

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