Have you ever participated in a loyalty program? Maybe you’ve collected airline miles or earned points redeemable for discounts at your favorite store. If so, you’re familiar with the basic premise of loyalty management: rewarding customers for their loyalty with perks and special treatment. But what if there was a way to take that concept one step further? What if customers could own the rewards they earn rather than just borrow them from the company? That’s where tokenization comes in. Tokenization is a process that replaces traditional identification methods, like names and Social Security numbers, with unique digital identifiers called tokens. This makes it easier for customers to manage their rewards and opens up new possibilities for companies looking to reward customer loyalty.
For businesses, this is important because loyal customers are a good source of stable revenue, they generate almost 40% of store revenue. In this post, we’ll take a closer look at how tokenization is changing the loyalty management industry and explore some of its future possibilities.
Tokens, the Next Big Thing
In the past, companies have used points, rewards, and coupons to incentivize customer loyalty. However, with the advent of blockchain technology, a new way to manage customer loyalty has emerged: tokenization. Tokenization is helping companies- from startups to Fortune 500- create digital tokens that represent real-world assets that can incentivize customers to make repeat purchases or sign up for loyalty programs.
Tokenization has already begun to transform the loyalty management industry. Here are three ways it’s changing the landscape of customer loyalty programs.
- Increased Customer Engagement
Customers often forget to redeem their points or coupons with traditional loyalty programs. As a result, they miss out on the benefits of the program. Tokenized loyalty programs solve this problem by giving customers immediate access to their rewards. For example, when a customer purchases with a tokenized loyalty program, they can immediately receive tokens that can be redeemed for discounts or other benefits. This increased engagement leads to more loyal customers and more repeat purchases.
- More Flexible Loyalty Programs
Tokenized loyalty programs are more flexible than traditional programs. With traditional programs, companies are locked into specific reward structures. For example, a company may offer ten points for every dollar spent. However, with a tokenized program, companies can offer the same person different rewards for different actions. This means a company could offer ten tokens for every dollar spent and five tokens for every product review left by a customer. They also have the option to reward customers with tokens backed by any digital or fiat currency of their choice, or tokens with no monetary value but instead with exclusive access to discount offers. This flexibility allows companies to tailor their programs to specific scenarios and to trial numerous loyalty strategies at the same time.
Moreover, customers can earn tokens through shopping, referring friends, or interacting with a brand on social media. The tokens earned can be redeemed for rewards, exchanged for other loyalty tokens, or even encashed. This system is more effective at engaging customers than a traditional points-based system.
- Greater Security and Transparency
Tokenized loyalty programs offer greater security and transparency than traditional programs. For example, conventional loyalty programs often require customers to provide personal information such as their name and email address. This information is then stored in a central database vulnerable to hackers. With tokenized programs, personal information is not stored in a central location. Instead, it is distributed across the blockchain, making it much more difficult for hackers to access.
In addition, tokenization offers greater transparency because all transactions are recorded on the blockchain, allowing companies to track how customers use their tokens and ensure that they comply with the terms of the program.
The big question
The benefits of tokenized loyalty points are clear: they are more flexible, secure, and efficient than traditional points systems. But the big question from consumers and businesses looking to enter this space is how do I go about it or which blockchain platform is well equipped to meet my business needs and goals?
Tokenization is the go-to way for businesses looking to offer their customers more value. And with the help of a platform like Libra Incentix (LIX), it’s easy to get started.
For businesses using LIXX tokens, all the rules governing a loyalty program, such as the earning logic, redemption options, value, and expiration date, are coded into smart contracts, eliminating the administrative overhead associated with reconciliation and settlement. The LIX platform is a pay-as-you-go loyalty management system that aims to connect people to the brands they love and reward them for activities that drive consumer engagement such as; downloading a new app, following them on social media, or posting positive feedback online. Customers also have access to a web application and an Android or IOS app, allowing them to manage their accounts, check their rewards balances, use their LIXX token, and redeem discounts in the marketplace. In addition, retailers will have access to a web-based management portal to manage their accounts, edit the earning and redemption logic, manage promotions, run research surveys, and view market insight data.
This increase in value for participating in customer loyalty programs helps to create more interactions and deeper relationships between companies and their customers. Tokenization also opens up the possibility for new types of customer loyalty programs that were not possible before. With LIXX tokens, everyone can participate in an ongoing transformation of the customer loyalty rewards sector.