Blockchain-Based Loyalty Management System

Abstract

Loyalty platforms are designed to increase customer loyalty and thus increase consumers’ attraction to purchase. Although successful in increasing brand reach and sales, these platforms fail to meet their primary objective due to a lack of incentives and encouragement for customers to return. Along with the problem in originating sales, they bring excessive costs to brands due to the maintenance and infrastructure required to make the systems feasible. In that sense, recent blockchain technology can help to overcome some of these problems, providing capabilities such as smart contracts, which have the potential to reinvent the way loyalty systems work and solve current problems. Although blockchain is a relatively new technology, some brands are already investigating its usefulness and rebuilding their loyalty systems. However, these platforms are independent and linked directly to a brand. Thus, there is a need for a generic platform capable of creating and managing different loyalty programs, regardless of the size of the business. This paper explores the shortcomings of current loyalty programs identified through the literature review, and proposes a loyalty management system with blockchain integration that allows any retailer to create and manage their loyalty programs and have customers interact directly with multiple programs in a single application.