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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.
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.
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.
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%.
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.
On top of this, brands themselves benefit from having access to an ecosystem of already loyal customers, which again reduces data acquisition costs.
Through a trustless, decentralized technology solution, blockchain is centralizing the customer’s loyalty programs.