What Is a Loyalty Program?
The idea of a loyalty program is designed as a marketing technique.
Merchants use this technique as an encouragement to customers to patronize their products or services. Loyalty programs usually require customers to register so they can gain commitment points in every purchase or usage in merchants’ services. Some loyalty programs allows the customers to use their acquired points on accessing new services and products. It can also be used for discounts and even get free merchandise. Other loyalty points can also be used as regular flier miles of airlines, hotel points and restaurant points.
Why it is important?
Loyalty program helps any business on keeping their customers to continue patronizing their product or service.
It is more costly if business focuses on getting a new client than selling products or service to the current customers. As the figure shows, it is between 5 and 25 times more expensive. Therefore, offering rewards like loyalty programs is a good idea to pleased existing customers.
Are loyalty points important?
Yes they are.
According to 2017 Colloquy Loyalty Census Report, sign-ups in loyalty programs increased by 15% between 2015 and 2017. This development rate that was recorded in 2015 is 26% therefore, subscription sign-ups progressing slowly. Professionals concluded that abundance is the main reason of decreasing interest of customers. Having a lot of loyalty programs makes an average consumer to hardly monitor each loyalty program they sign-ups. In this case, consumers had the difficulty on acquiring enough points to get the benefit of the loyalty program. Based on Maritz Loyalty Marketing report, 70% of consumers quit on loyalty programs because of the very slow progress on accumulating enough points for redemption.
Consumers found loyalty points not urgently important and don`t mind not coming back. In this case, this will lead to more expense in selling their products and services. Guaranteed increase in consumers retention rate can be possible if making reward points more critical to consumers that it will be easy for them to actively take part.
So Blockchain can include them worth?
Sure it can! Blockchain can decentralize and put back together the broken loyalty benefits gap. As a decentralized network, a good result is still expected on benefit points.
Elements, a new cryptocurrency is aiming to do such. Element cryptocurrency is using X11, a chained hashing algorithm that works for “Proof of Work” calculations. This new cryptocurrency has the main goal to pleased various merchants as the mainly loyalty cryptocurrency.
Elements as a “proof-of-work” cryptocurrency, can be mined with someone who has a system in a computer that has required processing power to do such. Miners can use their accumulated loyalty coins for shopping and buying tickets.
How do merchants benefit from it?
Basically, loyalty coins make it easy for a business to build interaction on their clients.
Merchants that are giving commitment points for consumers can somehow lead them to be valuable. Consumers will find those points helpful and will actively participate to accumulate points. Competitors will take in consideration on how they will encourage consumers to sign-up and the value of loyalty coins they can offer.
Universal commitment cryptocurrency can help merchants to lessen their loyalty liability. Liability is what a company’s obligation to other services or individuals. This is one of the entries in its balance sheet . Commitment points will be recorded as a liability because it is like a promised lesser rates and complimentary items to consumers. If each consumer always redeem their points, it will badly affects the company’s financial books. Since Mining is open to everyone, like in Elements coins, merchants could mine as well and provide loyalty coins to consumers. They can also benefits from the commitment coins of other merchants.
If you spend a traditional commitment points, merchants will consider this as no value. Therefore, merchants can take more advantage because a Blockchain-based currency can be exchanged for a fiat currency that will help them recover with loyalty points’ few sales.
How is this valuable to miners?
Rewards are also given to miners.
Scientists at Research and Markets predict that by 20123, the market size of the loyalty management market would reach its worth at $6.2 bln. Cryptocurrencies monetary value and great benefits might make consumers accept it at once and will definitely increase its worth.