University of The Cumberlands Leverage Blockchain for Loyalty Programs Discussion

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Computer Science

University of the Cumberlands

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What is the central justification for companies to leverage blockchain for loyalty programs?

Customer loyalty and commitment are one of the most significant measurements of the success of the contemporary retail company. Almost every successful company today uses loyalty programmes of some kind in order to recruit new consumers and thank previous customers for their support.

Consumers discovered that loyalty points were not essential immediately and don't worry about returning. In this scenario, you will spend more on the sale of your goods and services. A guaranteed rise in customer retention may occur if incentive points are more important to consumers and are easier for them to engage actively.

With only one bundle to collect all rewards in one integrated financial infrastructure, consumers would not have to remember each programme's regulations and the reimbursement possibilities and vendors would not have to worry about their reward points' liquidity.

What is one common challenge the videos both shared for companies to understand when looking to leverage this technology for customer loyalty programs?

Often the loyalty programme is seen as the marketing department's duty. The business has to evaluate the loyalty programme worldwide, it is a tool to retain consumers, but it is not the marketing sector.

Some businesses see the job of "customer loyalty," which is why the company is already customer-oriented, when they have a loyalty programme.

Consumers usually comprehend loyalty points, but the program's intricacy makes it challenging. However, most customers do not know tokens and cryptocurrencies. This excitement may generate more value perceived (and hence higher loyalty) or disable customers (Rijmenam, 2019). In any event, crypto tokens do not have consumer acceptance problems. Businesses utilising tokens will need to overcome this through training and intelligent user experience.

Loyalty programmes may also offer companies with a great deal of information about customers involved to customise goods, services and marketing efforts. Consumers are nevertheless more sensitive than ever about disclosing their personal data. This sensitivity is expected to grow.

What do you think is a way for companies to work through those challenges?

The advantages that Blockchain loyalty programmes may gain are: cost reduction, friction reduction in points redemption, real-time procedures, enhanced system security, and new and innovative business possibilities.

Reduction of costs

Although blockchain entails costs at the outset, we think transaction cost reductions may be seen at three major levels: system management, transactions, and customer acquisitions. A loyalty loyalty-based programme is supposed to decrease system administration costs by means of intelligent contracts reporting safe, monitored and transparent transactions into legacy systems, lowering the cost of mistakes and fraud.

Enabling a system without friction:

With blockchain, an airline no longer requires a full package to sell its passengers in a partner hotel that has limited infrastructure to handle such loyalty programmes (İnce, 2018). What it is going to accomplish is pay the client's rewards in the same digital wallet he uses to pay for these points at the hotel. By means of a decentralised technological solution, loyalty suppliers may choose how and with whom they are using their benefits, yet from a consumer point of view (their ability to access and manage them is virtually non-existent).

Make the process almost real time

Blockchain may enable a transaction to be recorded and accessible in almost real time by many stakeholders so that a loyalty rewards programme provider reduces the amount of papers it has and therefore loan points faster.

Ensure a secure atmosphere

Blockchain provides a time stamped and unchanging distributed database entry of each transaction, making it easy to track every transaction and its record, but also irreversible. This eliminates duplication of expenditure, fraud, misuse and any other manipulation.

References:

Bülbül, Ş., & İnce, G. (2018, September). Blockchain-based framework for customer loyalty program. In 2018 3rd International Conference on Computer Science and Engineering (UBMK) (pp. 342-346). IEEE.

Rijmenam, M. A & Ryan, P. (2019). Blockchain: transforming your business and our world. London Routledge.

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Week 5 discussion reply 2
Hello, I commend you on how you have explained the various reasons Blockchain loyalty
programs are preferred. The technology is indeed in its early stages of ad...


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