The blockchain has been touted as a technology to revolutionize a lot of things — moving money, clearing trades, making contracts smart and enforcing terms. But curing what ails loyalty?
That’s the view of Ron Quaranta, COO of loyyal and chairman of the Wall Street Blockchain Alliance. In the latest installment of Topic TBD, Karen Webster spoke with Quaranta about how blockchain is just what the doctor — or anyone interested in attracting and retaining an engaged consumer — ordered.
The question at hand: how to improve the experience in a manner that promotes both customer stickiness and payback for the banks and other institutions putting time and money into those efforts in the first place.
“The loyalty industry needs a lifeline,” said Webster, by way of introduction, noting studies that have concluded that many loyalty programs rank poorly when measured in terms of both innovation and customer satisfaction.
Quaranta agreed, stating that the loyalty and rewards marketplace is one that remains “highly fragmented, creating both lost revenues and reduced customer loyalty.” Quaranta cited a study that reported only 13 percent of consumers surveyed said they were satisfied with their loyalty offerings and 64 percent of respondents said they wished to have some level of personalization in the rewards and loyalty offerings from their cards and banks. Personalization, he suggests, is all about where and how consumers can use their points to get what they might like to buy — anywhere, including at the physical point of sale.
That, Quaranta said, is what makes the blockchain so appealing. Blockchain can innovate loyalty, he said, because it can eliminate the fragmentation that plagues the industry and help it scale. He contends that the loyalty industry, as it now stands, “has no universal network,” so it can’t offer that kind of redemption reciprocity given its legacy systems underpinnings. And if it can, it is months and even millions of dollars in the making.
Blockchain, on the other hand, he said, allows for the “interoperability of data and the security of maintaining consumer privacy.” That, he said, lets companies promote their brand, create stronger partnerships and strengthen consumer loyalty.
It’s the concept and execution on interoperability that can help usher in a truly effective loyalty and rewards program, said Quaranta — and in short order. He said that blockchain technology and smart contracting supports a sort of “pop-up” partnership so that loyalty providers can provide customization and partner with the firms that make the most sense for the customer.
That can help eliminate the silo mentality and reality that dominates the current loyalty operation, which, for example, could, at a large bank, run the gamut from employee rewards programs, multiple types of rewards programs for customers and even points for non-card-related services, like mortgages.
A blockchain-supported loyalty platform, he continued, can keep all of those programs “under one umbrella, and this can mean high levels of issuance and redemption and greater value for end customers.”
That’s what loyyal has built, Quaranta said, and is now testing with blockchain in the loyalty arena, with “overwhelmingly positive responses.” He also confirmed that more than 40 processors have been working in tandem with the pilot program to get things up and running.
Quaranta also said that the blockchain can help leverage knowledge of customer preferences in real time and even enable “end users to become the program operators … with the ability to exchange airline points to some level of restaurant points,” which then implies that the end user can choose what is most likely to engender satisfaction and loyalty.
Loyyal’ s partnership with the government of Dubai, Quaranta said, uses blockchain’s capabilities to push the loyalty envelope. This program is intended to streamline loyalty and reward programs for the city, the fourth most visited in the world. The pilot program is slated to go live in the fourth quarter of this year and will help promote access to cultural events. Eventually, he said, the program will allow for a “personalized and customized” experience that “remembers what consumers have done and where they have been and what they have enjoyed the most” — adjusting the rewards program (and offerings) accordingly.
“Interoperability” via blockchain, said Quaranta, “offers new ways to generate revenues and new ways to engage customers in ways that had not been done before.”