How blockchain will impact customer loyalty programs
PHOTO: How blockchain will impact customer loyalty programs

There is an in-house pilot project at Capgemini on a subject that is near and dear to every marketer’s heart — loyalty, according to Dion Lisle, vice president and head of FinTech for the company. But this is no ordinary loyalty application, rather, Capgemini is working with a third party vendor called Loyyal, basing the pilot on blockchain.

Don Lisle
Dion Lisle
The pilot is very simple: using blockchain, various merchants can put their loyalty points into an exchange whereby a consumer could, on a trusted basis, exchange those points across the loyalty platform. “For example, a coffee merchant gives, say, 50 points every time a customer comes into his store. A very active customer could wind up with thousands of points. He doesn’t need all of the points for his coffee fix — but he could use some of them to buy furniture as the furniture store is also in the same loyalty system,” Lisle explained. “Basically what we are doing is making loyalty fungible.”

Blockchain is an excellent platform for that because the points can be stored in a repository that is not centrally managed by any authority, he added.

The Early Days of Blockchain

These are clearly early days for blockchain and a loyalty program. Dan Kowalewski, Jessica McLaughlin and Alex J. Hill of Oliver Wyman wrote about how loyalty platforms could be disrupted by blockchain earlier this year in the Harvard Business Review — and the scenario they described was in the future tense. “For consumers juggling an array of loyalty programs, blockchain could provide instant redemption and exchange for multiple loyalty point currencies on a single platform,” said Hill and Wyman in the article. “With only one “wallet” for points, consumers would not have to hunt for each program’s options, limitations, and redemption rules.”

Not Too Early

In some cases the market has moved beyond pilot projects. There are a handful of offerings available to users that want to apply blockchain to loyalty. Loyyal for example, the vendor working with CapGemini, offers a platform for a blockchain loyalty app that uses smart contract technology to reduce the costs of setting up and operating a loyalty program, Sean Dennis, the co-founder and CHO of the company, told IBM in a blog post. It enables operators to dynamically target consumers in an effective way that allows them to increase revenue and therefore profits.

Another example is qiibee, a blockchain-based loyalty eco-system that is based on the Ethereum blockchain. Other offerings include Blockpoint and Ribbit.me. This YouTube video by Ribbit.me shows how its particular brand of blockchain loyalty works.

A Rapid Advance

Despite this list, there aren't that many actual companies building loyalty programs on blockchain — yet, according to Lisle. “We are at the pilot stage for most of the folks we are working with, or starting to plan out production. I realize that there’s a lot of press around blockchain-this and blockchain-that, but the number of transactions that have actually travelled through a blockchain infrastructure system are still pretty limited.”

That said, activity is growing rapidly as illustrated by Capgemini itself — it was only around June of this year that the company decided it was time to move blockchain from the proof of concept stage to a pilot.