Across the world, business accelerators have been popping up. In the U.S. alone, the number of accelerators grew from 16 programs to 27 in 2009, to 49 in 2010, before eventually reaching 170 programs in 2014. And across the globe, there are 387 accelerators and counting, which have invested nearly $192 million in startups and up-and-coming businesses.
Startups typically are founded to solve an issue or challenge in a market or industry.
The loyalty industry, specifically, has many challenges — for instance, economic challenges related to declining customer engagement and ever-increasing loyalty financial liability, compounded by outdated technologies.
Startup loyyal has been accepted into a specific type of accelerator to solve many of those issues related to loyalty and customer incentives.
“People sitting on their hands in loyalty is no longer good enough. It’s time to look hard at this,” said Stuart Evans, managing director and EVP of global loyalty strategy at loyyal, a blockchain development company. “It’s time for a proper conversation on what new technology like blockchain brings to loyalty.”
Of course, the fundamental premise of the loyalty industry is that a company issues points to customers. However, that’s where a fundamental issue persists: Much of the time, the issuer of the points isn’t so keen on the customer actually using those points, so the issuer may try to expire them and ultimately save the cost. That expiry — known as “breakage” — is why some resistance exists in the loyalty industry against moving toward something more fungible, which is something that blockchain can do.
Recently, the government of Dubai and loyyal have announced that they’re looking to solve that issue, together.
As a New York City company with offices in London, Zurich and Dubai, loyyal was recently accepted into the historic Dubai Future Accelerators program, backed by a $275 million fund.
PYMNTS reported on the initial announcement recently. Now, as details are unfolding, loyyal expounded on what the plans are.
The Dubai government has called forth companies to “bring the future forward faster,” putting together a program that is less of an accelerator for nascent businesses and more of a launchpad for later-stage startups to take their product to market. There are seven different challenges that interested businesses can submit a proposal for.
Loyyal successfully submitted under the “Dubai Holding” challenge: Increase customer engagement by an order of magnitude and, at the same time, reduce cost and complexity by 10–20x. As a relative expert in the space focused on solving this type of challenge, loyyal has spent the past two-and-a-half years building a proprietary platform for the management of loyalty currency, which can be used across a whole host of different applications.
“The big picture vision for the proposal is to connect customer value across the whole of Dubai — as a resident, as a visitor, as a citizen — into a simple understanding of the customer and their value,” said Evans. “At the same time, this would generate far better results for the customer and increase their engagement and ultimately their happiness.”
The Dubai government has a goal to be the happiest city in the world. From that goal, Evans said loyyal saw massive inferences in the total loyalty industry, which translates to less-than-happy consumers. But the use of blockchain — and the acceptance of loyyal into the Accelerators program — may intercept that translation and turn it around.
“Blockchain is helpful from the fungibility standpoints of transferring of points and other values, but it doesn’t solve things directly from an economic point of view,” said Evans. “It does, however, mean you can connect to new partners and break into an ecosystem much easier and then address the economic challenges within loyalty and loyalty liability, specifically.”
This is not the first time loyyal has worked with the Dubai government. Over the summer, loyyal committed to launching Dubai Points, an inbound tourist program. Tourists can explore and enjoy more of Dubai.
“It’s a ‘gamified’ model with an app where you can check in at various locations, earn points and then redeem those points for different things to enjoy your trip more,” said Evans. “So, we’ve already built the platform, and we’re finalizing the number of big commercial partners for that across the different travel sectors.”
Dubai Points and loyyal’s participation in the Accelerator program are just the beginning, as the company is in the next-step investigation and ideation phase after its acceptance into the program. However, as the pilot program comes to fruition, Evans said its eye is on a bigger prize down the line. Working with the government of Dubai is just the first step in rolling out this blockchain usage across the world.
“If we can make the breakthrough, then there is a huge groundswell of pressure behind the dam wall of liability and value, which we’re trying to unlock here,” said Evans. “If we can make the breakthrough in Dubai, then the floodgates can open and the world can follow pretty quickly, because blockchain is about the network effect of broad adoption, as well as singular use cases.”