Published on July 13, 2024
By: Karin Interfector
When making a purchase, it’s essential to receive attentive service and encounter compelling reasons that encourage us to return. Having worked in customer service for many years, my guiding principle was always to treat customers as I would want to be treated, particularly because I lived on an island where good customer care was virtually non-existent. However, my experience in this field taught me that kind treatment alone isn’t sufficient. As emphasized in our analysis of AI’s impact on the e-commerce experience, customers should feel that their interests matter to you, beyond simply receiving a product listed in your inventory.
Here, the renowned rewards/loyalty programs take center stage, a strategy that continuously evolves and adapts to the new times. This practice traces back to the 18th century when numerous American merchants began offering copper tokens to customers, redeemable for future goods. However, as time went by, merchants realized the high cost of issuing these tokens, leading to the search for more cost-effective alternatives to incentivize purchases. Notably, in 1958, Green Shield Stamps emerged as a significant example. These small green stamps, introduced in the United Kingdom, quickly became a cultural phenomenon. The concept was simple: customers received stamps based on their purchase amount, which they would then affix to a Green Shield savings book. Once filled, the book could be exchanged for branded products.
As time passes, changes in consumer trends and increasing competition among loyalty programs make their mark. While highlighting historical details holds value, it’s now imperative to concentrate on the present and explore novel methods of offering points, discounts, and other exclusive benefits. The goal, of course, remains unchanged: fostering robust customer relationships and ensuring long-term profitability. Although many companies have been leveraging mobile apps and biometric technologies for user identification in recent years, our focus is directed toward what we regard as the latest advancement in the evolutionary chain: loyalty programs based on cryptocurrencies.
Like NFTs and smart contracts, these new loyalty initiatives are rooted in Blockchain technology. Given that traditional programs are susceptible to certain complications, such as unclear transparency in point retention and, worse yet, the complete loss of points due to expiration or changes in company policy, it became necessary to recognize the advantages offered by cryptocurrencies and provide more efficient experiences. In this manner, crypto-based loyalty programs offer users greater flexibility and control, enabling them to accumulate and redeem points more quickly and easily.
We can categorize the period between 2010 and 2015 as the “Experimental Beginning” of loyalty programs based on cryptoassets, and designate the years 2016 to 2018 as the “First Functional Projects” phase. Since 2019, a new reality has emerged: if a customer visits a crypto e-commerce platform and perceives insufficient added value, they are unlikely to return. Therefore, it’s crucial to focus our attention on current innovations, adapt accordingly, and take into account people’s opinions.
Among the notable projects in the field are BitRewards, Loyyal, and Qiibee. These platforms enable multiple merchants to implement cryptoassets to optimize their loyalty programs, as well as design personalized loyalty initiatives to adapt to the preferences of their customers. By employing cryptocurrencies, merchants can eliminate middlemen, reduce costs, and offer more attractive benefits. The idea is to allow users to accumulate rewards in the form of cryptographic tokens, that can either be stored in a wallet provided by the merchant or managed by the customer through another platform.
In crypto-based loyalty programs, every accumulation resulting from a transaction or points exchange is recorded on the Blockchain. This enables customers to meticulously track their purchases and engagement in company promotions, thereby facilitating more informed decision-making to maximize rewards. Similarly, it provides merchants with the ease of auditing transactions, allowing them to access immutable data that reflects the performance of the loyalty program relative to associated costs—all while safeguarding customer privacy.
Blockchain provides a solid foundation for implementing, tracking, and analyzing cryptocurrency-based loyalty programs. While the volatility of digital assets may impact users’ perceptions of these programs, there are alternatives for high-quality protection. While we cannot provide concrete information at this time, it is important to emphasize that with Hamza.biz, the first Web3 e-commerce platform based on the LOAD protocol (using the LOAD token), our goal is to create an experience where buyers and sellers not only feel welcome but also feel heard. Click here to learn about the next step in our roadmap.