Is Bitcoin about to replace loyalty programs?

Businesses have sought to retain and retain customers with rewards programs for decades. Unfortunately, these systems are fundamentally flawed and often fail to fulfill their fundamental purpose.

Today, experts believe cryptocurrency technology could eclipse and even usurp traditional loyalty initiatives, creating an intriguing set of possibilities for the future of customer relationship management.

Why loyalty programs are on the ropes

The main reasons for the slow death of loyalty programs are fragmentation and friction. Customers must have loyalty accounts with many different companies, many of which are entirely independent of each other.

Even those that are compatible with each other place a number of barriers between earning rewards points and redeeming them, which means many customers simply don’t care. This creates an additional administrative and financial burden for the companies that operate them, without actually boosting loyalty in any significant way.

Why Bitcoin is better

There are a number of reasons for the rise of crypto-based loyalty schemes, with Bitcoin being the most well-known and widely accepted asset in this context.

First of all, learning how to buy cryptocurrency is a snap thanks to the cavalcade of high-quality, properly regulated exchanges and investment operators in this space, says Sofia.

The blockchain technology that underpins crypto tokens also makes it easy to monitor and track transactions, as well as integrate them with any third-party service a business might need, including a loyalty program.

Then there is the promise of improved security and the decentralization of infrastructure which ensures that individual organizations do not need to support the purchase and maintenance of any hardware or software to host their security program. rewards. Since loyalty programs have been retired beforethe lower overhead involved in crypto alternatives is reassuring.

What matters most from the customer’s perspective

So far, the benefits of a Bitcoin-based loyalty program seem to tilt in favor of brands, but there are benefits from a customer perspective as well.

Perhaps more importantly, it is a way to introduce the concept of cryptographic ownership to a mainstream audience; one who until now was perhaps too intimidated by the apparent complexity of this market to get involved.

When brands distribute crypto rewards to loyal customers, more people have the opportunity to tinker with and perhaps engage in trading and investing in digital assets. Given that the market as a whole depends on growth coming from more people joining the fray with their capital, this is certainly important.

It is also a movement that addresses the aforementioned question of usefulness. Loyalty points earned in traditional programs tend to be inflexible and non-transferable. Bitcoin is a globally recognized currency that can be used every day to purchase goods and services in more and more places (More details).

So if customers know that the rewards they earn from brands they love aren’t an annoyance, but rather something with real, transferable value, the proportion of people using them will increase.

Is this a realistic prediction of things to come?

Of course, there’s no denying that, for now at least, Bitcoin and other cryptocurrencies have yet to overthrow old-fashioned loyalty programs.

It’s hard to predict whether they will succeed later, especially at a time when the volatility of this particular market is so remarkable.

With established loyalty programs, the value of points earned does not fluctuate much, if at all. Meanwhile, as Bitcoin can rise and fall in value by thousands of dollars day after day, the lack of certainty could prompt caution in some circles, says Time.

It will be a few more years before things become clearer, but undervaluing cryptocurrencies has proven unwise in the past.

Last update: November 9, 2022