Ripple and PricewaterhouseCoopers (Pwc), a prominent advisory business, recently collaborated to explore the place of blockchain in loyalty programs.
The firms argued against companies’ traditional loyalty systems and how crypto solutions can improve the processes. Interestingly, an overwhelming majority of executives and customers already crave more efficient reward-based systems.
91% of executives say their loyalty programs should provide more rewards or benefits. ⭐️
— Ripple (@Ripple) August 23, 2023
Current State of Loyalty Programs
In a survey of over 400 executives, 70% expressed that transitioning their loyalty programs to digital platforms positively impacted customer loyalty. Meanwhile, a substantial group of the respondents mentioned that their firms have increased their loyalty budgets in the latest cycle.
However, Ripple argued that such extra efforts to loyalty programs do not imply the implementation processes were efficient. Ripple highlighted that customers often struggle to monitor their rewards or comprehend how they accumulate.
Moreover, the report mentioned that some brands impose limiting features that sometimes frustrate users to abandon the program altogether.
Nonetheless, Ripple noted that companies are gradually transforming their loyalty rewards programs to tackle its inherent challenges.
It highlighted specific crypto-based solutions that can make loyalties more efficient. Among them were decentralized identities (DiDs), non-fungible tokens (NFTs), stablecoins, and smart contracts.
Building Loyalty Profile with DiDs
First, Ripple argued that customers participating in multiple loyalty programs are at risk of identity theft. This problem arises as customers must provide personal details upon sign-up at every location.
The statement read in part:
“Providing this information for various loyalty programs means there are multiple potential points of failure where personal information could be leaked or stolen.”
Meanwhile, according to Ripple, crypto-based solutions like DiDs employing zero-knowledge proofs (zk-proofs) play a significant role here.
Notably, a Decentralized Identity (DiD) is a blockchain wallet identifier containing metadata linked to personal information. The data is securely stored off-chain.
Likewise, a zk-proof operates on the principle of confirming information to a third party without disclosing the actual content of that information.
Ripple cited an example case of DiD and zk-proof working to establish a customer’s legal drinking age. With an identifier leveraging zk-proofs, the website can ask if the birthdate indicates an age over 21. The identifier responds with a ‘yes’ without disclosing the exact birthdate.
Furthermore, Ripple highlighted that in a world where companies adopt crypto, DiD would offer greater utility beyond confirming profiles. Since DiD implies connection via crypto wallets, Ripple believes firms would be able to tokenize their rewards via stablecoins.