Securing Customer Loyalty Programs With Blockchain For Retail

0aaaJess Vadino Softserve

In today’s on-demand retail market, customer loyalty is a highly prized commodity that is hotly sought after and easily lost. With increasingly aggressive competition between retailers — and a variety of interaction models available (mobile, web site, app, in-store) — just one mediocre customer experience can result in brand abandonment.

An effective loyalty program is an important component of not just retaining and rewarding customers, but keeping the brand top-of-mind and relevant.

Technology is enabling more valuable loyalty programs — for both the customer and the business — with better usability and scalability, and real-time redemption. Blockchain specifically, has been discussed in financial services for a few years, and now its applications for retail are burgeoning and promising.


Blockchain creates transparency, which encourages trust — imperative to establishing brand loyalty. Blockchain records are immutable and completely transparent, for both the retailer and the customer. Giving customers control over rewards, creating a permanent record and building on that trust creates a strong foundation for a valuable rewards program.

Flexible Rewards

Loyalty programs based on blockchain deliver rewards that are flexible in several ways:

No expiration date

Unless the retailer wishes to set an expiration date, blockchain-based rewards do not expire. This is a substantial benefit, considering that short expiration dates are a leading cause of loyalty program opt-out. Instead of points, blockchain rewards function similarly to cash back incentives, currency is stored in a digital wallet and redeemable whenever the customer wants to useit.

Expandable rewards

Blockchain enables flexibility in streamlining storage for both the business and the customer. A digital wallet stores all blockchain rewards in the same place for easy visibility and access. Rewards can be cashed out or saved as the customer wishes.

Loyalty programs can also partner using a shared “point” method and increase opt-in for better retention across several businesses. This method is especially valuable for multi-brand corporations, as the blockchain can be used by all of them, functioning under one unified umbrella. Blockchain enables customers to seamlessly exchange tokens for a variety of rewards across different stores by creating a unified reward that can be applied to all partners.

Blockchain rewards can also take the form of cryptocurrency, exchangeable for cash or pooled from multiple retailers in a similar structure.

Omnichannel access

According to Nielsen, more than 81% of global loyalty program participants are interested in earning rewards regardless of the channel (in-store, online, mobile, etc.). Blockchain is flexible as rewards are made in real time, eliminating the waiting time associated with most points-based programs, so that points can be accessed via smartphone whenever a transaction ismade.

Increased Security

It is no surprise that security resonates as a top concern among retail customers. With the increasing number of hacks affecting previously trusted retailers in recent years, brands cannot afford to skimp on security, especially when it comes to the personal data of loyal customers. Blockchain offers a means to significantly decrease the risk of data leaks.

Secure by its very nature, blockchain allows customers to exchange tokens for valuable rewards without compromising private data or creating extra steps to keep data private. Blockchain is decentralized; data doesn’t live in any singular location, and its structure makes it extremely difficult to hack. Each block of data is stacked on top of another, making it virtually impossible to move or to change.

Blockchain technology also provides an immutable database that monitors and archives each transactional record. This not only keeps data secure, but protects it from tampering and fraud. Retailers that manage customer data securely and transparently therefore establish better trust and longevity with customers.

Loyalty Through Blockchain

Blockchain creates possibilities for better customer loyalty in retail. Whether rewards take the form of a proprietary token system or an existing cryptocurrency, rewards are direct, airtight and scalable.

While applying this technology for retail is still in early stages, several retailers are already using blockchain for their loyalty programs.

KrisPay, a loyalty program from Singapore Airlines, lets members transfer KrisFlyer points to partner retail merchants. Points are read at point-of-sale as regular cash through a digital wallet via a QR code scanned at the register. Point redemption happens in real time, across a variety of retailers in beauty, food and beverage and more. Rewards can be used for either full or partial payment, and accumulate in the same way as traditional miles. Expanding the rewards beyond travel allows customers better value overall, and increases loyalty and trust.

American Express is also exploring how to use blockchain for better customer loyalty. Making use of the transferability of blockchain, American Express will enable retailers to tie American Express reward points into retailers’ own products. Wholesaler Boxed is the first to partner with American Express, offering more points for specific products that Boxed want to move off of shelves, and passing value to customers in the form of these blockchain rewards. While the program is still being piloted, there are many partnerships that American Express plans to grow via blockchain to increase profitability for both partners and customers.

Chanticleer Holdings, owner of several restaurant chains in the U.S., is in the process of using cryptocurrency to attract and retain customers. The cryptocurrency can be used at any of the enterprise’s chains, including Hooters and American Burger, and can even be transferred between loyalty program members. The company intends to offer its rewards members more control over their loyalty program to improve their customer experience.

Transparency, Trust And Value

All loyalty programs are meant to be symbiotic between customers and businesses. Blockchain reveals a new method of growing customer loyalty while providing flexible rewards. Blockchain is a technology that stacks data for transparency; immutable and extremely difficult to hack.


Jess Vadino is Global Digital Strategy and Experience Leader at SoftServe, a digital consultancy working at the cutting edge of technology to enable businesses around the world to get innovation done. Vadino is a subject matter expert in digital and has a background in strategic design. With over 15 years of experience, she has worked in the digital space since the days of dial-up and has spent time in different roles like customer experience, merchandising, platforms and personalization.

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