Loyalty programs has long been a staple in the business world, offering incentives to customers for their continued support. According to Fortune Business Insight, the global loyalty program management market size stood at USD 2.47 billion in 2019 and is projected to reach USD 10.02 billion by 2027, exhibiting a CAGR of 19.9% during the forecast period. However, the current state of loyalty programs is plagued by a lot of issues.
Let’s dive deeper into each issue to gain a better understanding:
- Complex: Modern marketing uses loyalty programs to build brand loyalty. However, this popularity has led to complexity. However, the increasing popularity of these programs has led to a rise in complexity. The once simple loyalty programs have now transformed into intricate webs of rules, tiers, and points as companies strive to provide more benefits and outdo their competition. The simplicity that made these programs enticing has been buried under layers of confusion, causing clients to struggle to understand their benefits and redemption processes. Businesses need various resources to operate and maintain these complicated services, which frustrates consumers.
- Non-Transferable: While the intention behind making loyalty rewards exclusive to individual customers may seem logical from a business standpoint, it creates a negative experience for the customers themselves. Customers want flexibility and freedom, and being tied down to a single brand undermines that desire. It leads to frustration and a feeling of confinement; making customers less inclined to participate in the program in the long run. As a result, the non-transferability of loyalty rewards becomes counterproductive for companies. Rather than fostering genuine loyalty, it hinders growth as dissatisfied customers seek alternatives with more customer-centric reward programs.
- Lack of personalization: Consumers today prefer customized experiences, hence generic, one-size-fits-all awards fall short of their expectations. Loyalty programs that fail to adapt to individual preferences can leave users with a surplus of points that don’t align with their specific needs or desires. This disconnect leads to a subpar customer experience. Without personalized rewards, users might find themselves unable to redeem points for items or services they truly value, and the inability to sell or transfer those points further worsens the situation. In the end, this creates a feeling of waste, which disenchants customers and lowers their motivation to actively engage in the loyalty program.
Blockchain technology is changing the game for customer loyalty programs. By utilizing the decentralized nature of blockchain, these programs can become fast, flexible, and fraud-proof.
This innovative technology allows for the easy transfer of loyalty points between different brands or exchanges for digital assets. Customers no longer have to worry about accumulating points that can only be used in limited scenarios. Additionally, blockchain enables businesses to offer personalized rewards based on customer preferences and behaviors. By analyzing securely stored user data on the blockchain network, businesses can offer incentives that truly resonate with their customers.
Ultimately, this frustration can result in lost revenue for businesses, as customers may be less likely to make repeat purchases or refer others to the brand. To prevent this undesirable outcome, companies should consider adopting a more tailored approach to their rewards programs. With blockchain, loyalty program transactions become more transparent and trustworthy. The immutable nature of blockchain records makes fraudulent activities like double-spending or tampering with point balances virtually impossible. The future holds immense potential for personalized rewards that truly engage customers and foster trust between businesses and consumers.