In a recent study, Deloitte stated that blockchain, as a distributed ledger with a fundamentally new way to transact and maintain records in a secure, trustless, digitized interlinked network, will eliminate many inefficiencies currently seen in the loyalty rewards programs.
Titled “Making blockchain real for customer loyalty rewards programs”, the report says:
“[L]oyalty rewards are also a type of digital currency, so it is only natural that the engine that enables Bitcoin to be transacted among multiple parties in exchange for services, goods, and even other monetary tender could do the same for loyalty reward points.”
Deloitte believes that for loyalty rewards program providers, blockchain technology has the potential to streamline execution and administration of their programs with near-real-time transparency, resulting in cost savings that can be realized in the medium-term.
For existing loyalty rewards programs, joining a blockchain-based network would be beneficial as they could join on their own terms, controlling how they wish their customers to interact with their rewards programs and others, the report said. For small operators, such a network would provide unprecedented scale.
“We maintain that blockchain will allow instantaneous and secure creation, redemption, and exchange of loyalty reward points across programs, vendors, and industries through a trustless environment using cryptographic proofs in lieu of trusted third parties and administrators”, the report said.
Moreover, as loyalty programs are not core to businesses’ operations, they are relatively low-risk way for testing the security and efficacy of a decentralized, distributed ledger solution. Deloitte says that loyalty rewards providers can set up blockchain-based innovation labs with proof of concepts catering to their employees that they then leverage as models with established protocols that lend to customer loyalty programs integrated with blockchain-based loyalty networks, or they can collaborate with other organizations with loyalty rewards programs to develop solutions that could become industry standards.
