If there is one thing that the eCommerce business retailers value equally, it would be their customer loyalty. Any entrepreneur can vouch that a loyal customer is one of the greatest assets he/she can get. And underestimating its value could be the worst mistake you can make as an entrepreneur. Repeat customers generate 40% of the store's revenue. Loyal customers not only spend more but are also more likely to return and they hold a higher chance of conversion than others. With the number of competitors in the eCommerce business industry on the rise every day, it is quintessential that you build a strong relationship with your online shopping customers.
But how do you go about doing that? What is the best practice to earn your customer’s loyalty?
Based on advanced Analytics, the most obvious answer to this question would be a customer loyalty program. For those of you who do not know what a customer loyalty program is, it is a rewards program with blockchain loyalty tokens offered by a company to their customers who make purchases regularly/frequently. Almost all the eCommerce stores today have a customer loyalty program, so how can you make your eCommerce store stand out from the rest of them? Step away from traditional loyalty program and step into blockchain platforms to reap rewards from the performance of blockchains.
“77% of shoppers say discounts can influence where they shop, and 48% say they can speed up the decision-making process” - RetailMeNot
The answer you are looking for could be a Blockchain Loyalty Program. Blockchain technology has been around for a while now; however, it gained popularity with the introduction of cryptocurrency (bitcoin) by the developers of blockchain technologies as ideal loyalty point currencies. These loyalty point currencies have become customer's choice now. Blockchain is a decentralized method that keeps track of your account while making transactions. In other words, as efficient online services, Blockchain keeps track of your account at all times, from the very beginning without losing any data. In loyalty programs using Blockchain technology, you can keep track of your customer’s loyalty points from the very beginning. This means that your customers will neither lose their loyalty points nor will its validity run out. Blockchain technology could possibly perfect the customer loyalty program for you and the survey of blockchain technologies have confirmed the same. It is truly essential that the technology revolutionize customer loyalty rewards while eliminating discrepancies of conventional programs.Thus, contributing to customers satisfaction with its enhanced functionality as top loyalty schemes.
What is Blockchain?
The concept of Blockchain Technology has been around since the early 1990s. It wasn’t until 2009 that Blockchain gained popularity - when the cryptocurrency bitcoin used Blockchain as the ledger of transactions and blockchains tokens. The Loyalty scheme is widely accepted now!
The “blocks” in Blockchain are storage units where information about the transactions are stored in digital format. The information thus stored in the block may include date, time, amount, and parties participating in the transactions. Each block is assigned a unique code called a hash, making it distinguishable from the rest of the blocks. The unique hash code makes it hard for hackers to gain access. A new block is added at the end of the chain every time a new transaction is made as loyalty cards.
A good example of businesses focussed on blockchain loyalty is Boxed. In this case as a customer shops on Boxed, the blockchain stores the purchase transaction information, The data of the transaction leads to the forming of a smart contract that provides points in the backend loyalty system.
Blockchains used in eCommerce are of two types - Public and Private. The public blockchain is widely in use as it is open and lets anyone be a part of it. Hence, eCommerce Loyalty Programs use Public Blockchains because of its transparency & security. Private Blockchains are usually used by companies internally with its access limited to its members. The security of a Public Blockchain is ensured by the Proof Of Work (POW). POW ensures the following.
- The block is validated before making any change
- Blockchain is stored on multiple devices as loyalty cards
- Takes at least 10 mins to add a block in a blockchain
Every machine in the Blockchain network will have a copy of the Blockchain. Even though it is easy to read certain information from the blocks, it is near impossible to alter the data on a blockchain.
Some of the significant advantages of blockchains include the following.
- Blockchain in Loyalty Programs
Once you know how a blockchain works and its benefits, it’s not hard to imagine how it can be used to create the perfect Loyalty Program for your eCommerce store. The advantages of blockchain technology, when incorporated into a Customer Loyalty Program, can be a game-changer. Having a blockchain-based loyalty program means that it’ll be transparent, secure, and traceable. A customer loyalty program with these advantages is bound to make your customers happy. Opt for these and branded loyalty programs.
- A new customer makes his/her first purchase on your eCommerce store. As part of your Customer Loyalty Program, your customer gains reward points for his/her purchase. Imagine the customer makes even more purchases as time goes by and keeps culminating reward points. At some point in time, the customer decides to use his/her reward points. Two things can happen at this stage.
