Why Loyalty Points & Rewards Should Be Tokenized
By: Al Burgio, Founder, DigitalBits.io
Loyalty programs are as old as American commerce. In the late 18th century, American retailers gave out copper coins to loyal customers. Stamps were a popular form of reward in the 19th century. The late 20th century introduced modern loyalty programs. Modern loyalty programs now include a variety of schemes from airline points to retail cards to coalition programs.
But these modern programs have the ability to frustrate consumers. Many points are difficult to redeem and lack liquidity. For all the advances in loyalty, consumers still experience friction from their loyalty programs.
But blockchain technology has the potential to change the game. By tokenizing points, businesses can provide a whole new level of value to loyal customers. Further to this, by tokenizing on the DigitalBits blockchain, these points will be transferable, tradeable, and secure. Here’s why loyalty points & rewards should be tokenized.
Tokenized Points Are Tradeable
When enterprises tokenize their loyalty points on the DigitalBits blockchain, they provide the opportunity for those points to be 100% portable/transferrable. The DigitalBits blockchain, for example, allows users to trade these digital assets (e.g. tokenized points A for tokenized points B) directly on-chain within the decentralized DigitalBits blockchain.
This means a user that collects airline points, can swap these points for other tokenized points on the DigitalBits blockchain. Airline points could be traded for hotel points. Hotel points could be traded for grocery store points, or even some other digital asset. This provides instant liquidity to a loyalty program.
Higher Perceived Value
By tokenizing on the DigitalBits blockchain, these reward programs have the potential to enhance the perceived value of their loyalty points and rewards. Programs that provide frictionless on-chain transfer and trading between digital assets may be valued higher than competing legacy programs. Imagine having the choice between two grocery store reward programs. Both Grocery Store A & B provides points that can be redeemed for in-store rewards like discounts or certain products, however, the tokenized points issued by Grocery Store B also allow you to trade your points for any other tokenized points available on the DigitalBits blockchain. Which Grocery store points seem more valuable to you? By offering something with a higher perceived value, will it drive more revenue for a business?
Tokenized Points Are Secure
The DigitalBits blockchain network is able to also enhance security for a loyalty program system. Users don’t need to have a login to access a centralized system of a loyalty program operator when using the DigitalBits blockchain. Because these tokenized loyalty points exist on a decentralized blockchain system, the hacking of a centralized system doesn’t result in various program members having their loyalty points compromised. The user is also able to directly access their account using a private digital key and in effect directly hold custody of their loyalty points.
Join the Next Wave
Blockchain has powerful use cases for every major industry, including loyalty & rewards. Join the next wave of the Internet. Tokenize your existing or new loyalty program on the DigitalBits blockchain. Learn more at digitalbits.io.