Every day, the digital landscape and the way we do the simplest of things; buy groceries, pay our bills, interact with friends, is changing. So, isn’t it about time the loyalty programmes of yore got an over haul too?
Last week I caught up with Philip Shelper, CEO & Founder of Loyalty & Reward Co, and passionate advocate of the cryptocurrency uprising to discuss the changing landscape of customer loyalty programmes and how this confusing little thing called “Bitcoin” is revolutionising the way brands can reward and retain customers.
In case you are a total avoider of modern shopping trends, let’s provide some context…
The Frequent Flyer programme adopted in the early 80’s is of course the most famous programme, but there have been findings of early Loyalty programmes as far back as Ancient Egypt. Since that far back, people have loved rewards, and businesses love loyalty – it’s a match made in consumer heaven.
So, what’s going wrong?
“Digital has made it much easier to engage with loyalty schemes, but the fundamental designs of their programmes haven’t changed”, Philip explains, “Blockchain is exciting, as it is the first real innovation since the ‘80’s”.
Let’s look at it this way; the points you earn are a currency, they have a value assigned to them at point of sale, and much like the London Mint prints cash, businesses must print enough points to go to their affiliates to give to their customers. When you redeem them, the stored revenue pays for the cost of your well earnt reward.
A few problems though; points expire, you can only use them on flights or in store, and the biggie; the value is totally at the discretion of Loyalty Programme.
“They’re a real currency, but they aren’t controlled by a loyalty programme. They’re controlled by the market. Supply and demand.” Philip continues, “Secondly, they don’t expire and more importantly; you can use it anywhere”.
But hang on, pretty sure if I walked on into General Pants to pick up the latest hipster trendy ripped jeans and desert hat and offered to pay with virtual money they assistant would be all, like, totally freaked out, man.
Let Philip break it down for us, “There’s a few companies, one of them called TenX, who import currencies such as Bitcoin or Ether into your TenX account, and then link it to your debit account. Then, when you use that card, it actually deducts from your Bitcoin/Ether balance – turning it into local currency”.
Looking at the even basic enhancements those kinds of transactions will make to people’s lives, like spending when travelling for example, you can start to feel how this new kid on the FinTech block is kind of here to stay. “I’m going to London soon,” Philip boasts “and instead of getting fleeced on the exchange rate into pounds, using TenX I would only be paying around 1% exchange rate”. Boom.
Before we can get into how loyalty programmes can adopt Blockchain into their clique, I found it fascinating and necessary to dig into Bitcoin a bit further with Philip.
Let’s start big – is this going to become a global currency? I’m picturing Bladerunner, laser guns and robots taking control…I have an active imagination. But back on Earth, “It’s certainly heading in that direction – let’s look at it in the context of how we perceived the history of major tech companies”
In the days of Yahoo, AOL and Internet Explorer – none of these browsers were actually very good! Google came along and totally took the market. The reason was simple; they came up with something everyone needs, and did it to a superior standard. Same with currency. Current markets and economic climate is unstable, tense and frankly, a little scary. How is Bitcoin different?
“The perfect example is Argentina”, Phillip explains, “They had massive issues with the deflation of their currencies and so in the early days of Bitcoin, people were putting all their wealth into Bitcoin as it was more stable – it was a way of avoiding facing pressures on their home currency”. But hold up, every day I am hearing more and more about the instability of Bitcoin, and the Chicken Little’s of the world telling us the sky is falling? “Yes, they are new and speculative, but a lot of smart people are working on a cryptocurrency that stays stable, maintains value and isn’t subjected to those supply and demand market forces and speculative behaviours”.
It all sounds great so far, makes sense, actually sounds kind of cool. But how can Loyalty programmes be improved by this?
“Crypto is released from the shackles of a traditional loyalty programme, it’s an exciting alternative to points. You are earning a live currency that is constantly fluctuating; at POS the currency could be worth $10, but in two months it could be $20”, Philip goes on to explain that while, yes, the value could also decrease; the fact of the matter is that people are gambling with earnt rewards, not their own hard-earned cash. “People are interested in Bitcoin, but they don’t understand it, and are scared to invest ‘real’ money. Loyalty schemes like this can really help people be introduced to cryptocurrencies”.
Not only that, but they won’t expire, they can be used anywhere, and even better; those pesky shareholders can’t decrease the value for their own profit gains.
For once, it really looks like the consumer is coming out on top doesn’t it?
There are also massive benefits for businesses in taking on the Blockchain Loyalty revolution; you can create your own cryptocurrency – create value from nothing and this can be a hugely profitable venture for them. Secondly, although they’re giving revenue to customers, Philip explains, “they don’t have to defer revenue to cover future liability as you do with points”.
And finally; novelty. Not like the socks you get from Nan at Christmas; actual market value novelty. This is completely new and fresh, and the brands that move first on this, that get their programmes up and running in a meaningful way are going to have a huge advantage on the market.
But will customers get on board with this shift from squirreling away meaningless points to earning a real digital currency?
Philip’s most recent project has been a research project at UNSW called “Unify Rewards” – students and staff were able to join a loyalty programme with crypto currency instead of points. When they shop at any of the 12 outlets on campus, they scan and earn Ether. They can then cash that in for dollars or keep it to see how the market plays out. Philip is trying to determine the answer to the question, “Is providing members of a loyalty programme with a crypto currency more engaging than providing them with loyalty points?”.
The project officially ended Friday 17th November, and although we are waiting on the official report, an early poll found that given the choice, 80% of participants wanted to keep the Ether where it was to see how it plays out, and 82% said they preferred earning a cryptocurrency to earning loyalty points.
Think about that. Students, the most hard done to, live on a shoe string, cash poor people in the country didn’t want to cash out the crypto for jagerbombs, but keep it in the programme – because they love the engagement.
And at the end of the day, isn’t that all brands really want? Loyal, engaged and satisfied customers?
Digital revolutions can be scary, consider the mass panic of the millennium bug, but humans and tech have overall had a beneficial, progressive relationship. When it comes to money, however, people get particularly paranoid; the naysayers will say nay, the yayers will yay – but looking at the facts of it; loyalty programmes in a cryptocurrency make sense. They introduce consumers to a new way of finance in a comfortable, protected space, as Philip says, “Don’t talk about the tech – talk about the benefit. No one speaks about the internet in HTML and coding; it’s all about how it can enhance your life. It will be the same with cryptocurrency – eventually, we won’t even speak how it works anymore, it will just be another product that works in a particular way that makes sense somehow”.
The first rule of marketing – features and benefits, people. And Blockchain Loyalty looks to be a revolutionary beneficial way forward for consumer rewards.
To see the video on Philip’s Unify project – https://youtu.be/6nSpm3MYl4g
And to read more about the project & results – www.unifyrewards.com