Hence, developing a strategy that would retain and boost loyalty from customer has become the objective of most companies nowadays (Duffy, 2003).
Many see it as primarily an attitude-based phenomenon; therefore, offering customer relationship management initiatives such as customer loyalty programs can be significantly influenced by it (Uncles, 2003).
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.
Loyalty programs based on Blockchain where smart contracts will automate all transactions will make the management of loyalty programs smooth and autonomous.
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.Transaction costs related to the issuance and redemption of reward tokens are much lower on the blockchain since they do not require a third-party.Blockchain also significantly reduces system management costs, thanks to smart contracts that automise processes, all while reducing costs related to instances of error.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.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.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.And till the day these points expire, they will sit as a liability in balance sheets of brands.And for an industry that tops 0 Billion, the problem is undoubtedly immense.