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A study by American Express revealed that 62% of millennials tend to only ever buy a preferred brand compared to 54% of the wider population.In addition, 58% of millennials say that they will buy the same brand of products no matter what.Blockchain creates an immutable and time-stamped distributed database entry of every single transaction ever made, making each transaction and its record easily traceable, but also rendering them irreversible, preventing double spending, fraud, abuse, and any other type of manipulation of the transactions.
An average American is reportedly a member of seven loyalty programs and many of them reportedly have 10–15 loyalty cards in their wallet.
As industry insiders know, breakage can be as high as 30%.
The data stored on blockchain will maintain privacy of users which will increase trust of brand among users.
Implementing joint loyalty program with other brands will be a piece of cake because smart contracts will take care of everything, from transferring of tokens, converting tokens, validating users during rewarding and redeeming of tokens, thus creating a trustful environment between multiple involved brands.
This Blockchain network will be a shared scalable infrastructure between brands from different sectors.
This blockchain model for loyalty programs enhances the value of points to users and brings in new value to the involved brands by creating trusted transactions.In the US alone, consumers hold more than 3.3 billion memberships in customer loyalty programs.There is a term called “breakage” used in the loyalty industry to refer to reward points that are not redeemed.Blockchains technology is an excellent solution for running network loyalty programs because they address many of these technical challenges.One of these solutions include creating a shared transaction ledger between all involved brand, implementing interchanging rules based on “smart contracts”, which is fraud and cheating protected.One of the major reasons for this is that when this complex system is to be implemented(set-up) technically, it can be both expensive and tedious to set up, and demand a significant investment of time and money.Blockchain can be used to connect different owners of loyalty programs and make the points they distribute interoperable.Loyalty points today are not interoperable among multiple stores of different groups.Customers often suffer from ‘loyalty program fatigue’ due to the vast number of programs available, which subsequently leads to loyalty program inactivity.As a result of strong millennial brand loyalty and the loyalty rewards that drive it, 57% of Fortune 500 brands surveyed indicated that they will increase loyalty program budgets in 2017–18.It’s no surprise that 33% of millennials dislike rewards programs because there are “too many cards to carry,”.