Blockchain: The link into a smarter future for loyalty marketing

Blockchain technology is already established in crypto-currencies and we think it is a fascinating technological development, with the potential to make significant step changes to the way the loyalty industry operates. But what is it? How does it work? And what impacts will it have in loyalty?


How does it work?

Best known as the technology behind Bitcoin.  A continuously growing list of records called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp and transaction, for smart use each block is recorded chronologically and publicly.

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Benefits across the board

It is thought that the future of finance will be dominated by Blockchain technologies, which will provide a traceable global currency complete with an extremely efficient infrastructure producing both cost reduction and a real change to global banking. Unlike banking, transactions are verified and approved by consensus among participants inside a network with full chronology, making the act of fraud much more difficult.

The benefits of Blockchain don’t just apply to the banking sector, it can have a profound impact on virtually every industry on the planet. Blockchain has the potential for new industry opportunities and can create real disruption for a far more globalised world.


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A game changer

Both small and large businesses are adopting the disruptive technology. ….IBM is working with Loyyal the leading Blockchain for loyalty provider who focus specifically on Blockchain infrastructure for loyalty and rewards programs. Even Amazon’s AWS billion dollar cloud computing platform is embracing the technology and is also looking to support the innovative solution with consulting partners offering a rapidly growing selection of Blockchain solutions.


What does this all mean for loyalty marketing?

The technology holds the potential to revolutionise the way and the speed in which we reward. When a new digital transaction occurs (for example, a loyalty point is issued, redeemed, or exchanged), a unique algorithm-generated token can be created and assigned to that transaction. Making the solution more effective and universal.

Tokens can then be grouped into blocks (for example, every 10 minutes) and distributed across the network, updating every ledger at once. New transaction blocks are validated and linked to older blocks, creating a strong, secure, and verifiable record of all transactions, without the need for intermediaries or centralized databases.


 Issues Blockchain can address:

Slow rewards

Blockchain can enable a transaction to be recorded and accessed by multiple involved parties in near real time, increasing the chance that a loyalty programme provider can cut through the slow turnaround times to allocate points faster. Inadvertently this more seamless and inclusive experience can help enhance redemptions and engagement whilst maximising efficiencies for loyalty programmes.

Rigid Systems

Loyalty programme providers can decide how and who uses these reward tokens, allowing them to shape consumer spend and it provides ease for the consumer with the ability to access and manage the rewards in one place with immediate results.

Isolated programmes without effective partnerships

Newly Interlinked loyalty networks with loyalty programmes will have more opportunities to offer value-added services to each other.  With close customer bases and reward platforms working together with the same technology – it creates a real opportunity to produce seamless brand partnerships, which can be bolstered and tracked by the technology.

The way in which we use partner rewards can become faster, more secure and much simpler– making it a seamless experience to come together and collaborate. For example, rewards can be packaged and sent in various forms such as loyalty tokens for points, travel tokens to be used a portable currency – creating a real flexibility. It also creates an amazing possibility to track consumers’ use of rewards and to gain further insight into the effectiveness of certain rewards allowing us to understand how we can use the data to empower further brand partnerships and reward programmes but always ensure this is completely GDPR compliant.


Segregated communities

With the ease of peer-to-peer transactions, it presents an opportunity to create a closer community and allows customers to trade points whilst providing a real basis for conversation.


 How else can it be implemented?

Gamified loyalty programmes have already begun to work sinuously with Blockchain to create platforms which reward interactions, engagements and progress with tokens delivered via the digital ledger. This allows merchants to test the elasticity of their price whilst embracing invaluable insights and preferences all delivered within a robust and efficient ecosystem.

Blockchain addresses important marketing issues such as trustworthiness, transparency and efficiency, which can revolutionise the way in which we implement our loyalty programmes. The technology presents an enormous and exciting opportunity for the loyalty industry as it unlocks huge potential for partnerships to reward, integrate and collaborate for a mutually beneficial goal of greater engagement and results.


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    Mark Lewis
    Head of Data Science