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Why blockchain will innovate and grow the loyalty industry


Businesses recognise that a loyalty programme is an important tool; for some companies, it generates up to 20% of profits. What’s more, customers love collecting loyalty points and getting rewards.

In the UK the majority of the population (77%) are members of a loyalty programme. Nearly half of them believe that the programme encourages them to be loyal to the brand.

Earning customer loyalty

Unfortunately, the industry has stagnated, and a large number of look-alike programmes mean that customers get bored.

Despite huge participation and increasing membership, one drawback with current loyalty points is the time it takes to reach the redemption threshold, with values too low to be exciting.

Moreover, the current methods of loyalty points exchange are very limited and expensive. As such, there is scarce opportunity for a customer to pool their points for a higher-value redemption.

As a result, over $360bn worth of points lie unredeemed worldwide, ?6bn in the UK alone.

What customers want

Brand loyalty never died, there's just a premium on it

What customers are looking for are personalised, easy and hassle-free experiences. They want to feel truly rewarded for their loyalty and enjoy the power of choice and flexibility.

The good news for the loyalty industry is that there is plenty of scope for innovation and competition, and the opportunity for increased and improved interaction with the customers.

Customers want to manage all their loyalty cards in one place, to view their available offers, vouchers, and gift cards, and to exchange and pool points for a higher-value redemption; for something they really want, something that feels like a genuine reward for their loyalty.

Go digital

To facilitate this loyalty, programmes need to go fully digital. Most of the small and independent businesses use paper cards and stamps, but customers tend to lose physical cards or forget they have one.

Additionally, paper loyalty cards don’t generate any customer insights: what products they favour or how receptive they will be to various offers. However, A digital loyalty programme and/or loyalty app can.

Re-engaging customers

A potential way to re-engage customers through loyalty programmes is to provide flexibility and more options on redemption by allowing exchanging points between programmes.

For example, a small independent caf in Shoreditch allows its loyalty points collected from the purchase of coffee to be exchanged for Airmiles, a spa day, or money off supermarket shopping.

By allowing an exchange, this caf increases the perceived value of their loyalty points. This particular caf will be more appealing than a caf that allows customers to only redeem points internally.

However, exchanging loyalty points has, to date, been time-consuming and expensive meaning that customers have to sacrifice a lot of their points” value.


But with advancements such as blockchain technology, this will change.

Blockchain allows the creation of a secure network of loyalty programmes, facilitating the instant and effortless exchange of points.

For example, solutions like LoyalT use blockchain technology to cost-effectively integrate any business, of any size, from any industry into a single loyalty points exchange network.

These solutions allow businesses to extend more value to their customers with a real-time loyalty points exchange facility while marketing their business to customers beyond their own programme members.

Our Shoreditch coffee shop can essentially offer Airmiles, or points of another business by simply opening up to an exchange.

Cyber Monday

In return for offering an exchange of points, businesses will benefit from deep insights on customers” shopping habits, helping them generate more customer engagement through precision marketing.

SMEs especially can gain from being a part of an exchange solution for loyalty points.

Not only can they access a massive pool of customer data to help run precision marketing, but they can also set up quickly and easily, facilitating point exchanges with huge global businesses at a very competitive cost.

Small businesses, like our coffee shop, can set up a digital loyalty programme and almost immediately start offering loyalty points on every purchase and open up exchange to some of the highly-desirable loyalty programmes.

"Buy it for life" trend could ease pressure on retailers looking to boost customer conversion and loyalty

The beauty of a loyalty network running on blockchain is that businesses own and control the data of their customers, minimising privacy concerns. Blockchain is highly secure and the data is encrypted. Further, advanced digital contracts keep information secure and private. Since blockchain automatically creates an unalterable ledger and keeps points wallets incredibly secure.

Small businesses

With large companies using AI and Machine Learning to transform loyalty programmes small businesses need to rethink their own approaches to rewarding customers.

Integrating different programmes across brands into a single, consolidated loyalty network will provide aggregated data and an overview of customer spend and preferences.

The quid pro quo for customers is a choice of where to spend their points and exchanging points to meet a higher redemption value.

This transformation means that small business can deliver more value to their customers by setting up to an exchange, making the process easier for customers, and helping create exciting personalised offers.


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