Today Etisalat announced the launch of a blockchain-powered Rewards Exchange that lets users of the Smiles mobile app exchange points from one loyalty program for another.
Smiles is an existing deals and rewards app that provides discount offers across 3,000 outlets in the UAE. It has 2.2 million customers and more than a thousand participating brands.
Now users can add their memberships of other loyalty programs within the same app and convert points that are about to expire to other programs.
Given the Rewards Exchange is new, the first program that has signed up is GEMS Rewards, a loyalty program from GEMS Education. Hence Smile points can be exchanged for GEMS points and vice versa.
“We are delighted to launch Rewards Exchange on Smiles, the first Internet of Loyalties in the UAE powered by blockchain, which allows customers to earn and redeem points and maximise their savings by exchanging points with GEMS Rewards, as well as other loyalty programmes that will be integrated with Smiles in the near future,” said Khaled Elkhouly, Chief Consumer Officer, Etisalat.
We contacted Etisalat to find out more about the blockchain technologies used but didn’t receive a response by publication.
The rationale behind blockchain and rewards
There are several reasons why rewards and blockchain are a good match, but two stand out. Most reward points are redeemable at multiple brands and outlets. Blockchain is ideal for these sorts of multi-party processes and it can provide greater detail about how the rewards are being used in near real-time. In other words, not just where the loyalty redemption is happening, but for what product or service.
A second advantage is tokenization. Rewards points can be treated as digital assets and are now tradable as in the Etisalat case. Recent KPMG research found that 61% of millennials prefer to donate reward points rather than use them personally. Tokenization and reward exchanges make this viable.
On the one hand, that could result in greater customer satisfaction, which is the ultimate purpose of loyalty programs. However, it also could end up costing brands more, as a higher proportion of points are likely to be redeemed. Unredeemed points usually sit as a liability in the balance sheet, but only until the points expire. A significant proportion of loyalty points go unredeemed, with estimates varying from 20% to as much as 60%.
Rewards: a popular blockchain application
Perhaps the highest-profile blockchain rewards app is from Bakkt, which is launching a solution where users can cash out their loyalty points. The company started as a spin-out from NYSE owner ICE, and ICE bought rewards technology company Bridge2 Solutions for Bakkt. The startup used the bulk of its $300 million Series B round for the acquisition and its app, which is also a cryptocurrency wallet, is in early access mode.