Liberating Loyalty Points With Blockchain

Young Americans are a mobile generation, from their smartphones to the places they call home. According to researchers, millennials represented 43 percent of people changing addresses between 2007 and 2012, despite comprising just 24 percent of the population.

Given that these young adults often don’t stick with a living place, what’s a company to do to get them to stick with a brand?

With brand loyalty threatening to go the way of shoulder pads, Furbies and mullets, some companies are looking to up their rewards game.

That’s the challenge artificial intelligence (AI)-powered, personalized marketing platform provider Mobivity is hoping to resolve by creating a better rewards offering for the millennial generation. In a recent conversation with PYMNTS, Corey O’Donnell, Mobivity’s senior vice president of marketing, discussed the company’s new blockchain-powered, cross-brand rewards points program: Mobivity Merit.

Mobivity plans to debut the program with Chanticleer Holdings later this year. Chanticleer owns and operates several restaurant brands, and the solution would liberate loyalty points and better incentivize repeat customers.

“[The standard rewards program is] rather limited, because what it says to the customer is, ‘You can get these points and you can then only spend them here,’” O’Donnell said. “[But] Chanticleer owns multiple brands and they want to be able to do promotions cross-brand.”

A loyalty program for the 21st century

Under current plans for the program, customers will be rewarded with digital rewards points — as in typical rewards programs — when they get a bite at one of Chanticleer Holdings’ various franchises. That list includes Little Big Burger, American Burger Co., Hooters, Just Fresh and BGR.

Unlike typical rewards programs, though, the points would be redeemable at any one of the company’s 36 restaurant locations. A customer scooping up points for buying a large soda at Little Big Burger could opt to spend those points toward an order of fries at American Burger Co.

O’Donnell said it was a tactical choice to create a promotion that doesn’t discount the original purchase, but rather encourages later spending with the rewards earned.

“[With typical] reward programs, a lot of times they function as ‘Come in five times and get your sixth for free,’” he said, “which doesn’t really affect consumer behavior. There’s not that high a likelihood that if I come to some place five times, I wasn’t going to come a sixth anyway.”

The points will be stored in customers’ mobile rewards wallets, which will be paired with a profile they create. They can then agree to share their profiles with a franchise to earn and redeem loyalty points with the establishment.

According to O’Donnell, the appeal to customers is a rewards program that offers a whole lot more bang out of their virtual points. With the ability to redeem at different franchises, customers are looking at a lot more flexibility — and thus a lot more value. Plus, he added, the excitement of using cryptocoin tech will likely hook some younger consumers on its own.

The new flexibility is not just for customers, either. Mobivity is currently in talks with food and beverage manufacturers and distributors about enabling them to purchase points from Mobivity. The distributor then could offer points to customers to incentivize them to buy one of its items at a participating venue.

Dishing out data

But even if a rewards program offers flexibility and value, it needs to drive real behavioral change — from the customer and the company — for it to be really rewarding to the offering firm. To that extent, blockchain is a company’s friend, O’Donnell said.

For one, the technology provides greater tracking and data, allowing companies greater insight into how (and if) the points are used, he said. Though one franchise won’t be able to see details of a customer’s purchases at another franchise, a company will know where they awarded points, where they received points back from customers and for what transactions.

Hypothetically, Chanticleer could see that a customer’s profile earned two reward points at a Little Big Burger for adding fries to his order. It could later learn that the same customer redeemed two reward points when getting a milkshake at American Burger Co. The tracking feature also helps companies clamp down on fraud, and eliminate instances in which employees give away unearned discounts to friends.

Companies can also access more data by encouraging customers to share the information they’ve added to their profiles in exchange for becoming eligible to obtain or apply points. With this kind of cross-brand program, information about a customer can spread across each franchise, providing quicker, deeper customer understanding — and all without the venue having to build up knowledge on its customers over time.

Knowledge like that is key, too, because it helps a company become more strategic. At the end of the day, a rewards program needs to encourage customers to change their habits, be that buying new or more items, visiting more frequently or patronizing new franchises, among others.

What a program shouldn’t do is reward customers for making purchases they were going to make anyway, O’Donnell said. That means a program shouldn’t reward customers for making a sixth purchase, for instance, because by that point the customer already has established the habit of patronizing the location. Instead, programs need to push customers to try something new.

Up and coming features

With the rewards program solution planned to debut this year, O’Donnell and his team are already planning updates to Mobivity.

Over time, member profiles could eventually include volunteered information like dietary or allergy restrictions, food preferences, customer ages and the types of promotions they would like to receive, O’Donnell added. And, down the road, he hopes to expand the number and types of venues accepting the points, maybe even allowing users to make person-to-person (P2P) transfers of their rewards.

Ultimately, the hope is to make the program more like a credit card reward system through which earned points might be spent on completely unrelated purchases — something O’Donnell said would make the points more valuable in the eyes of customers.

Whether that vision will come to life, and whether reward points start traveling across industries, remains to be seen. But even in the program’s current form, the company is ushering in a new level of loyalty points mobility.

“Giving the customer something that’s more transferable and more flexible in the ways they can utilize the reward they redeem is incredibly valuable,” O’Donnell said.

As Mobivity Merit gets up and running this year, 2018 will see if reward points start moving between franchises as often as millennials move between cities.