🗝️Key Problems for Loyalty and Rewards Solutions

Encouraging loyalty is not an easy game. A lot of customer issues can result in problems for loyalty rewards providers, including:

Account inactivity

With many loyalty programs, the need to take additional action and non-transparent reward schemes are perceived negatively by customers and lead to adoption decrease and customer inactivity. 8 9 According to 3Cinteractive, 70% of consumers do not sign up for a loyalty program due to the inconvenience and time required to complete registration.

Low redemption rates

According to The 2022 Bond Loyalty Report, the percentage of customers who were active members was only at 50 percent. Out of these members, 20% never redeemed their received bonuses and rewards. Also, according to this report, loyalty and rewards program members who do not make redemptions are 2.3 times more likely to defect from one program and join another.

Low client retention

Existing loyalty programs give insufficient motivation to encourage repeat purchases. According to COLLOQUY “Customer loyalty 2022 & beyond report”, the top two reasons why consumers stop participating in a loyalty program are: the program did not provide offers that were of interest (56%), and it was too hard to earn points for rewards (54%).

Increased costs for customer service

Retailers who want to set up their own in-house loyalty program, need to not only invest time, money and effort, but to also arrange a solid customer support service specifically aimed at the loyalty program, which incurs training and sometimes hiring employees, the implementation of internal practices and 10 procedures, reporting, and analysis. The more sophisticated the loyalty program rules are, the higher the cost of customer service.

Low motivation by offered rewards

According to CardLinx’s 2022 Card-Linking Industry Survey, 64% of consumers prefer cash-back payments as part of rewards, while only 12% prefer programs connected with the accumulation of bonuses, points or miles. At the same time, loyalty programs are still one of the most effective solutions to generate more revenue among existing customers. According to the Talech Retail Technology Report, 87% of customers say they want loyalty programs. The outlined problems could be solved by an integrated loyalty system, which would provide customers with convenient tools to earn rewards and redeem them for valuable purchases. With the emergence of blockchain technology, creating such a system has become possible. Our hypothesis that the new approach to rewards and loyalty with the use of blockchain and smart contracts can deliver synergy, is confirmed by recent blockchain experiments of Deloitte, IBM, China Union Pay, MasterCard, VISA and many more.