What is the solution to the Loyalty Rewards problem?
As of 2017, the estimated value of the global incentives and rewards industry was approximately US$320 billion with an annual growth of 6% expected thereafter. According to a survey by Code Broker, The Nielsen Company, 76% of the consumers simply do not use their shopping incentives and the 2016 Bond Loyalty Report states that from loyalty programmes across all industries, the percentage of active members was only 50 percent and of this 10 % had never redeemed their rewards. The Bond report also showed that loyalty reward members who do redeem their reward points were 2.7 times more likely to defect from a programme and join another.
So why the low redemption rate?
Loyalty points, for the most part, are not convertible to cash and due to their nature, consumers own an excessive amount of loyalty points they do not redeem. Merchants and big chains devote numerous resources keeping track of loyalty points, and marketing their programmes. However, only a small percentage of these get redeemed for products people actually want, resulting in considerable company resources being wasted and customers paying for points they do not use.
The reason consumers are ignoring so many rewards programmes is because the majority of programmes look the same. Each provides, to varying degrees, some form of bonus, some form of discount, or some sort of privileged access. Considering loyalty points are powerful tools to trigger purchases, there is a surprising apathy towards their utilisation.
In addition, due to the inflexible nature of reward points and shopping incentives, consumers are not easily able to transfer exchange or sell them to other users. With an ever-increasing number of loyalty cards in wallets and purses, highly impractical for use on a daily basis as they to be constantly carried around in physical wallets, it is not surprising that consumers have difficulty utilising their points.
Finterra’s Loyalty Points Exchange
Finterra’s Loyalty Points Exchange looks to change that by enabling the secure exchange of Merchant Loyalty Reward Points, adding liquidity to currently unused loyalty points by allowing consumers to buy/sell / transfer/exchange / and gift their loyalty points for products and services from merchants on the points exchange ecosystem. Being able to use their Loyalty Reward Points in this way creates a situation where reward points have an actual value and puts the buying power back into the hands of the consumer.
With the exchange, being built on Finterra’s Blockchain IP and accessed online, multitude brands and merchants can be carried on a smartphone, without the need to carry excessive loyalty cards. The added bonus of this being both the consumer and the merchant can see and verify the transactions in real time and records updated immediately.
Finterra Blockchain offers the possibility for unique (and uniquely verifiable) items and having this information on a smartphone means a precise geolocation can be used to offer increased value to existing customers and new customers through the exchange ecosystem. Additionally, the valuable data gathered from the transactions that take place through smartphones and online via eWallets allows merchants, and brands the opportunity to target specific groups of users according to their interests, demographics or location, hence driving value and engagement with consumers to new levels.
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