Image credit: https://www.pexels.com/photo/round-silver-and-gold-coins-730564/
For years now, companies all over the globe have recognized the power of loyalty programs to drive engagement and sales among new and existing customers. That’s because they’ve proven to be very effective, with statistics indicating that consumers spend up to 37% more with companies that offer them a loyalty rewards program. That doesn’t mean that businesses can afford to create a program and leave it on autopilot, though.
If you dig a little deeper into the statistical picture, you’ll find that around 75% of consumers are active in no more than three customer loyalty programs at any one time, so it takes plenty of effort on the business’s side to stay relevant and keep their customers active in their programs. To do it, it’s becoming necessary to find ways to stand out from the crowd by creating a program with maximum flexibility and accessibility for consumers. One of the ways that some companies are exploring is linking their loyalty programs to crypto-tokens and giving customers plenty of options regarding how to use them. Here’s a look at the latest developments at the intersection of cryptocurrency and customer loyalty.
Connecting With a Maturing Market
When the cryptocurrency craze first began a few years ago, mainstream businesses weren’t sure what to make of it. Some rushed into the space and tried to adopt early crypto-payment platforms, and others rebranded themselves to try and take advantage of the boom. Now, much of the initial hysteria has worn off, and the crypto industry has matured into a more regulated and stable marketplace. That’s finally allowing businesses to find some real use cases for cryptocurrencies, and it’s looking like they make a perfect solution for providing real value in customer loyalty programs.
Integrating Crypto-Tokens with Loyalty Programs
The main thrust of the connection is that crypto-tokens already have the infrastructure in place to facilitate things like redemption and trading, making them a good fit for digital-age loyalty programs. Already, several vendors have created purpose-built platforms that allow companies with existing customer rewards programs a way to offer customers the option of converting loyalty points into cryptocurrencies. Car rental firm EZ Rental made a splash earlier this year by announcing just such a program, and have so far been reporting growth in program usage within the coveted millennial and generation Z demographic.
Converting Points to Tokens
Businesses are also beginning to explore launching their own branded crypto-tokens as a replacement for the points system that most had been using up until today. They’re doing so because it not only positions their brands as forward-thinking and digital-friendly but also because cryptocurrencies allow businesses to avoid one of the biggest drawbacks to traditional reward redemption programs: payment processors. It is estimated that the prepaid debit and credit cards that many businesses currently use to allow their customers to “spend” their points cost upwards of $35 billion each year in processing fees. Cryptocurrencies (and their processing networks), by way of comparison, can be privately run and cost only a fraction of traditional systems.
A Collaborative Future
There’s another, more interesting potential benefit for businesses turning to crypto-tokens as the cornerstone of their customer loyalty programs. It has to do with the primary function for which cryptocurrencies were invented in the first place, which is to be a secure replacement for fiat currency. Like any other currency, crypto-tokens can be exchanged for each other or used to pay for goods and services. That opens up the possibility for collaborations between multiple companies to create rewards marketplaces that could be a powerful draw for consumers. That’s the idea behind Swiss startup Qiibee, who is building a shared token exchange platform specifically for use as a rewards program engine that any business can make use of. If they gain traction, they may change the paradigm for the loyalty rewards program ecosystem forever.
Everything to Gain
With customer loyalty rewards programs continuing to be such an important revenue driver for so many businesses, there’s plenty of motivation for innovation in the marketplace. The cryptocurrency revolution has provided a means of starting something of a revolution-in-place in the market, allowing companies to opt for anything from a phased adoption of the technology (like adding a crypto cash out option to their existing program), all the way up to multi-company collaborations to create the ultimate customer loyalty experience. No matter how the market develops, it seems clear that the crypto is becoming the customer loyalty medium of choice – and the sky’s the limit.