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Building Customers Rewards Program With Blockchain

Coca-Cola has always been a master of branding and innovation when it comes to marketing. In 1887 Coca-Cola was the first company to create a handwritten coupon offering consumers a free glass of Coca-Cola. Between the years of 1894 and 1913 about 1/9th of Americans had received a free Cola. This method is credited to Coca-Cola being in every state by the year 1895 and one of the most well-known international brands today. By the 1900s these coupons were being applied to the cereal industry changing what Americans ate for breakfast. When the Great Depression came coupons instantly became a tradition as families struggled to afford the basic necessities. By 1992 about 7.9 billion discounts had been granted by coupons.

Even before coupons were a thought, customer loyalty programs were attracting new customers and bringing previous customers back. In the 1700s retailers were giving customers tokens with purchases that could be redeemed at a later date for future purchases. Though this method quickly proved itself to be the most cost-effective customer acquisition method, the tokens became costly. By the late 1800s stamps replaces copper tokens and proved themselves to be much more cost-effective. Green Shield stamps was the first and largest retail loyalty program. Green Shield stamps awarded stamps for purchases at certain retailers and allowed customers to redeem these stamps with catalog purchases. Box tops and other such programs followed suit in the 1900s as brands quickly adapted their own programs. By the 1990s loyalty cards lowered the cost of customer acquisition drastically, allowing for a much cheaper and easier way to keep track of points. As the internet and IoT grew, these card programs became much more popular and cheaper for retailers to use.

Rewards Programs Today

71% of consumers say that loyalty programs are a meaningful part of their relationship with brands. Building a meaningful relationship with your customer is the most important part of brand building. Customers who have a relationship with a brand are more than 50% likely to refer that brand to a friend or family member. Word of mouth is still king! In total 70% of consumers say that they are more likely to recommend a brand with a good loyalty program.

86% of shoppers said they’ve joined a loyalty program to collect points for rewards. If the majority of shoppers are joining rewards programs for points, then stores without loyalty programs are in the minority. Another great number is that 75% of shoppers claim they favor companies that have a some kind of rewards program. This means that by not having a loyalty program you are automatically limiting your favorability to a mere 25% of the market.

95% of loyalty program members are looking to engage with brands via new high-tech solutions like augmented reality and digital loyalty programs. This digital trend is a good thing for retailers. Cards are expensive to manufacture, replace, and require costly systems that have high fees.

Digital Shift

Since the world wide web’s debut in 1990, the way we shop, do business, and communicate with brands has changed drastically. Today Millenials now make 54% of purchases online with Amazon accounting for more than half of online purchases. How did Amazon accomplish such success? It could be something to do with the fact that 95 million people in the USA have an Amazon Prime Membership. Amazon Prime for those who don’t know is Amazon’s membership program that provides many perks to its loyal members. There is no doubt that consumers are moving online and they expect their loyalty programs to do the same. Backing this up in a report done by Brand Keys, the three brands that topped the loyalty leaders list in 2018 are Amazon, Google, and Apple. All of these are digital companies.

The Blockchain Revolution

Although, rewards programs have drastically decreased in price since the copper token days digital programs are still costly. There are setup fees, monthly fees, users fees, and transaction fees all cutting into your profit. Keeping customer data safe has become a top priority and costly endeavor for businesses. Most programs are not connected and require a different program for coupons, points, rewards, referrals, and other aspects of the overall loyalty system. Blockchain brought us bitcoin and all of the other cryptocurrencies on the market, it also brought us many solutions to modern-day digital problems.

Now blockchain and mobile wallets are disrupting the way companies do rewards. Blockchain is cutting out 3rd parties and giving full control directly to businesses. Blockchain is a new technology that is creating decentralized and encrypted programs. It is much faster, much more secure, and transparent; everything that the current rewards system needs. Blockchain also has brought us smart contracts which, in simple form are encrypted digital contracts.

Why Blockchain is perfect for the rewards industry.

  1. Secure. Blockchain is more secure than any previous technology. With the use of smart contracts and blockchain; customers data is protected like never before.
  2. Fast. Blockchain, if implemented correctly cuts transaction times down to mere seconds, allowing for more accurate reward programs.
  3. Efficient. Reward programs have billions of transactions and very large amounts of data that needs to be stored. Blockchain brings efficiency unlike anything we’ve seen before and this means huge cost savings.

Custom acquisition has always been difficult. Rewards programs still hold the best ROI and have the greatest retention rate. Blockchain is making the rewards program even more cost-effective, allowing you to take control of your rewards program completely.


Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 15 October, 2019, 13:29Be the first to give this comment the thumbs up 0 likes

Control is certainly one benefit of a blockchain-based loyalty program. Such a program can also overcome one of the biggest hurdles to performance of current generation of loyalty programs, namely, “too many loyalty programs, too few reward points”, as I highlighted in How Blockchain Can Crack The Holy Grail Of Loyalty Programs.

Paul Shumsky

Paul Shumsky

Technology Advisor


Member since

10 Sep 2019



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