A business’s long-term success and momentum are ultimately derived from its customers’ satisfaction. No matter if a company is B2B or B2C, they must cultivate strong relationships that incentivize customers to come back repeatedly. For consumer-facing businesses especially, the experience should be the focal point of any interactions because a positive outcome, no matter if it results in a sale, will likely translate to a better reputation, stronger loyalty, and hopefully drive results with word-of-mouth advertising. The crux of the strategy is to aim for customers that are ‘very satisfied’ more so than simply ‘satisfied’.
Companies have long understood this phenomenon and sought to harness these highly lucrative relationships by engaging in any number of promotions including loyalty points, rewards programs, and other value-added perks. However, despite their popularity, the current engagement model leaves a lot to be desired for both customers and businesses.
While successful marketing strategies have long depended on these types of programs to incentivize users and build a sustainable following, the paradigm is rapidly shifting as influencers and brand ambassadors play a larger role in the process. By capitalizing on this shift and gathering better data, companies can find a way to reverse the erosion of loyalty-driven programs by deploying new technologies to improve the fungibility of these relevant relationships.
A shift in perception
Customer loyalty programs are not a new model, having played a role in commerce for over 100 years. The most visible modern examples, though, break down into frequent flier programs and credit card points ecosystems. These programs have been effective at retaining customers and encouraging repeat business by distributing value-added benefits in the form of discounts or other perks, be it upgraded seats on participating airlines, free tickets, lounge passes, extra insurance, hotel discounts, and much more.
However, the informational overflow available today lets consumers compare products side by side more easily, and has commodified the concept of loyalty among users, letting them jump from service to service to fit their immediate needs. The internet in many ways is responsible for this transformative makeover as it reduced the cost of comparison research and made switching between products and services significantly easier.
The result of this growing dependence on internet-based outreach activities has forced companies to reevaluate their marketing efforts and the steps they take to build loyalty amongst users. One of the most popular solutions to emerge is the idea of brand ambassadors—popular individuals such as celebrities who actively promote products and services as part of a lifestyle and generate sales by increasing awareness.
A newer entrant into the social media space is influencer marketing, which emphasizes leveraging massive user followings to build buzz and create communities around companies and products. Adding these channels to an existing marketing program is an effective model for growing revenues, but blockchain is uniquely poised to bring the marketing revolution one step further towards a sustainable, loyalty-focused ecosystem.
How cryptocurrency can add fungibility to rewards
One of the main drawbacks of existing rewards systems is that they often are limited in nature. Taken in the context of airline mileage accounts, these miles can traditionally only be spent at the airline that awards them or with applicable partners, forcing loyalty instead of encouraging it because miles are only forward compatible and not exchangeable for cash or other rewards. However, new technology companies are challenging this formidable model with exchanges designed to help empower users to monetize their rewards, and even exchange them for miles at competing airlines. Startup Bastonet, which focuses primarily on the air travel ecosystem, has built a model that overcomes these hurdles by enabling users to exchange miles for BSN tokens which can then be converted to other participating mileage rewards or even to fiat currency, helping improve overall fungibility.
The travel sector is just one industry participating in the entire loyalty rewards evolution. Other models look beyond the concept of value denominated in arbitrary points by seeking to offer more granular rewards and incentives. These targeted programs offer better satisfaction for all participating stakeholders. Blockchain company Sandblock, for example, has developed a unique tokenization model that is intended to drive higher levels of user engagement and better satisfaction by standardizing a largely disparate rewards ecosystem.
Per the company’s whitepaper, “The protocol enables partner merchants to gather feedback at various key moments of the customer experience and keep track of their performances regarding the satisfaction of their customers. Customers can rate and/or comment about their purchase either instantly or after a delay specified by the merchant. This ensures merchants only get reviewed by their customers and reward them while avoiding fake reviews.” Sandblock’s idea overcomes loyalty and rewards program fragmentation by letting companies reward users with Satisfaction Tokens for any activity that is synonymous with improving or promoting a company’s activities. Users can then redeem their tokens for discounts and merchandise from any merchant participating in the ecosystem while marketers are granted the opportunity to obtain insights and data produced by the platform users, completing the circle and preventing leakage.
Reaping all the rewards
Unlike the current standards for awarding miles and points to loyal customers that come with numerous restrictions attached, new blockchain-based services are demonstrating that the capability for building a model that serves all participants across the value-chain in a mutually beneficial way. Users can uncover ways to make their rewards more fungible across products and services whereas companies can encourage greater loyalty while applying the data to refine and streamline their offerings. These types of ecosystems have already established their capacity for improving loyalty and engagement. All that remains is to drive more widespread adoption amongst the relevant parties to improve satisfaction.