The Impact of the Platform Ecosystem on Loyalty Industry

Created: Thursday, October 31, 2019, posted by Geetesh Bajaj at 10:00 am

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By Aparajita Roy, KornChain

Technological innovation leads to new business models and industries are leveraging digital technologies to develop new platform-based business models where the platforms act as enablers.

The emerging platform strategies promise to provide unprecedented scale, speed, and global reach. These can build the foundation for unleashing new market opportunities from system management to data collection to gather deep consumer insights. We have seen platform model underlying the success of many biggest and fast-growing companies such as the global tech giants like Amazon, Google, Alibaba and companies like Uber, Airbnb, eBay, KAYAK. These are simply the platforms on which products and services are built and supplied. But not a product or a service itself.

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Image: Scopio

Businesses across every industry realize that it has become increasingly important to invest in platforms from a strategic growth perspective. This technology era demands a connected world and connectivity channelized by platform driven business models is the way forward. Around 40% of the businesses believe adopting a platform-based business model and engaging in ecosystems of digital partners are hugely important to their business success. 80% of the enterprises will be creating or partnering with industry platforms1.

Businesses in the consumer goods and services industry want to gain insights into consumer behavior to acquire and retain customers. Marketing strategies based on mass-segmentation are no longer good enough. Consumers look for a more personalized experience.

What Does This Mean for Loyalty Marketing When Consumer Loyalty Is Undergoing a Tectonic Shift?

Consumers’ expectations are increasing as they experience personalized, easy, real-time services with businesses via their smartphone. I can track my pizza delivery guy on placing an online order. I’m relieved that I can send money back home, in seconds, and at a very attractive transaction fee. It’s super easy to manage my movie, hotel and flight tickets on my wallet app. I am sure you too have been enjoying this real-time visibility of day-to-day transactions that make things easy and enjoyable.

However, when it comes to loyalty programs, this particular industry has transformed not as much as compared to, for example, the banking and payments industry. But this needed change is coming.

A platform connecting businesses and their customers through a unique network will provide the relevant data and enable businesses to provide true customization and acquire more loyal customers. Imagine a network that can facilitate loyalty points earn, burn and even exchange within the businesses, cost-effectively and in real-time.

Businesses have the potential for reclaiming the lost value of their loyalty programs by joining an exchange platform. This will be a catalyst and introduce fluidity within the loyalty points.

Customers like the power of choice and flexibility, look for hassle-free experiences and want to feel genuinely rewarded.

A significant downside of current loyalty programs is that it takes too long to reach the redemption threshold and the value isn’t exciting. An exchange induced loyalty program can provide the much-needed momentum where one can harness the power of a platform to exchange points between the businesses. An exchange network powered by Blockchain, such as LoyalT, that connects businesses of all sizes and multiple domains can emerge as a data hub as more businesses join the network. There are clear benefits for consumers. They can consolidate points to their favored brand and with a much higher redemption value. A blockchain based network ensures real-time and secure points exchange with instant gratification for consumers.

What Might the Future of Loyalty Programs Be Like Once the Platform Model Is Adopted?

1. Enabling customers to plan redemptions.

If customers can readily exchange and amalgamate their loyalty points to reach a high-value redemption, they will start to see all of their loyalty programs as equally valuable. On occasion, they will want to put all of their collected points into a single program in order to reach a specific reward, such as a flight or a holiday.

Businesses will benefit from the enhanced consumer insights and repeat sales. Imagine having the data from your customer’s loyalty wallet spend around the world pooled together.

2. Location-specific offers

With a loyalty programs network, our smartphone devices will be able to detect local loyalty programs automatically via location-based offers. Bluetooth beacons are already being used to a limited extent and another solution may come along that does it even better. However, customers need to install dozens of apps as location-based solutions work through the retailer’s own app. If loyalty programs were part of a coordinated network of global brands, customers would be able to search automatically for nearby loyalty programs on a single app, providing true portability to loyalty points and act as a marketing device for businesses to attract new customers.

3. Collect points in one country and redeem somewhere else

It is estimated that international tourist arrivals have increased to 1.4 billion per year2. Tourism is on the rise and businesses need to offer more dynamic forms of engagement to their customers.

A globally connected network of businesses will offer more choice and flexibility over points redemptions. Consumers can exchange points to spend while they are travelling. They may add the retailer to their planner for future visits.

Businesses get to market and re-market to their customers and never lose a loyal customer by linking customer footprints in multiple countries. You would be able to create a persona of each customer and see where they love to travel, where they shop abroad.

It will create a globally connected loyalty marketplace, forging links between businesses in even the remote parts of the world!

4. Sending gift cards to other countries

People use physical or digital gift cards to give to their friends and family. But what about those living in a different country? Seldom are the retailers who provide gift cards available in both the countries, and most do not offer gift cards in multiple currencies. What if loyalty points could be transferred peer-to-peer as a gift?

A loyalty network can enable peer-to-peer transfer of points within a business. You can send 5,000 air-miles to your dad and ask him to come and visit you. Now imagine that those 5,000 air-miles you actually consolidated from all your coffee points you’ve collected throughout the year.

There can be multi-currency digital gift cards, allowing anyone from anywhere in the world to buy and send a gift card in any available currency. This would be a massive untapped market, helping expats send gift cards to those at home, and vice versa. As more people choose to live and work abroad in the future, this will grow into a huge industry that will further connect businesses into a global network.

Building a Global Loyalty Marketplace

We are headed towards a world where we will find a rise of digitally managed marketplaces.

For the loyalty industry this will provide a new lease of life.  Managed loyalty marketplaces on blockchain will emerge as a single source of trustless and decentralized point to connect businesses at a global scale.

With the power of an established loyalty marketplace, business will be able to focus on their core offerings as the network takes care of the rules of engagement.
For the loyalty industry, a blockchain enabled exchange network will manage business partnerships, multiple loyalty currencies and individual business preferences, all enclosed within a digital smart contract that is executed every time a transaction is initiated.

It will give businesses exciting opportunities to gain new and loyal customers by enabling them to enjoy personalisation and freedom of choice.

Aparajita Roy
Aparajita Roy is the Head of Market Research at KornChain. She started her career with the Central Bank of India. She has extensive work experience in blockchain with her researches on International Money Transfers using Blockchain technology, account aggregators, trade-creating effects of the EMU and more. She brings her knowledge of international trade economics and experience of conducting independent researches to KornChain where she has been involved as a co-founder.

KornChain is a technology company that is building a global blockchain network for the loyalty marketing industry. KornChain have recently launched LoyalT® which seeks to be a global loyalty point exchange network underpinned by Blockchain. Customers can earn, spend, exchange & consolidate points in real-time while businesses benefit from customer acquisition, repeat-sales and deep insights. On-going implementation with large clients.

The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer or company.


1. Platform-Driven Business Models Create Significant Added Value in Enterprise IT Infrastructure
2. Our World in Data – Tourism

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