Plus, it can be difficult for the average person to accumulate enough points to earn a meaningful reward. While estimates vary widely, we estimate that the typical “breakage” rate (meaning the share of points not redeemed) is about 10%–20%. In some cases, travel loyalty program points differ by journey component (flight, car rental, hotel, dining), leading to fragmented point collections. Travel loyalty programs tend to be complex and multicurrency, making them different from retailers, which typically run simple discount programs, or from banks, which offer cash back or a single currency that can be spent easily across a range of merchants. With only one “wallet” for points, consumers would not have to hunt for each program’s options, limitations, and redemption rules.Īll loyalty programs are vulnerable to a blockchain revolution, but the travel industry is perhaps the most at risk. New transaction blocks are validated and linked to older blocks, creating a strong, secure, and verifiable record of all transactions, without the need for intermediaries or centralized databases.įor consumers juggling an array of loyalty programs, blockchain could provide instant redemption and exchange for multiple loyalty point currencies on a single platform. Tokens are grouped into blocks (for example, every 10 minutes) and distributed across the network, updating every ledger at once. When a new digital transaction occurs (for example, a loyalty point is issued, redeemed, or exchanged), a unique algorithm-generated token is created and assigned to that transaction. Best known as the technology behind bitcoin, blockchain enables a ledger of transactions to be shared across a network of participants. So users can set up algorithms and rules that automatically trigger transactions between nodes.īlockchain may just be the answer. The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network. Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Transactions occur between blockchain addresses. Users can choose to remain anonymous or provide proof of their identity to others. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Transparency with PseudonymityĮvery transaction and its associated value are visible to anyone with access to the system. Each node stores and forwards information to all other nodes. Peer-to-Peer TransmissionĬommunication occurs directly between peers instead of through a central node. Every party can verify the records of its transaction partners directly, without an intermediary. No single party controls the data or the information. Distributed DatabaseĮach party on a blockchain has access to the entire database and its complete history. Fat membership roles may look good in a press release, but active loyalty program members are the only members who count.Here are five basic principles underlying the technology. Does the participation data mean the loyalty empire has reached a saturation point? The response from COLLOQUY experts: “Loyalty memberships are flying dangerously high. The census results raise a major question. In a key finding, the COLLOQUY census shows that “active participation” in loyalty programs is a blended average of 39.5 percent across all sectors analyzed, a number that COLLOQUY experts characterized as “dismal.” Of the 12 programs per average household, 4.7 yield active participation. COLLOQUY's benchmark‐setting measurement, based on a fourth‐quarter 2006 analysis of a dozen business sectors, reveals that the average US household belongs to 12 loyalty programs. US loyalty rewards program membership has reached 1.3 billion, according to COLLOQUY research that provides the first comprehensive census‐taking of loyalty marketing since the modern loyalty era began with frequent flyer incentives in 1981.
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