Blockchain is the modern shipping container – a game-changing advance that brings efficiency, security and global opportunity to business. Great news if you’re a supply chain manager or CFO, but if you run your brand’s loyalty program, do you care? Loyalty programs keep consumers engaged with your brand, building preference, repeat purchase and lifetime value. Introducing blockchain to loyalty seems counterproductive. Except it isn’t.

What is Blockchain?

Blockchain is digital information (blocks) stored in a public database (a chain). Blocks have three main parts:

  • Transactional information like dates, times and purchase amounts
  • The people involved in the transactions WITHOUT PII (personally identifiable information) – digital signatures, not actual names
  • A unique code called a ‘hash’ that distinguishes that particular block from all the other blocks

Blocks can be added to a chain if:

  • A transaction occurs
  • The transaction is verified
  • The transaction is added to a block (most blocks hold many transactions)
  • That block is given a hash

Once a block is added to the chain, it is essentially impossible to change.  Copies of the chain are distributed in many, many places, so to hack a block you’d have to make changes to that block in those many, many places. Also, blocks are hashed in sequence so if a change is made to any detail in a block, it’s hash changes. A hacker would have to hack an entire chain to change anything in a block. No one has the time or money to do that.

What does this have to do with the free flight you hope to earn?

Points expire in many of today’s loyalty programs. It’s also crazy tough to earn top billing a la Executive Platinum or Rouge, and terms of the programs themselves can change on a whim. Blockchain eliminates all of this infuriating friction. With blockchain points are tokenized. Tokenization means that points become currency. Currency can be listed on cryptocurrency exchanges. Once there, consumers have the freedom to choose where they redeem their rewards, putting the coveted flexibility & accessibility of coalition loyalty programs on steroids. Blockchain also protects the points themselves, so they cannot be unilaterally devalued by anyone in a brand boardroom.  Consumers can earn & burn points across tens of thousands of brands on their own timeline.

But what about the purpose of a loyalty program – keeping consumers engaged with your brand.  Isn’t the purpose defeated if consumers can port their points wherever and whenever they want?  Concerns here fade when remembering that loyalty is a function of customer experience. Consumers that feel valued, privileged and powerful are the most loyal. Is there anything that inspires loyalty as much as the gift of freedom? That’s the genius of blockchain loyalty. If you love someone (like your customers) set them free.


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