It’s lunchtime, you’re in the office, sat at your computer, picking through some leftovers, and glancing half interestedly at Instagram on your phone. Scrolling past the memes, puppy pics, and sunset snaps, you spot a picture of your old school friend on holiday, waist high in turquoise water holding a mojito and playfully splashing the camera...
“This has got to be their fourth holiday this year? HOW!?” you think, and decide to do something about it. You spend the rest of lunch figuring out where you can afford to go with the loyalty and reward points you’ve been so diligently collecting on every flight, hotel and credit card purchase over the past few years. Surely these have to get you somewhere?
No chance.
After half an hour painstakingly scouring your inbox for long-forgotten login details to ten different airline, hotel and travel providers, you realize that half of your points have already expired, and even if you could combine all your other points (spoiler: you can’t), they’re not enough to get you anywhere you want to go.
You’re left feeling frustrated and disempowered, while any excitement about what could have been has been watered down by the whole experience.
This scenario might have an air of drama about it, but it’s emblematic of the current state of the loyalty and rewards market, both in travel, and retail more generally. From a consumer perspective, these programs are now so numerous and fragmented, that they’re difficult enough to stay on top of, let alone make the most of.
Unless you’re a blogger, called something like ‘Coupon King or Queen’, and dedicate half of your week to sniffing out the best deals, there’s no guarantee you’ll be getting a good return on your investment, and the effort is bound to feel like pushing water uphill.
That’s not to say that loyalty programs don’t work. Properly designed they are an effective marketing tool, based on sound behavioral science. Reward point incentives have been proven to drive repeat purchase, frequency of visit, and shopping cart size, while the most famous programs have also proven that they can bolster brand loyalty. Yet, too many of these programs fall short of achieving these goals, and in a market that’s growing by 30% annually, too many brands are now touting programs that are ultimately set up to fail.
According to Accenture, 77% of the population now belongs to at least one retail loyalty program, and the average American now juggles a wallet-busting 24 different loyalty cards every time they go shopping. Of course, not all of them make it to the stores, only 5 to 12 loyalty programs are actively used by their members, meaning that an incredible $100 billion in reward points are left to expire, unclaimed, every year.
$100 billion. That’s the same amount spent by the entire US population last year on credit card interest and fees, or the record breaking net worth of Amazon founder Jeff Bezos. All that potential value left unclaimed every year, probably somewhere in your bedroom dresser. Why?
For the most part, the reasons come back to the inbuilt limitations of almost every loyalty program out there. Yes, shoppers now have too many to keep track of, but this overwhelming volume is exacerbated by the complexity of each individual program.
Each has its own unique redemption rules, validity periods, expiry dates, and point collection mechanics. Almost all prohibit sharing points with other people, spending them at other outlets, or using them in conjunction with other offers. While a good many seem so immaterial that it hardly seems worth the effort to collect them.
They have their fair share of downsides for the businesses offering them as well. Loyalty programs are expensive to set up and manage, which prohibits many small businesses from taking part (especially in the travel and tourism industry where customers are more transient). Their role as a digital currency means that they must also be accounted for on company balance sheets until they eventually expire, causing all sorts of headaches for financial planning.
For all of these drawbacks, the loyalty and rewards market is one that continues to offer a huge amount of promise, particularly for those that are adding value in innovative ways (e.g. Amazon Prime’s TV offering), but it has become so bloated that it risks alienating the very customers it hopes to inspire.
There is however one modern-day innovation that has, built within its founding principles, the potential to cure many of the ills of traditional reward programs.
Blockchain technology has already demonstrated that it can function perfectly well as a digital currency, and with every day that passes we are getting closer to a truly scalable, and universally accepted, cryptocurrency. And it’s this universality that makes cryptocurrencies uniquely suited to life as a rewards token, free of frustration, free of limitation, and free of liability for participating businesses.
One of blockchain’s defining features is its publicly distributed ledger, which allows for a cryptocurrency’s value to be stored and transferred reliably without centralized control. Once created, the value of that cryptocurrency is fundamentally determined by market forces. How much effort does it require to earn? And what can it be exchanged for?
In the same way a universal reward token would be entirely decentralized, and therefore borderless, timeless, and protected from manipulation.
At KeyoCoin, we’re creating this universal reward token. One that resolves so many of the pain points of traditional loyalty programs, but crucially, one that also has a real world utility that is largely absent from the world of cryptocurrency. From day one, people will actually be able to redeem their accumulated rewards for products and experiences in the real world.
Through our live KeyoPass app, people will be able to choose from a growing inventory of over 12,000 travel products, while the underlying blockchain-based platform will also in time be home to a host of other related Dapps, developed by third-parties.
You could for example earn rewards booking a sunset cruise in Sydney, and gift them to your children years later to pay for accommodation during a language exchange in Spain.
For businesses, blockchain’s trustless network allows a limitless number of companies to participate in the system, without any one of them having overriding power over the token and its value. Instead, it’s left to market forces to determine, and all participants operate within the micro-economy of that rewards ecosystem.
What’s more, the financial barriers to entry for even the smallest business are tiny, and their level of involvement is entirely flexible.
With one universal rewards cryptocurrency and platform, independent travel businesses have a meaningful incentive that they can offer to their customers for making purchases, or completing desirable actions, such as visiting landmarks near their business, or sharing a review or photo of their experience on social media.
It’s in this way that blockchain can, by its very design, unlock a truly universal rewards and incentive ecosystem, one that excludes nobody, and rewards everyone. For KeyoCoin, we’ve begun this journey in the travel industry, precisely because so much of the market is calling out for this kind of innovation, but it’s potential is greater still.
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