Check out the latest posts where we discuss loyalty program strategy.

Key Takeaways from the LoyaltyLive Blockchain Conference

LoyaltyLive 2018 was a recent conference supporting the convergence of loyalty and blockchain, bringing together thought leaders from both worlds for knowledge exchange and education. I attended the conference as an “optimistic skeptic,” hoping to uncover the ways that blockchain will disrupt the loyalty industry.

The world’s brightest are moving fast in this space, and I wanted to share my biggest takeaways from the event.

1. Bitcoin is now ten years old!

The birth of bitcoin is considered to be October 31st, 2008, when bitcoin’s mysterious founder Satoshi Nakamoto published a nine-page academic-style paper called “Bitcoin: A Peer-to-Peer Electronic Cash System.”  On May 22, 2010 the purchase of the two Papa John’s pizzas by Laszlo Hanyecz from another bitcoin enthusiast marked what is believed to be the first “real-world” bitcoin transaction. Hanyecz traded 10,000 bitcoins for two large Papa John’s pizzas.  That transaction is estimated to now be worth around $63 million!

And believe it or not, Bitcoin is not something only used by questionable characters on the dark web to carry out nefarious activities. The value of a single Bitcoin reached nearly $20,000 USD in late 2017 and is now considered mainstream.  But some of the boom has already worn off and Bitcoin is currently trading at just over $6,000 USD per coin.

But Bitcoin is not the only game in town.  In early 2018, over 1,600 unique cryptocurrencies were being actively traded. And even though we’ve reached the 10-year anniversary of the invention, many still state we are still in the equivalent of 1992 for the internet.  There’s much more to come. 

2. Blockchain is not bitcoin. 

Bitcoin is a cryptocurrency enabled by a blockchain technology. Blockchain is the fundamental method of distributing the database records across thousands of computers where all have a simultaneous copy of all the records. No single record change can be made without complete consensus of the blockchain. This is called a “Distributed Ledger” which is essentially unhackable. 

3. Electricity is a big deal! 

Bitcoin itself is estimated to consume as much electricity as the entire country of Nigeria on a daily basis. Many blockchain farms are strategically located close to power plants.

4. Ethereum is a company you should learn about. 

They have created the world’s most prominent platform for implementing blockchain solutions. Ethereum invented “smart contracts” which allow business rules and logic to exist on the blockchain. The previous generation Bitcoin type model was only a mathematical computation using cryptology, which resulted in the creation of a token.

5. If you’ve never heard of ICOs, don’t worry, the craze is over. 

8 months ago, Initial Coin Offerings were popping up everywhere and were funding start-up money as a type of enterprise crowdsourcing. But the market has already experienced there is no current demand for the cryptocurrencies purchased through these ICOs and therefore no value to gain. In addition, governments are beginning to make it more clear that these could be considered financial securities and may fall under the regulation of the SEC.

6. The future of the world is now “trustlessness.” 

A term that means you can do business on a blockchain without having to trust another individual business or entity. Trust is created by the chain itself.

7. No one has figured this out yet. 

No prevailing loyalty business cases were presented in this recent and first-of-its kind conference. The general consensus seems to land on the idea that solutions we may end up seeing utilizing blockchain will likely be back-office applications. In fact, they may not have any visible user experience impact to a customer in a loyalty program.

8. Due to computational complexity, today’s blockchains can only handle less than ten transactions per second. 

Compare this to Visa who alone can process 24,000 transactions per second! Slow transaction time is a core issue yet to be completely solved.

9. The fundamental underpinning technology model is already shifting. 

Engineers are looking for a way to gain quicker consensus on authorizing a transaction. Consensus is the key to creating authenticity and the core value-prop of blockchain. To speed this up requires short-cuts, however the inside engineering secret is that Ethereum 2.0’s “Proof of Stake” model may create vulnerability to security issues due to these shortcuts.

10. Cryptokitties are a thing!

And someone actually paid over $100,000 for a digitally created electronic pet kitten.


Are you looking for additional information on blockchain and loyalty? Here are a few recommended readings:

Blockchain Loyalty by Philip Schelper 

Blockchain Loyalty Blog

Blockchain’s Broader Application & Movements Across Multiple Industries

BitRewards WordPress and Shopify Plugins

How Joseph Lubin’s Power Moves Will Further Stir The Blockchain Controversy Pot 

Two Reasons HENRYs are the Most Important Subset of Millennials

Before we get into the reasons why HENRYs are the most important subset of millennials, you might be asking yourself what millennial HENRYs are and why you should care.

