Blockchain and Customer Loyalty Programs: Are they Made for Each Other?

Blockchain and Customer Loyalty Programs: Are they Made for Each Other?

Customer retention is the key aspect to sustain customers with business for a long time. There are various campaigns planned in order to retain customers in companies. The loyalty program is one a major campaign that is planned almost by every segment. Loyalty programs have burgeoned across different segments like travel, retail, financial services, and other economic sectors.

However, even being a classic approach, customer loyalty programs are not able to realize their full probably due to low client withholding and redemption rates, time delays, and higher costs.

That’s when Blockchain comes to rescue. Blockchain is one digital technological breakthrough that revolutionizes the aspect of how we think of customers, money and transform the enterprises to a whole new level. Loyalty rewards industry is one true contender that when aligns itself to blockchain is credit with immense digital benefits.

In current loyalty programs, there is labyrinth of managing multiple point systems and redemption options. This often leads to burdensome processes for exchanging points with program partner and associates.

The easiest method to make customers a loyal user of the brand lies in a great marketing initiative that is meant for customers and that reap benefits to customers. The loyalty program is one unruly innovation that needs a strategy for easy breezy flow.

Blockchain being a regionalized network, can disperse and amalgamate the disoriented loyalty rewards space, making reward points more valuable, justifiable and worth in the end.

Fondly known as the technology behind bitcoin, blockchain enables a record of multiple transactions to be shared across a series of a network of participants. When a new transaction occurs (issuance of loyalty points, redemption, or exchange), a unique algorithm-generated token is created and assigned to that operation.

Tokens are grouped into blocks in a stipulated measure of time and distributed across the multiple networks, updating every record at once. New block series are validated and linked to older records, creating a strong, secure, and verifiable record of all transactions, without the need for intermediaries or centralized databases.

It’s a relief for users who juggle through an array of loyalty programs. For such consumers, blockchain provides an instant allocation of points, ease of redemption and exchange for multiple loyalty points simply over a single platform.

With the help of a mobile app development company, you can create applications powered by blockchain that enable customers to extract the maximum benefits of customer loyalty programs, while also enabling enterprises to improve their customer retention rate.

Source: Colloquy, The Economist, Loylogic desk research

Benefits for Loyalty Reward Programs

Cost Drop:

There is no doubt that blockchain does incur some possible upfront expenses; still it proves to be a cost saver at three identifiable major levels. Those include blockchain application management, transactional, and customer management.

The blockchain based application loyalty reward program reduces application management costs that support feasible, secure, trailed, transparent transactions altogether. This automatically reduces costs aligned with processes errors and fraud.

Real-Time Process:

Blockchain covers the possibility to enable a transaction that can be recorded and availed by multiple involved associates and parties in real time basis. This increases the chances of loyalty rewards program organizers to credit points faster and in real time instantly.

Fast and Cheap:

The regionalized methodology of blockchain minimizes the complications between a buyer and a merchant. Many enterprises make the transactions complex by simply involving multiple parties complicating it further by adding additional stages to it.

This also puts a lot of run in financial transactions through a complex network of vendors, banks and payment processors. Blockchain removes all unnecessary third parties associates by allowing cheap and timeless peer-to-peer transactions.


Blockchain has one most appreciated feature and that is Transparency. is because blockchain follows a distributed public record system. It becomes easy to track every bit of information of a transaction happening in the planned loyalty reward campaign

For example – In e-commerce reward campaigns, brands usually keep all information by themselves and charge any merchant to pass the information ultimately. Blockchain easily solves the issue by ensuring data visibility and allows all involved associates to access and view the data for free.


Loyalty reward campaigns have become an integral part of the brand planning and customer retention, acquisition strategy. With blockchain involvement reward campaign, consumers no longer have to worry about managing different reward programs that cater to complex rules on earning and redeeming points.

They now enjoy the benefit of having a centralized and simple rewards system allowing them to quickly redeem their points from anywhere at any point in time.

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