Can blockchain be implemented in Loyalty Programs?

Today, brands can issue loyalty tokens on the public Ethereum Blockchain. Unlike loyalty points, tokens are valued in real-time and can be exchanged and transferred between users. Brands can reward their clients, like with points. Users can redeem tokens for discounts, products, and services. They can also exchange them for cryptocurrencies like Bitcoin or Ethereum. Brands can use their tokens to acquire new customers or reward loyal clients for purchases, engagement in social media, participation in events or sharing their personal data.

How brands can use their tokens: Build a successful brand token campaign keeping an equilibrium. Build a successful brand token campaign keeping an equilibrium between supply and demand.

There are three main rules we need to take into consideration while implementing a system of token distribution:

(1) Supply = demand

Brand tokens should generally be distributed in quantities that meet the market’s demand — and the other way around. Brands should avoid giving too many tokens away and offering unattractive services or rewards in exchange since that usually causes a decrease in demand. In case of a drop in the market value, a marketing value of the token goes down accordingly. Therefore the demand for one’s tokens should ideally slightly exceed the supply, which will result in a stable rise of the token’s market value. It’s safe to assume at the beginning, to give away as little tokens as possible.

(2) Determining the goal

Most of the companies aim mainly at a rise in sales, meaning their goal is a rise in profit. Therefore while defining channels of token distribution brands should focus mostly on the ones with the highest conversion rates. For example, if a brand’s most effective channel of customer acquisition is Facebook Ads, it’s worth considering increasing its performance even more through token-related actions (ex. ‘Sign up and get 100 tokens now’). For other companies, the goal can be to retain customer attention, so Netflix, for example, could use tokens as a reward for each hour spent watching movies.

(3) Value for value — nothing is free

Brands should definitely avoid giving tokens away and not getting anything in exchange. ‘Free’ tokens are usually perceived as worthless. The greater the effort made to obtain the token, the more valuable it seems to a user. That doesn’t mean they should be too difficult to get, though — quite the opposite, actually. A lot of small, easy-to-do tasks can be demanded from users in exchange for tokens, like sharing their personal data or sharing the content of the brand. The main rule here is that if the brand rewards a user with tokens, they get something in exchange — desirably something that translates into a rise in sales.

One of the companies enabling the tokenisation is BrandTokens