The evolution of customer reward systems in the cryptocurrency era
Loyalty programs in retail have been around for decades. Different types of loyalty and reward programs have been introduced by both physical and online companies. These programs are primarily aimed at improving the overall customer retention rate by providing customers a way to earn discounts, rewards and “points” that can later be spent at the retailer they received the rewards from.
The idea of these programs has evolved a lot over just a couple of years. With the introduction of blockchain technology and cryptocurrencies, even further advancements in how retailers are taking advantage of reward programs are being put into place. Here, we will review the evolution of customer reward systems from traditional options like cards and gifts, to the inclusion of cryptocurrencies in modern-day options.
Traditional customer reward systems
A recent survey revealed that as much as 61% of consumers in the United States utilise at least one type of discount program1, with half of all these people preferring the use of online and digital programs over offline and card-based programs. Of all the respondents, 71% who was a member of a reward program reported the program to be very helpful and beneficial to them.
Traditional reward systems usually include a card that is provided to the customer. Every time the customer buys from the retailer, they swipe the card, and they are rewarded points. These points can then be exchanged for a monetary value that can usually only be spent at the retailer. Sometimes, the points are somewhat redeemed for gifts, gift vouchers, specific products, and services, or discount vouchers.
The use of card-based reward systems is growing old in the modern-world as technology is taking over, however. Today, people are allowed to sign up for online programs that award them for shopping at a variety of retailers – in turn, they earn points, which can be exchanged for credit that can be used at supported retailers. These gifts would often include Amazon vouchers, Google Play Vouchers, and sometimes even virtual credit cards.
Turning to cryptocurrency for loyalty and reward programs
Bitcoin was released in 2009. The world was skeptical, but the idea of a digital currency quickly became popular. Today, there are hundreds of popular cryptocurrencies that does not only offer an opportunity for investing money and sending money abroad but also for buying products and services – both online and offline retailers are increasingly adopting cryptocurrencies as part of their payment options.
The increasing popularity of cryptocurrency has now also given retailers an opportunity to introduce a new kind of reward program for their customers. These digital currencies can be used in various ways to offer rewards to customers – some brands are even going as far as to create an entirely new cryptocurrency and cryptocoins. One perfect example is how Rakuten, the most popular online e-commerce marketplace in Japan, replaced their popular reward system with a new blockchain loyalty program, through the development of their own cryptocurrency, Rakuten COIN2.
Even the healthcare industry has joined in the cryptocurrency reward evolution. Dentacoin3, for example, is taking a new approach to delivering cryptocurrency as a means of payment for dental services, lab services and supplies, as well as a way for patients to be rewarded for being active on the network (e.g. for participating in surveys, giving feedback to their dentists, using the dedicated mobile app for establishing proper dental care).
“Giving a voucher/coupon/client card or a discount in euro was nowhere near the excitement of receiving Dentacoin. Dentacoin felt like some kind of magical money to them (the patients)”, shared the manager of SWISS Dentaprime, one of the first Dentacoin partner clinics4. Currently, over 40 dental practices in 14 countries accept the dental currency for payments, along with dental laboratories, a recruitment company, an online shop for dental implants, mobile dental care providers.5
Many retailers have adopted loyalty programs to help drive more customers to them, as well as to ensure existing customers come back to them for their products and service offerings. As cryptocurrencies become a more integrated solution in the modern world, companies are now turning to these virtual currencies to provide customers with an opportunity to be rewarded for their loyalty in ways that benefit the customer in more ways than ever before.