Consumers of all ages are increasingly willing to make purchases with blockchain loyalty tokens. This trend makes it much more interesting for businesses to transform commerce using blockchain. According to auditing firm KPMG ‘tokenization is ushering in the next generation of commerce’.
Tokens and loyalty programs are just some examples of what blockchain can bring to the table. KPMG believes that businesses who embrace blockchain technology can create entirely new revenue streams and customer engagement opportunities.
“It provides inspiring new ways to classify value, either by creating new assets or re-imagining traditional ones, sustained with the security and transparency of blockchain”, said Arun Gosh, Blockchain Leader at the US division of KPMG.
However, there’s still a lot of work to be done. For example only one-third of consumers are highly familiar with blockchain-based tokens. Education of the audience will be important to improve that number. Tokens can be used as an easy form of payment, and can improve loyalty reward systems. As a matter of fact, KPMG believes that new tokens are better accepted when part of an existing loyalty program.
“By using tokenization, companies can develop new forms of value exchange within an existing network, such as allowing consumers to use loyalty points for purchases with different merchants,” continued Ghosh. “Not only can this create more engaging customer experiences, it offers significant operational efficiencies by accelerating the transfer of value.”
Crypto and cashback reward programs
Loyal customers are very valuable to retailers. In general repeating customers make up 40 percent of a store’s revenue. On top of that 62 percent of the millennial consumers tend to only buy from their preferred brands. The more loyal customers are the more they spend. A top ten percent customer spends three times more money per order than the average customer, and the top 1 percent even five times more.
Coffee companies like Starbucks already introduced loyalty points years ago. Consumers can pay for their coffee using an app, and earn points by doing this. They get a free coffee when they have earned enough points. Similar systems are also common with credit cards companies and in the travel industry. Spend money, earn points and then spend those points on something you get ‘for free’.
Where these blockchain-based reward programs are different, is that these points can transfer from owner. As a result they represent a certain value. This is potentially the case if Starbucks would move its reward program to the blockchain, and is already the case with the bitcoin that consumers can earn when they are shopping through the Lolli loyalty reward program.
Also published on Medium.