Lecturer at Deloitte Academy Sergey Bondarenko: blockchain grants new opportunities to loyalty programs
Such loyalty tools as bonus and discount cards, gift certificates successfully help companies retain clients and increase an average bill. Sometimes it crosses our mind that there is an excessive amount of them. How to make a loyalty card work, not gather dust? The speaker of Blockchain & Bitcoin Conference Belarus Sergey Bondarenko ensures that tokenization of all loyalty programs and combining them in a single network is the most efficient solution.
Interviewer: Blockchain & Bitcoin Conference Belarus (BCВ)
Speaker: Sergey Bondarenko (S.B.)
Sergey Bondarenko is a CEO at Bonex.io, lecturer at Deloitte Academy, a Chairman of the Committee for the Standardization of Blockchain and Distributed Ledger Technologies (TK-188/ISO 307). Blockchain evangelist, member of working groups on the crypto assets regulation. He was a Head of Technological Consulting and Digital Innovations at Deloitte Garage. His professional experience embraces over 20 years in managing projects related to IT audit, enterprise architecture design, development of IT strategies and long-term growth plans, software development. He is a practicing specialist in design thinking and the scientific method of Goethe. Sergey is an ISACA Member since 2008, and a certified IT auditor (CISA).
BCВ: Hello, Sergey. What are the advantages of the decentralized loyalty system over its decentralized analog?
S.B.: A decentralized blockchain-based network would give each merchant an opportunity to issue own loyalty tokens. Moreover, we leverage blockchain for the registration of goods delivery, bonuses exchange or repurchase. The shift to the blockchain tech would entail the visible price cut for the loyalty programs maintenance. Plastic bonus cards are currently the best solution but due to the accompanying infrastructure, they require a lot of expenses. Blockchain offers the same functions at a considerably lower price.
Another important advantage lies in the elimination of cards, tokens, coupons, and other holders of bonus cards. They will be replaced by a single app created for all loyalty programs.
The third but not less important: a buyer will be a direct holder of loyalty tokens and manage them independently, give them to another user, buy out goods or services or exchange loyalty tokens of one merchant to loyalty tokens of another one. This is a whole new approach!
BCВ: How can business benefit from the tokenized bonus system?
S.B.: First of all, it will cost cheaper for a business to implement the loyalty management technology. Secondly, companies will know that the issued bonuses return to them only once and nobody would buy them out twice. The accounting system would also gain benefit: tokenized bonuses are easy to record and manage. This system can be implemented very quickly and transparently. Sometimes it’s hard to predict the amount of expenses on a loyalty program. We all know that business processes cannot be elaborated if not estimated. Blockchain-powered loyalty programs are of the highest importance to the B2B segment.
BCВ: What are the challenges of the single loyalty system implementation (say, in one country)? How can they be removed with the help of the modern technologies?
S.B.: Many marketers and loyalty managers don’t have the foggiest idea about cryptocurrencies. For them, it’s hard to understand the possibilities the DLT exposes (many thanks to Smile-Expo for its exhibitions!).
It has always been a challenge and a pain point of the emerging technologies introduction at a time when the old ones work well. Meanwhile, many business owners have already invested big money in the existing loyalty programs and will strive to save them. At the same time, the majority of merchants who couldn’t afford themselves an electronic bonus system not long time ago are going to get such an opportunity.
BCВ: What are the features of the decentralized loyalty system that attracts clients?
S.B.: I would say that these technologies should be presented as a product focused on the user future experience. For example, here are some unfavorable and inconvenient aspects of loyalty systems.
- Registration: filling up a paper form, which is a boring routine.
- It’s a real burden for one person to carry all the cards. Therefore, some of them gather dust at home and are never used. In fact, a client participates only in a couple of loyalty programs.
- Non-transparent customer-merchant relations. Sometimes bonus points unexpectedly expire or a merchant forgets to inform you that they will expire soon.
- No freedom of actions with bonuses: you cannot add them to the bonuses of another person.
- If a program has a mobile app, every merchant will present their own.
A solution that goes far from the abovementioned restrictions and satisfies client buying experience would gain popularity. Clients would be happy to hear that there won’t be boring forms, card packages, and tons of mobile apps anymore. Instead, they would obtain completely digital experience, a single app for all types of bonuses, and absolute freedom of their internal exchange.
BCВ: How to make such a system scam-proof?
S.B.: Blockchain currently demonstrates a very high security level. It’s impossible to use crypto tokens twice. The DLT also offers a function of multisignature excluding one-person processing of the most important transactions. This means that an employee at the merchant’s company would not have a chance to uncontrollably emit loyalty tokens, not mentioning usual holders of these tokens.
BCВ: What will your presentation be dedicated to at Blockchain & Bitcoin Conference Belarus?
S.B.: I plan to tell about the function of tokenization in economy on the whole, approaches towards tokenization, and its advantages exemplified by the loyalty management industry. I will as well shed light on my own research and development works carried out by the Bonex startup.
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