It’s safe to say most people are familiar with the millennial generation, as they have been a hot topic for the past 10 years. The intensity of interest in them is growing as their purchasing power increases, soon to surpass that of the Baby Boomers. Tons of articles are published every day about how to engage with millennials, or how to incorporate them into your marketing strategy. Many companies have identified a need to connect with the millennial generation. A handful have defined an actual strategy around targeting and engaging them (seen a Diet Coke ad lately?).

The intensity comes from a reasonable place — a desire to tap into a segment of the American population with both a high disposable income and a lifetime value to a brand that could span decades. But there’s a problem — targeting a loosely defined group of 80 million people doesn’t exactly classify as a marketing strategy. The truth is — from top to bottom — millennials are the most diverse generation of economic significance in the US today. So we need to stop treating them all the same.

Within the diverse mix of college co-eds and minivan driving parents the secret to effectively leveraging this generation of consumers can be found by targeting one specific group known as the HENRYs. If you want to develop a successful marketing strategy, or develop a strong loyalty strategy, millennials are not your target. Millennial HENRYs are your target.

HENRY stands for High Earner Not Rich Yet. A HENRY is defined as: a household under 55 years old with an annual income between $100K and $250K, but that has not amassed investable assets of $1M. And while demographics for the term HENRY technically span 3 generations, the Millennial HENRYs are where brands need to focus for two core reasons:

1. They have a significantly higher budget for discretionary spending than Gen X or Baby Boomer HENRYs.

2. Young HENRYs are the most likely to become the brand’s most valuable customers both in terms of money spent & influence given over their lifetimes

So, how do you engage with this segment of consumers? What are their spending habits like? Download our white paper: Millennials are Not Your Target to learn more and gain strategies for engaging with this group.

3 Trends that Rewrote the Rules of Loyalty Marketing in 2017 (Part 1)

If you don’t like change, 2017 was a bad year to be a loyalty marketer.

Change in the loyalty space is a good thing. Necessary even. Most of our legacy approaches were established when Max Headroom and Duran Duran were still a thing, and have evolved very little since. Stubbornly, loyalty marketing has remained static while the whole world has changed around it.

That’s why we embraced the crazy number of shifts we saw this year that bring the promise of upending our thinking about customer loyalty. From blockchain to conversational commerce, to the ascendancy of the Millennials, most of these changes are still nascent. But three — liquid currency, fraud and security, and the stumbles in coalition programs — have already fundamentally shifted the landscape.

Shift #1. Points Currency Gets Liquid

For most of the history of loyalty marketing, program currency has been locked inside of proprietary reward experiences. Consumers could belong to multiple programs, but the currencies for each lived within walled gardens that purposely limited their reward options. Points could only be redeemed within a catalog specific to each program, or currencies could only be transferred within a tightly managed partner network.

In 2017 an evolution in redemption options finally hit the tipping point, breaking down many of those those garden walls. “Liquid currency” (a term first heard at the Loyalty Academy Conference in 2016) refers to a pay-with-points approach that enables loyalty points to be redeemed out in the big wide world, just as if they were cash. Examples of programs now embracing liquid points include US Banks’s Real-Time Rewards solution, Citi’s Shop with Points and La Quinta Inns and Suites’ Redeem Away! program.

“Liquid” is the best descriptor for this shift because it illustrates the continuum of pay-with-points options. Each solution allows its own specific degree of flexibility or liquidity as to where and how points can be used.

Some solutions offer ultimate liquidity by enabling program currency to be used exactly like cash at any point of sale. Others are only moderately liquid, allowing points to be used only within specific retail settings (for example, Starbucks Rewards allows stars to be redeemed only for Starbucks products at the POS using their mobile app). A number of hotel brands now allow points to be used just like cash, but only during stays at their branded properties.

Despite these varying degrees of liquidity, what does appear clear is that brands embracing this change are looking to grab consumer attention by introducing as much flexibility as possible in the usage of points currency. And the programs offering the most liquidity believe they’ll have the upper hand.

What does this change mean for loyalty marketing?

