The rise of Web3 has brought new technologies and ideas that could change many industries, including customer loyalty programs. However, focusing on innovations that offer value rather than just repackaging existing concepts with a different tech stack is essential.
There is a difference between recreating Web2 ecosystems in Web3 and adding Web3 to the technology stack that includes Web2 capabilities.Â
The Balancing Act of Innovation and Practicality
We have learned this through our own experience. The original meed was built entirely in Web3 on a blockchain backbone. It was complex, with smart contracts creating more contracts linked to NFTs (Non-Fungible Tokens). While technically impressive, it had a fatal flaw:Â
Blockchain.
In its current state, blockchain is not suitable for everyday retail use. It's not a matter of elegance; it's about practicality. In retail, transactions must be seamless and instant, which blockchain struggles to provide. Delays can lead to frustrated customers and lost sales.
Privacy is another concern. Companies are understandably protective of their sales data. Making this information publicly accessible, even encrypted, poses competitive risks. Similarly, consumers may hesitate to have their purchase history recorded on a public ledger, no matter the security promises.
Blockchain's Strength: Credentials and Anti-Fraud
Blockchain excels at being an immutable record keeper. It's great for verifying credentials. In loyalty programs, it can ensure membership is authentic, providing a solid foundation for building and measuring loyalty. Blockchain can also facilitate secure interactions and allow loyalty programs to verify each other's legitimacy without sharing sensitive data.
Interoperability and cooperation are essential facets in the future of the meed platform.
One promising application for blockchain in loyalty programs is fraud detection. Enterprise loyalty fraud costs billions annually. Blockchain can make fraudulent activities easier to detect and harder to carry out by providing transparency and immutability. It securely logs transactions and customer interactions, creating an audit trail that's almost impossible to tamper with, significantly reducing fraudulent claims.
Web3 & Loyalty: In Conclusion
While blockchain and Web3 technologies are exciting, it's crucial to be selective about implementing them, focusing on areas where they offer clear advantages over existing systems. Blockchain's true strength lies in secure, verifiable transactions and the need for an indisputable source of truth. However, placing it at the core of real-time retail transactions highlights its limitations and potential mismatch with market needs.
The future of loyalty programs may involve Web3, but careful consideration is required to avoid pitfalls and genuinely enhance the customer experience. When used correctly, blockchain can revolutionise trust and security in customer loyalty schemes. However, blockchain’s role must be carefully defined to maximise benefits while minimising drawbacks.
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