How blockchain can make loyalty programs exciting again

Shop, travel, or transact, and there's a loyalty program you can benefit from - but is there a way to make them interesting with blockchains?
18 April 2018

KrisFlyer to launch the world’s first blockchain-based airline loyalty digital wallet. Source: Singapore Airlines

What makes loyalty programs exciting? The joy of collecting points for spends and exchanging them for rewards at a later date. When done effectively, it takes customer experience to a whole new level.

However, in today’s world, customer expectations are rising. They don’t just want a loyalty program that lets them collect points for every dollar they spend with you, they want a mobile app so they don’t have to carry their card with them, they want to be able to sign up online, share information about points and rewards they collect on social media, and redeem their points on the app – quickly and at will.

Some want even more. They want their digital wallets linked to their loyalty card so their spends can be tracked automatically, and they want to be able to accelerate their earnings by earning points for spending with your partners as well.

The traditional loyalty program is no longer exciting for users. They want companies to breathe a new life into their loyalty programs. Loyalty programs in travel, retail, and financial services are most common – but their popularity is waning now.

Deloitte says blockchain can transform loyalty programs

According to Deloitte’s ‘Making blockchain real for customer loyalty rewards programs’:

We maintain that blockchain will allow instantaneous and secure creation, redemption, and exchange of loyalty reward points across programs, vendors, and industries through a trustless environment using cryptographic proofs in lieu of trusted third parties and administrators.

Through a rigorous online protocol, well-programmed building blocks, and Connecting a disconnected world smart contracts, blockchain has the capability to operate without intermediaries. The key elements of such a blockchain solution are a loyalty network platform.

According to the consulting giant, implementing a blockchain-based loyalty system can help reduce costs, enable a frictionless system, make the process near real-time, provide a secure environment, and create unique business opportunities.

Not clear? Well, imagine this. You rent a cab to go to the airport, you earn tokens. You buy a ticket to New York, you earn tokens. You land at JFK in New York and get into a cab, you earn tokens for the ride. You get to your hotel, you earn tokens.

Now, you have a shower and want something to eat. You order room service and realize you’ve earned quite a few tokens so far in your digital wallet, so you redeem them for your meal. That’s how the system will work – from a customer’s point of view. Oversimplified? Maybe, but it’s technically accurate.

Singapore Airlines’ program to take off soon

Deloitte’s idea and report aren’t abstract at all. Companies can, with a little investment, start building the blockchain-powered loyalty program and prepare to transform their customer’s experience.

In the travel industry, KrisFlyer, Singapore Airlines’ frequent flyer program seems to have taken the lead. The company announced that it will launch the world’s first blockchain-based airline loyalty digital wallet earlier this year. Singapore Airlines hopes that KrisFlyer’s new capabilities will help unlock the value of the program to enable everyday spending at retail partners and accelerate the accumulation of rewards.

A new KrisFlyer digital wallet app utilizing this innovative technology is expected to be rolled out in about six months. It will allow the extensive KrisFlyer membership base to use ‘digital KrisFlyer miles’ for point-of-sale transactions at participating retail merchants.

Following a successful proof-of-concept exercise carried out in collaboration with KPMG Digital Village and Microsoft, KrisFlyer will soon be signing up retail merchant partners.

“This groundbreaking development in which we will be using blockchain technology to ‘digitalise’ KrisFlyer miles is a demonstration of the investment we are making to significantly enhance the digital side of our business for the benefit of our customers. It is in line with our recently unveiled Digital Innovation Blueprint, under which we aim to be the world’s leading digital airline,” said Goh Choon Phong, CEO, Singapore Airlines.

Sounds exciting, doesn’t it? Only time will tell how customers actually receive the blockchain-powered loyalty program – but, if you’d like to lead your industry, now is a good time to explore and get started with this.