Loyalty and rewards programs are popular with customers but both program owners and members can struggle to get the most out of these schemes. Blockchain rewards programs can offer the transformative opportunity to reduce costs, draw in more participants and to provide flexible and faster redemption for members.

Why use blockchain for rewards programs

Customer loyalty and rewards programs are transactional in nature, with large numbers of participants. These are typical characteristics of blockchain applications, which is why the benefits of embedding decentralised principles in the operations of loyalty and rewards programs are so strong. Here's what blockchain rewards programs can help you achieve:

Cost efficiency . Blockchain delivers efficiency improvements for loyalty programs both from a transactional and a customer acquisition viewpoint. This is in part because blockchain reduces the need for intermediaries. Loyalty program transaction costs are high, merchants pay third parties $35bn a year to service credit cards tied to loyalty points. The scope for blockchain to deliver savings is wide open.

. Blockchain delivers efficiency improvements for loyalty programs both from a transactional and a customer acquisition viewpoint. This is in part because blockchain reduces the need for intermediaries. Loyalty program transaction costs are high, merchants pay third parties $35bn a year to service credit cards tied to loyalty points. The scope for blockchain to deliver savings is wide open. Improved ease of use . Customers get frustrated with rewards schemes because they often end up with too many accounts, each with too few points to meaningfully redeem. Blockchain can provide the opportunity to centralize loyalty rewards, making it easier for members to enjoy their rewards, consequently encouraging loyalty.

. Customers get frustrated with rewards schemes because they often end up with too many accounts, each with too few points to meaningfully redeem. Blockchain can provide the opportunity to centralize loyalty rewards, making it easier for members to enjoy their rewards, consequently encouraging loyalty. Increased availability. Loyalty programs are traditionally opaque systems proprietary to their owners. Blockchain can open up access to loyalty programs, drawing in more commercial participants. At the same time, the openness and efficiency of blockchain mean that members do not have to wait for rewards to credit, often an issue where the program owner must credit points for money spent at independent merchants.

A theme quickly emerges: blockchain is adept at solving many of the challenges experienced by transactional networks that are hidden behind corporate walls – such as loyalty programs. Apply blockchain to loyalty programs and these networks become cheaper to run, more available and easier to use.