For consumers, liquid currency opens the door to a significantly more frictionless redemption experience. According to new Maritz research, consumers cite rewards being too hard to earn or taking too long to earn as their primary reason for leaving a loyalty program. Liquid currency directly addresses that point of friction by enabling program members to redeem points much more frequently, for an almost infinite number of “reward” options, and at very small increments of value.

For example, I recently redeemed less than $5.00 worth of Amex Membership Rewards points to pay for a meal at the Midway Airport McDonald’s. That kind of redemption experience — a far cry from working a year or more earning points toward a high-value reward item — will become more the rule than the exception. And as members embrace points being increasingly more fungible, its likely they will no longer think of redeeming points at all, but rather of spending points.

For program managers, liquid currency will challenge your assumptions as to how programs have traditionally worked. Members will likely redeem more frequently, and at lower point thresholds. Paying with points also means redemption patterns shifting away from low CPP rewards like merchandise and in-kind options, which likely will drive up program costs. Spending points outside the brand experience — especially on pedestrian everyday purchases like groceries and gas that have little “memory halo” — also may well have a declining effect on brand loyalty, driving consumer attachment more toward the currencies than to the brand itself.

Its clear, though, that liquid currency will soon be table stakes for any competitive loyalty program. This means brands will need to be vigilant in measuring and evaluating the influence of this new form of redemption on both brand engagement and retention.

Stay tuned for Part 2 and 3 of this post to learn more about the impact of fraud and coalition loyalty. 

Rewarding Customer Feedback: Build Loyalty While Gaining Consumer Insights

Consumers have opinions on just about everything. So, what if a company’s loyalty program rewarded customers for the opinions that matter most to the business?

Loyalty programs have traditionally focused on rewards and points for purchasing behavior. As a consumer, I try my best to be savvy about participating in loyalty programs of brands I consistently buy from.

A program I am highly engaged with is the Southwest Rapid Rewards program. I have a Southwest credit card, and like most millennials, I typically prefer being rewarded with experiences.

Because I do my best to get the most out of the loyalty programs I participate in, I pay close attention to the communications I receive from brands I’m subscribed to. That’s why this recent communication from Southwest caught my attention:

The email invited me to be part of a select group asked to participate in Southwest’s Rewards for Opinions panel. This offer gives the opportunity to take surveys on your own time and — this is the key part — receive Rapids Rewards points for completing each survey.

Rewarding customers with points in exchange for their feedback can be an effective strategy for keeping already loyal customers increasingly engaged for a few reasons:

  1. Rewarding for feedback makes customers and program members feel valued and special.

The language in the Southwest email presents the Rewards for Opinions panel as an exclusive group. When I saw that the panel was “by invitation only” I got the sense that I’m a valued customer because I was selected and invited to participate in this program. Likewise, the phrase “your opinions are worth thousands of points” tells the customer that their feedback on the brand experience literally has a dollar value.

To add to that sense of value, brands could consider ramping up the element of status by inviting top point earners to a “most valued customers” opinion panel, including formal invitations and a surprise gift for participating.

  1. Member surveys provide insights about consumers and their demographics that companies and brands can use to shape future business initiatives.  

Many of the surveys in the Rewards for Opinions portal asked about my demographics, spending habits, and much more.

A brand can leverage these surveys to collect new kinds of customer data that loyalty programs do not usually collect.  That information can, in turn, be used to make the loyalty program even more personal. The survey information can also be used by brands to further segment their customers and provide more insight into their spending habits and purchasing decisions. And by positioning the surveys as a tool to provide them with a better brand experience, it’ll be much easier to get a high level of engagement and candid response.

  1. Points for surveys help members increase their earn velocity.

While I am active in my Southwest Rapid Rewards account, I don’t travel often enough to accumulate as many points as I’d like. The Rewards for Opinions panel makes it easier for me to quickly earn points without a huge time commitment.

Based on new consumer research data from Maritz, the most common reason for disengaging from a loyalty program is rewards/benefits being too hard to earn or taking too long to earn — 44% of consumers rank it as their top reason for quitting a program. Member surveys provide an additional, quick way for members to earn points. If a consumer doesn’t travel frequently like myself, it might be hard for them to earn points. If they were given the option to take surveys to earn points, they could earn and redeem more frequently.

Adding a survey element to a loyalty program is a great way to diversify loyalty program offerings, gather information about your customers, and increase engagement within your loyalty program. Brands should consider this in their program design to further drive engagement and loyalty.

Do you receive rewards for providing customer feedback? If so, which programs do you participate in?