- The customer can’t access his/her reward points (Conventional Loyalty Program)
- The customer is successfully able to access his/her reward points (Blockchain-based Loyalty Program)
In this case, the customer is unable to access his/her reward points. One of the most common reasons for this is that the reward points expired or got lost during the long period of inactivity of the points. In this case, the customer has no means of showing that he/she had culminated a specific amount of reward points. This can only lead to an unsatisfied customer by the end of the day; you may have even lost a valuable & loyal customer.
In this case, the customer is able to access his/her reward points; regardless of the period, the account/reward points remain idle. It could be a month, a year, or even more, one of the advantages of the blockchain-based loyalty program is that they never expire. The data in Blockchain remains unaffected, and the transparent nature of it helps the customer in case of any confusion. This also allows the customer to culminate reward points over a long period, which can improve the user experience.
Advantages of Blockchain in eCommerce Loyalty Program
The major advantages of a Blockchain-based Loyalty Program involve seven points.
No Expiration Date
The most important advantage of using blockchains for your loyalty program is that it never expires. The most common problem with any customer loyalty program in eCommerce is that the reward points are often untouched by the customer for a long time. When finally, they decide to use the reward points; they find that it has expired. Using Blockchain eliminates this problem as all the data remains intact and accessible at any time.
One of the best things about Blockchain is that they are transparent; the customers know that the company can’t take away or change the rules of the loyalty points/tokens according to their will. This gives the customer assurance and satisfaction that they can redeem their loyalty points whenever they want.
Blockchain keeps track of all the transactions made by the customer, and because of the Blockchain’s native ledger, you already have a loyalty ledger. This means you don’t need to spend a massive amount of money to implement and maintain the program.
Blockchain-based loyalty programs are flexible as they let your customers redeem the loyalty points in smaller increments. Customers often complain about the loyalty programs having complex point accrual systems and limited rewards and blockchains provide greater flexibility which lets the customer use his/her loyalty points freely
Blockchain uses a decentralized system, which means data corruption is almost impossible. The data entries in blockchains are time-stamped and irreversible, which prevents transaction manipulation or any fraud.
The flexibility of Blockchain allows the rewards to be made in real-time, which eliminates the waiting time associated with most programs that are points-based. This means the customer can access his/her points whenever a transaction is made, using a smartphone (or any other channel: in-store, online, mobile, etc.)
Customer Lifetime Value (CLV):
Customer Lifetime Value or CLV is one of the core KPI’s for any business including eCommerce, it shows the total value of a customer to the company over his or her lifetime. A Loyalty Program whose loyalty points never expire urges the customer to shop from the same seller again and again which leads to a higher CLV. The higher CLV leads to higher financial growth (revenue & profit) as well as a higher chance for long-term business success.
Companies That Are Adopting Blockchain
As time goes by, more and more companies, B2B companies are investing in Blockchain. Although not all of them are investing in loyalty programs, it is evident that the application of Blockchain goes well beyond cryptocurrencies, digital money or digital currency. Some of the largest public companies in the world are already dabbling in Blockchain technology.
To understand the versatility and dependability of the Blockchain system, let's take a look at the list of reputable companies & brands that are adopting the tech. Forbes published an article showcasing - The 50 Largest Public Companies Exploring Blockchain.
The list includes big-time companies like American Express, Facebook, IBM, and more. Out of these companies like American Express and Singapore Airlines have already implemented loyalty programs based on Blockchain.
How Important is it to Invest in a Blockchain Based Loyalty Program?
A Blockchain-based Loyalty Program could be the solution to this problem. With the tight competition in the eCommerce industry, it is quintessential that your eCommerce store stands out from the rest.
To make your website stand out from the rest you need to bring something new to the table. And you need to make sure that whatever you are bringing to the table is relevant and promising. The fact that content-rich platform and giant companies like Facebook, American Express, etc. are investing in Blockchain shows its future potential. Yet, Blockchain technology for loyalty programs is still somewhat in its infancy. This makes Blockchain-based technology a prime contender when it comes to earning your customer's loyalty. Jim Gregg, Head of Operations at Virtina confirms on the pertinence of Blockchain as the future of e-commerce loyalty programs. Elliot Levy, Head of Delivery also emphasizes on Blockchain and its pertinence to eCommerce loyalty programs based on industry insights and customized plans.
Virtina can help you to increase your revenue, improve profit and enhance customer experience.