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Blockchain: For brands, it creates traceability, less fraud, and opens safer, more secure opportunities for cross-brand partnerships.
Many brands have launched loyalty programs in the last 5-10 years to address the risk of stagnation. However, they are but are struggling with three key things.
The first of these is that the bulk of their members are inactive. Often, when campaigns are first launched there is a flurry of activity and there are similar patterns when new members join. However, this is hard to sustain.
The second issue is with the relative value of the schemes and the benefits to members. It is often the accrued benefits for members have low redemption rates.
The third and final issue is that the overall program costs are relatively high and the costs ae generally growing. This is due to the ongoing management complexities of the loyalty technology used by the brand, which is invariably bespoke in nature.
So, how can brands combat this? Rob Fagnani, co-founder of Formation provides Digital Journal with some advice.
Fagnani foresees a future based on digital ledger technology. This centres on blockchain, a technology that can be employed on advertising networks to cut out the middleman and track who clicks and interacts with the advertisement or promotion.
He notes the emerging changes as: “Using loyalty tokens through a permissioned blockchain addresses those issues.”
The advantage on the consumer side, according to Fagnani, is where “there is already traction with wallets that centralize their digital assets (such as points, bitcoin, and so on), so enabling the centralized storage of those assets and the possibility to redeem and transfer those points in new ways – either with additional brands or with peers – can drive deeper engagement with their preferred brands.”
Fagnani spells out the main advantage; “It will make it easier for consumers to remain active across a higher number of loyalty programs, because the friction of managing different bespoke programs and platforms is reduced.”
In terms of the core benefits, Fagnani says that: “For brands, it creates traceability, less fraud, and opens safer, more secure opportunities for cross-brand partnerships. While cross-brand loyalty partnerships have been popular for years, there is a tremendous amount of overhead to manage these with regards to data sharing and financial reconciliation.”
A further recommendation from the analyst is: “Loyalty tokens through a permissioned blockchain reduces the risk and makes it easier for brands to partner and share data to create exciting, up-leveled experiences for their customers.”
Finally, Fagnani indicates another benefit: “Moreover, the traceability allows brands the ability to more effectively measure the impact of their digital ads and offers, which is increasingly difficult for brands due to changes in data privacy.”
Dr. Tim Sandle is Digital Journal’s Editor-at-Large for science news. Tim specializes in science, technology, environmental, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.
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