Platform economy has arrived and is here to stay. Businesses across every industry are investing in platforms realising the importance from a strategic growth perspective. The technology era demands a connected world and connectivity channelized through platform driven business models is the way forward.
The emerging platform strategies are demand-driven, and they promise to provide unprecedented scale, speed, and global reach. These can build the foundation for unleashing new market opportunities from system management, data collection to deeper consumer insights. We have seen platform model underlying the success of many biggest and fast-growing companies like Amazon, Google, Alibaba, Uber, Airbnb, etc. The industry has been fast growing and 80% of the global enterprises are expected to create or partner with industry platforms in the coming few years.
What does it mean for the loyalty marketing industry when consumer loyalty is undergoing a tectonic shift?
Customer experience has become a key differentiator for businesses worldwide. Customers are looking for choices and ease of navigating between those choices for better and quicker decision making. They are more expectant as they experience personalised and real-time services with businesses via simple and affordable digital technologies.
As for the loyalty marketing, this has been a key tool for businesses to gain repeat sales, consumer insights and acquire new customers. However, the industry has transformed rather slowly as compared to, for example, the banking, payments and retail industry. It requires a technological edge to bring the much-needed momentum with $360bn worth points lying unredeemed, globally. Traditional loyalty programs are costing significantly more and delivering less. Loyalty points are not fluid enough. They hold value within single or a small group of brands and it takes too long to earn a meaningful reward.
Businesses require deep consumer insights as mass-segment marketing strategies aren’t reflective of individual’s preferences. Digitally managed platforms can create network effects such that every business can leverage the interconnected network for insights, analyse future prospects and design marketing strategies to drive sustainable growth, faster and economically. Whereas, a standalone or a closed-loop loyalty programme has its limitations. For the loyalty industry to enable true customisation and acquire more loyal customers, it requires rich and relevant data that can be generated by a platform that connects businesses and customers through a unique network.
The concept of loyalty point exchange or programme coalitions are not new. Businesses reward customers with points that are redeemable among a group of brands or transferrable to another programme. However, traditional coalitions have a standardised model of points exchange that doesn’t work for all sizes of businesses. Most of the settlements and reconciliation processes involve manual labour, adding to the time and cost. Eventually, the end consumer pays that as a transaction fee. By the time points are exchanged, consumer loses both, time and points value. The coalition owners tend to own the currency and businesses often lose out on the customer insights.
Redemption drives brand engagement. Then imagine the kind of engagement to be expected by offering diversified redemption. Businesses can potentially reclaim the lost value of their loyalty programmes by joining an exchange that will induce liquidity within the points. An advanced exchange platform can facilitate points earn, burn and exchange within the businesses in the network in a very cost-effective and real-time manner. 70% of customers leave a programme if it takes too long to earn a meaningful reward. Helping customers to reach the redemption threshold is of prime importance to gain their loyalty. LoyalT® underpinned by blockchain is among such platforms that connects businesses of all sizes and domains. In time, such platforms can emerge as a data hub with global and local businesses joining the network. Consumers can consolidate points to their preferred brand and redeem for a higher value. The network ensures real-time and secure points exchange and provides instant gratification to the consumers. One such platform can support numerous use-cases like multi-currency gift cards, peer-to-peer transfer of loyalty points, donations to charities. Every business is unique and LoyalT® helps businesses maintain their individuality and generate the brand awareness through their own loyalty programmes. The platform acts as an enabler connecting businesses and consumers to facilitate the exchange.
We are headed towards a connected world with digitally managed platforms of consumer goods and services. Loyalty industry is waiting for such a transformation. Managed loyalty platforms on blockchain can emerge as a single source of trust less and decentralised point of connecting the businesses at a global scale. Business will be able to focus on their core offerings while the network takes care of the engagement rules, manages partnerships, multiple currencies, individual business preferences and more. All enclosed within the digital smart contract that is executed every time a transaction is initiated.
ABOUT THE AUTHOR
Aparajita Roy is the Head of Market Research at KornChain. She started her career with the Central Bank of India. She has extensive work experience in blockchain with her researches on International Money Transfers using Blockchain technology, account aggregators, trade-creating effects of the EMU and more. She brings her knowledge of international trade economics and experience of conducting independent researches to KornChain where she has been involved as a co-founder.
KornChain is a technology company that is building a global blockchain network for the loyalty marketing industry. KornChain have recently launched LoyalT® which seeks to be a global loyalty point exchange network underpinned by Blockchain. Customers can earn, spend, exchange & consolidate points in real-time while businesses benefit from customer acquisition, repeat-sales and deep insights. On-going implementation with large clients.