deloitte
Customer loyalty and engagement can make or break companies, warns a report from the Deloitte Center for Financial Services on blockchain-based solutions for customer loyalty. That makes rewards programs a strategic investment for all types of organizations.
Deloitte , the second-largest professional services network in the world by revenue and the largest by the number of professionals, is very influential in the business world and its advice is regularly sought and followed. When it issues a report on loyalty programs and blockchain technology, many operators will listen.
"Loyalty rewards are also a type of digital currency, so it is only natural that the engine that enables Bitcoin to be transacted among multiple parties in exchange for services, goods, and even other monetary tender could do the same for loyalty reward points," the report noted. "[Blockchain technology] is an ideal remedy for what ails loyalty rewards programs."
Deloitte analysts believe that blockchain technology can streamline the execution and administration of loyalty rewards program with cost savings, economy of scale and near real-time transparency. New blockchain-based loyalty rewards programs can have continuity and synergy with existing programs. In particular, new blockchain-based platform can interact with existing ones through smart contracts.
If brand loyalty programs are interoperable, the customer is the winner, which is a defining feature of solid and sustainable business models. According to Deloitte, blockchain technology "can connect the largely disconnected world of loyalty rewards programs, reduce costs, eliminate friction, bring loyalty rewards crediting and redemption into near real-time, provide a more secure environment and facilitate business relationships."
"The loyalty industry needs a lifeline," said Ron Quaranta , chairman of the Wall Street Blockchain Alliance. Quaranta added that the loyalty industry is "highly fragmented, creating both lost revenues and reduced customer loyalty," which is what makes blockchain solutions appealing. In fact, blockchain technology can eliminate the fragmentation that plagues the industry by introducing much-needed interoperability of data and security of consumer privacy.
The Deloitte report noted that blockchain technology will allow instantaneous and secure creation, redemption and exchange of loyalty rewards points across programs, vendors and industries, and outlines a roadmap for blockchain-based loyalty program implementation.
According to Deloitte, through a partnership with a blockchain technology enabler, loyalty rewards providers can run internal proof-of-concept pilot projects, develop bespoke platforms and/or collaborate with other providers in the industry to develop solutions that could become industry standards, which is the approach of Hyperledger and R3 in the financial services sector. Besides the intrinsic value of streamlined customer loyalty solutions, Deloitte recommends blockchain-based loyalty programs as a relatively low-risk way for most businesses to start testing the security and efficacy of distributed ledgers for a whole range of business-critical applications.
An interesting example is "Dubai Points" the world's first tourism incentification program, launched by loyyal and the Dubai Future Foundation . Dubai Points will be earned and redeemed at participating locations based on a tourist's profile. Participants in the program include a regional flag-carrying airline, hotel group Jumeirah, telecom company Du, hotel and flight comparison service Flyin, advisory firm Privity, consulting company Digitus, the International Culinary Centre for Culinary Arts Dubai, SquareCircle Tech, the Dubai Future Foundation and others for redemption and issuance locations.
Carlos Domingo, senior executive at Du, a communication and identity verification service provider for the Dubai Points program, said that blockchain technology can offer superior means of powering loyalty-points programs. After the Dubai deal, loyyal was selected by AiSpot , a company backed by the Norwegian government that develops tourist applications for Scandinavian local governments to provide a blockchain-based rewards program that incentivizes tourism in the region and provides local businesses with a channel to target and incentivize visitors.
Deloitte itself is implementing the roadmap recommended in its report.
The company is evaluating "an internally-developed loyalty points blockchain application built by our Rubix by Deloitte team on a permissioned ethereum network as a test case," said Iliana Oris Valiente, co-founder and strategy leader of the Rubix by Deloitte team . "Although each client engagement is unique from a technology and a business model perspective, there are many similarities among the processes in designing, building and operating a blockchain-based product."
It's worth noting that Deloitte is speeding up its blockchain technology assessment work because "it's only a matter of time until our clients tell us they are moving portions of their business onto blockchain infrastructure," per Will Bible , partner with Deloitte & Touche LLP.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
