A Deloitte Research Report, “Making blockchain real for customer loyalty rewards programs” found that using blockchain technology can help build brand loyalty by delivering real-time updates, facilitating tracking of goods, providing security & reducing costs.
According to the Colloquy Loyalty Consensus Report market research shows that “55% of consumers spend higher amounts and increases purchase frequency due to loyalty initiatives.” This makes developing a loyalty rewards program a revenue driver for brands in today’s online economy.
The Poste Italiane Group—with its banking services, partnership with merchants and logistics across a wide supply chain—sits in the middle of the loyalty ecosystem.
Poste Italiane began working with the loyalty programs in 2017 when, in partnership with SIA, it created the Extra Sconti App that enables cost savings to debit card holders that also use Postepay cards. Instead of starting with a network of big shops, it created a platform called Sconti BancoPosta that initially served over 30 thousand small merchants and soon grew to other well-known brands. The cashback system rewards users with money deposited directly into their account for purchases of brands recommended by the app.
“The reality is that it is seven times more expensive to acquire new customers than retain existing ones, and over half of us are motivated to spend more and increase the purchase frequency due to loyalty initiatives,” Vernini shares.
As the center of commerce & online transactions, Poste Italiane wanted to support the companies within their supply chain with customer acquisition and retention. They also wanted to encourage customers to engage with the merchants and follow their recommendations or accept offers through them.
Poste Italiane saw this as a big opportunity in the market. The traditional postal system is bound together by an expansive and complex supply chain. This results in tech sprawl where there are way too many programs and they are not interoperable. This means the programs can’t communicate with each other and share data. With the plethora of programs and lack of interoperability between them, the management of the accounts and the rules on earning rewards are not clear. What makes Poste Italiane’s service delivery platform stand out is the creation of a single point of access to multiple loyalty schemes and formation of a loyalty point exchange.
It is common for customers to log into an airline miles/rewards account only to see they’re 100 miles shy of a travel reward. The Poste Italiane solution lets customers combine points from different programs to reach the threshold required to purchase the rewards, making it a truly customer centric approach. When customers only accrue points with one merchant, the value of those points are limited. Loyalty becomes much more worthwhile when the points can be bundled together so that they become interchangeable and benefits can be drawn from many places. With more points compiled, consumers can take advantage of more rewards. In a way, one can think of Poste’s loyalty points as a shop-issued digital currency where exchange rates set by the participating merchants.
The blockchain platform developed by Poste Italiane is fully decentralized with each partner running its own node. If a partner does not have the technical or financial capabilities, or interest in hosting one themselves, Poste Italiane can provide a node that the partner can manage. Because each partner needs to either contribute their hardware or pay for a node to be run on their behalf, everyone has vested interest and shared responsibilities to create a healthy ecosystem. Blockchain levels the playing field for everyone in the Poste Italiane network. Merchants get access to a complete loyalty service, including the ability to set up new campaigns and provide points and loyalty rewards to clients.
Without blockchain’s distributed ledger structure, a loyalty program typically reconciles on a periodic basis. With blockchain technology, customers can compile their points in real-time for more immediate rewards.
Customers can easily access their accounts and rewards, via a mobile app provided either by Poste Italiane or any of the partners and set up their account. After accepting the terms and conditions, a new wallet is generated. Upon joining, each new user receives a welcome bonus and can start exploring the multi-brand marketplace. Whenever they want to use their rewards, they can create a voucher that combines points from various programs and is redeemable in the system. The collection of points is also digital – the user can generate a QRcode that represents their wallet address where the partner and merchants can transfer the points. While having a single platform makes it convenient for consumers, they can still use the designated apps from various merchants and use the Poste Italiane app to transfer their points and convert them into loyalty tokens on the platform.
Poste Italian’s system uses blockchain in three ways: