Estimated reading time: 2 minutes, 35 seconds
By now, many people have heard of blockchain technology. However, they may not be fully aware of all the ways this new tech is, or soon will be, changing the world around us.
In our series, Blockchain In Action, we’ll take a look at some real-world uses for this digitized and decentralized public ledger. We’ll discover how it can potentially help various industries become more profitable, increase efficiency, and, perhaps most importantly, make our everyday lives easier.
The retail industry and their rewards programs may be going through a revolution. In this installment, we’ll take a look at how blockchain and loyalty rewards programs may be improved and work better for the industry!
Why loyalty rewards programs are important
The first and most obvious question here is, “What makes loyalty reward programs so important to retailers?” It’s because, depending on the specific industry, it costs companies between 5 and 25 times more to acquire a new customer than it does to sell to an existing one.
Moreover, on average, repeat customers spend up to 33 percent more than newbies. Another benefit to signing customers up for these sorts of programs, is that it allows business to acquire data about their shopper’s behavior – invaluable information for any company.
So if you’ve ever wondered why the cashier at your favorite store is always trying to get you to sign up for their rewards card – those are the reasons.
Motley Fool author Sean Williams explains how blockchain could help make these programs more appealing to customers, which in turn means for cash for the brands promoting them.
“By creating a token-based system that rewards consumers, and storing these tokens within a blockchain, it would incentivize consumers to return to a certain store or chain to do their shopping. It would also eliminate the fraud and waste commonly associated with paper- and card-based loyalty rewards programs.”
A new way for rewards systems
As it turns out, there is a new cryptocurrency called Elements that is very similar to what Williams described.
At present, shoppers who enroll incentivized programs need an individual card or account for each merchant they do business with. However, Elements is looking to change that.
Cointelegraph author Craig Adeyanju explains,
“The main goal is of the Element cryptocurrency, which uses X11, a chained hashing algorithm that is used for “Proof of Work” calculations, is to become a universally accepted loyalty cryptocurrency given and accepted by multiple merchants.”
This blockchain-based altcoin could potentially help unify the fragmented consumer reward space – not to mention free up some room in purses and wallets around the globe – by eliminating the need for cumbersome cards.