Corporate and customer perspective of using blockchain-based reward programs

Customers like loyalty points as they deliver great value to them. Many companies maintain loyalty systems and offer reward points to understand customer mentality better and to keep them on board.

Experts ascribe that companies who have developed great loyalty programs have a better customer foundation and market capitalization. Loyalty programs are industry skeptic be it Retail, Banking, Travel, Hospitality, Telecom, Aviation, etc.

Loyalty programs allow customers to engage and bring more business out of it. However, developing a loyalty program is expensive and complex. Improper loyalty programs may lead to disappointment among customers, resulting in losing the existing customer.

Blockchain can help businesses in finding solutions and yet set up an open system for loyalty points management. To be precise, in simple terms, blockchain will be the operating system, and loyalty point management will be the application running on that operating system.

Blockchain technology will add value in three aspects: points repository, redemption operation, and rule-based smart contracts.

Loyalty programs benefiting both corporates and customers.

From a corporate perspective, loyalty programs increase sales from existing customers, increase ticket size, and reduce customer acquisition cost through referrals. Simply put, it is easier to extract greater value from loyal customers than to acquire new customers.

From a customer’s perspective, loyalty programs are a great idea, especially if they enjoy the brand or their service and frequently use it. If the user uses the brand services, then he/she might enjoy the goodies and bonuses that come with a membership.

The loyalty programs give its subscribed members special access and privileges that the non-members miss. Some program memberships request a fee to join in but usually have perks that can be redeemed against it, so the user needs to pay for it as well.

Future of loyalty programs

The loyalty engine is the core part of the loyalty program. The loyalty engine calculates, updates, and redeems the points. It applies specific rules on transactions in real-time, converts, and updates into points. These points-based operations can be automated with smart contracts.

Smart contracts are self-executing contracts stored on a blockchain, which nobody owns, and everyone trusts. Smart contracts will reduce the work of the loyalty program engine in terms of operations, but the authority remains with all the involved stakeholders.

The users have total control over their points, although they concern with a certain brand. Users can redeem the points conveniently through a single interface, rather than multiple loyalty platforms. Additionally, users can transfer points between themselves, which is not available in any of today’s loyalty programs.


The world is gearing up in embracing blockchain technology in almost all sectors. Blockchain Based Reward System can be scaled up gradually by including other companies to be a great use in a multi-loyalty bazaar for everybody. 

Published by Katrin Kunze

blockchain and crypto trader

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