The world of cryptocurrencies is attracting an increasing number of investors. Bloomberg suggests that over half of the crypto holders at the end of 2021 brought their virtual currencies in the last 12 months. This demonstrates that most crypto investors are learning about the virtual asset market as they are building a space for themselves. Another study conducted by LRW and Visa called “The Crypto Phenomenon: Consumer Attitudes and Usage” revealed that the most significant factor motivating people to buy, own, and invest in cryptocurrencies was “building wealth” and seeing crypto as the “financial way of future.” With the driving interest in crypto, many major companies (including credit card companies) are linking their loyalty programs to cryptocurrencies.
Crypto rewards provide a useful entry point for people interested in exploring the crypto domain. Crypto rewards are similar to cash-backs, but they deliver a promise of rewarding cryptocurrencies. Compared to traditional loyalty programs, customers can now get services across various goods and services at once. Crypto loyalty programs integrate well with the existing loyalty programs across multiple stakeholders, managers, sellers, and system administrators. Such programs provide easy entry points for consumers and organizations to enter the crypto industry. It serves as an opportunity for people to learn about the crypto market.
Since cryptocurrencies eliminate the intermediaries, brands offering crypto loyalty programs benefit from customer trust as those customers gain crypto rewards. This means customers earn all the crypto cashback across different vendors simultaneously. Brands benefit from crypto rewards as they eliminate the costs of running various loyalty programs across various categories. Thus, crypto loyalty programs offer customers access to multiple reward programs whose benefits come directly into their single crypto wallet. This means they integrate all the various rewards into a single wallet address. By granting customers such unprecedented benefits, crypto rewards programs can serve to maintain customer loyalty.
Brands Adopting Crypto Loyalty Programs
Numerous leading brands are adopting crypto loyalty programs. Even the loyalty programs domain is evolving with the entry of cryptocurrencies. Several brands have shown the case of successfully adopting crypto loyalty programs:
1) Singapore Airlines: It first launched its loyalty program extension called KrisPay. It allowed customers to convert their air miles into KrisPay miles they can spend while buying from many partner outlets. The best part of the program was that they could easily convert their air miles at several partner stores. Then, Singapore Airlines launched another extension of KrisPay called Kris+, which claims to be spread across 650 retail stores and 150 partners. Its user interface offers customers a personalized shopping experience as it learns from their previous purchases. By July 2020, it caught up with the crypto loyalty programs offered by leading competing airlines like Emirates Skywards Reward Program and Russian Airlines S7.
2) Chanticleer Holdings: This is an investor in many small burger chains in the US. It partnered with a major blockchain infrastructure that facilitated a loyalty program. Under the program, buyers can earn a unique cryptocurrency called Mobivity Merit if they purchase from any partner brands. This program encouraged more sales and drove more customer loyalty.
3) American Express and Boxed: American Express launched a blockchain program in partnership with Boxed, an online wholesale retailer. When a buyer purchases something from Boxed, the blockchain stores that information without exposing the buyer’s personal records. This transaction triggers the yield of a smart contract that awards points in a backend loyalty-based system.
Will Crypto Rewards Replace Traditional Loyalty Programs?
This is a question that many of the readers will be thinking about. Given the spectacular growth potential of cryptocurrency, it is not too far of a stretch to say that crypto rewards programs might replace traditional credit card rewards and cash back. Since crypto rewards add significant value for its customers, it will drive customer loyalty and trust. With the rise in crypto popularity, many major credit card companies have started offering crypto rewards in popular cryptocurrencies like Bitcoin or Ethereum. This trend could indicate the unification of credit card companies across crypto rewards programs.
A Crypto rewards program can serve as an essential tool to engage customers and build brand loyalty. It helps retains old customers and find new ones. This is one of the reasons why the general loyalty program industry has become so popular. One of the most significant advantages of crypto loyalty programs is that they can be exchanged for fiat currencies or any other cryptocurrencies. This means that the customer is not bound by how they have to spend their rewards. They can spend them at once or save them in their digital wallet for future use. Unlike traditional points-based loyalty programs, crypto rewards do not have an expiry date, so customers get more flexibility to choose how they want to spend their crypto.
Another advantage of crypto rewards programs is a higher level of anonymity and privacy. In a traditional rewards program, the company providing the benefits usually has access to your personal data (including name, email address, and phone number). They can spam you with unnecessary advertisements and even sell your data to third parties. This is impossible in the case of crypto rewards programs as your transaction details are linked to your digital wallet address, and it will not be easy to find a real-world identity just with the wallet address.
Lastly, one of the most critical advantages of crypto rewards is that their value may increase over time. This quality makes them extremely lucrative for customers who want to experiment with virtual currencies without really entering the market directly. However, a drawback is an abrupt dip in its value due to market volatility. This is why most companies that offer crypto rewards have a fixed value to save customers from market volatility and prevent them from losing all their rewards.
Crypto rewards programs have the potential to serve as a vehicle of empowerment for the entire crypto industry as they attract many new customers who are looking to invest in the crypto market. Giving them first-hand experience with crypto, such reward programs give impetus to the crypto industry by encouraging greater adoption.