Brand loyalty programs have been used for years to encourage customer loyalty. However, the model of accumulating points, redeeming them by a specific date, and accessing limited products or services is no longer appealing to consumers. Renewed loyalty programs have begun integrating crypto assets to offer users alternative earning and return models. In new-generation loyalty programs, users earn digital assets instead of points for purchases or interactions. These assets can be used not only within the respective brand's system but also across the broader digital ecosystem. These tokens, stored in digital wallets, can be used for various services, converted, and even staked for additional benefits. Loyalty programs are no longer comprised of accumulated but often forgotten points, but rather of more active digital assets with economic value.
One example of this transformation is the Japanese e-commerce giant Rakuten. The platform allows users to convert their loyalty points into crypto assets. Thanks to the fundamental principles of blockchain, users can track every transaction and ensure their earnings are not lost. The system operates automatically through smart contracts, minimizing human error and reducing transaction costs. This results in a more efficient and secure loyalty experience for brands.
Loyalty programs aren't just a rewards mechanism; they're a way to connect with users, involving them in the process. Digital assets like NFTs are becoming a prominent component of new loyalty strategies. Whether a hotel grants VIP privileges to its loyal customer with a special NFT, or a brand offers collectible digital content for specific campaigns, these are innovative ways to build an emotional connection with users.
This system is even more appealing to the new generation of consumers. Gen Z and beyond, in particular, want to be active participants in the system, not just consumers. Loyalty models powered by crypto assets empower users by meeting this expectation. Earn as you spend, redeem your earnings, join the community, find opportunities to realize your ideas, and grow with the brand.
The innovative startup Flycoin has adopted a crypto asset usage model. Integrating with companies like Northern Pacific Airways and Ravn Alaska, users earn FLY tokens instead of miles for their flights. These tokens can be traded, spent, or staked. Similarly, a platform called Lolli offers users the opportunity to receive cash or Bitcoin when they shop at more than 25,000 stores in the US.
This model is not just being adopted by retail or hospitality; gaming, education, music, healthcare, and many other sectors are beginning to embrace this model. For example, an educational platform awards tokens to its students based on their performance, which can be used to access additional course content or certifications. A music app offers special advantages to users who support independent artists.
Thus, brand loyalty in every sector becomes not merely commercial but also community-based. Certain fundamental requirements exist for the proper functioning of these systems. First and foremost, it is crucial that the systems are properly structured on a legal basis, and tokens are positioned as utility tokens, not investment instruments. User interfaces must be simple, the system must be easy to understand, and the technology must be integrated with the user experience.
