Loyalty programs can come with two challenges for retailers: getting consumers to sign up, and then making them feel like the rewards are worth the program. Some merchants are quick to think big to tackle these issues, offering hundreds to thousands of rewards points for the simplest of acts, such as downloading a merchant’s app. All those points come at a marketing cost and liabilities on the balance sheet, but still don’t guarantee loyal customers.
And then there are merchants that might think too small by offering smaller incentives in fiat currency, and then the problem becomes that the consumer may not perceive the reward as having enough value to earn their loyalty.
What if the solution to finding the right incentive for loyalty programs isn’t playing Goldilocks on the rewards, but offering something different than points and fiat currency altogether? How about something as uncommon as cryptocurrency? Qiibee Founder Gabriele Giancola told PYMNTS that he believes crypto rewards can be quite attractive to customers, serving as an alternative to traditional loyalty programs.
Creating Better Reward Perceptions
With crypto-based rewards systems, merchants can offer consumers branded tokens instead of cash back in dollars or points. In essence, these programs give merchants a chance to offer tokenized points – and they come with some advantages.
For one, consumers may not feel as easily devalued or shortchanged by merchants when their rewards are not given in fiat currency. Merchants that give a few hundred points in tokens, for example, don’t have to worry about customers perceiving the value of rewards in fiat currency as falling short of their expectations.
“You have a completely different perception of the reward that you’re getting back,” Giancola said. In addition, merchants can offer their customers a piece of a dream with cryptocurrency: There’s always the chance that tokens will rise in value. And, at some point, it might be possible for consumers to cash out those tokens when the price is right.
In the shorter term, however, services such as Qiibee allow users to trade coins for more immediate consumer needs, such as food or beverage. For example, a consumer might earn rewards at a coffee shop, but may want to redeem his or her points for a deli sandwich at that time. Through programs like Qiibee, businesses can trade points with other merchants and provide their customers with more reasons to earn their tokens. “By doing that, you actually engage the customer to … get more rewards,” Giancola said.
Rolling Out Crypto Rewards
In order to kick off their crypto loyalty efforts, merchants start off by buying a Qiibee token. After completing this step, they can reserve their own branded token, which is backed by the Qiibee tokens that they purchased.
As an example, Qiibee is currently working with a coffee chain that offers a code with each cup of coffee purchased. The consumer then enters that code into a web app, which then allows them to open a digital wallet. That process benefits Qiibee as well, with a network effect of sorts: The more users that sign up for its wallet, the more useful its wallet becomes across its entire platform.
Going forward, Qiibee has a bold goal: It envisions getting the whole loyalty market into its ecosystem. In order to achieve this, the company seeks to target brands that don’t currently have a loyalty program – and even some of the larger legacy brands.
“You have a lot of huge potential brands and customers that can be brought into the ecosystem,” Giancola said. And, by rolling out such a system, retailers. According to Persuade Loyalty, which rolled out a loyalty program for a rental car company, “studies show that cryptocurrency redemption options are more meaningful to millennials than more traditional redemption rewards, such as gift cards or branded merchandise.” As a result, crypto can generate “an immediate benefit or serve as a foundation for financial growth,” the company said in an announcement.