Loyalty 2.0: How Brands can Tokenise Customer Attention and Data (Part 1)


A friend recently called me up and asked me if I was a member of a specific loyalty program. I said I was. He said: Please go and convert your points to ecommerce vouchers because the redemption process was likely to be made harder. I did, and walked away with Rs 20,000 of vouchers. To the credit of this loyalty program: redemption was very easy.

One of the credit cards I have has a redemption process that consists of 11 steps!

Ever tried redeeming airline miles for free tickets? I have – multiple times. More often than not, there is a mismatch between the preferred date of travel and the availability of the free tickets. Net result: points keep expiring. And what is worse: the airline keeps sending emails periodically to buy back the expired miles!

The company where I bought shoes (a once-in-a-few-years purchase) auto-enrolled me in their program. So I keep getting messages about the points I have and prodding me to cross a threshold for availing benefits. An ice-cream chain also gives me points, and I hope one day I will have enough to get one free ice cream!

From airlines to credit card companies, from restaurants to ecommerce sites – loyalty programs are the in-thing. We are all advertently or inadvertently members of various loyalty programs. In some, we track our points earned closely. In others, we don’t care. Most loyalty programs are brand-specific. Points are generally non-transferrable and they can expire. While some have moved to mobile number as the identity, some have long strings of alphanumeric characters that make it necessary to carry the card along for earning points on purchases. Redemption is often not easy – multiple steps or restrictions make the process much harder than earning the points. A few open even debase the program forcibly reducing the value of the earned points. One thing common to all programs is that they are linked to transactions – us as customers spending money. This is the world of Loyalty 1.0.

Loyalty has not changed much in the past few decades. For brands, it is a mechanism to ensure an increase in purchase frequency as well as gather data about our preferences so they can personalise offers. In commoditised markets, a loyalty program can be a good way to ensure stickiness. For customers, it is a sweetener, a sort of cash-back program – paid for from our own money.

I recently started thinking what loyalty programs would look like in the Web3 future. Could rewards be linked not just to transactions but our time? Could these attention-based programs be pan-brand? Could customers be incentivised for sharing their data? Could the points be transferrable or even tradeable on an exchange? Could the loyalty programs be differentiated based on our lifetime value to brands? Could the value of the points increase over time? Could the programs be decentralised and onchain so that the points earned could never be debased? Could what has happened with crypto (the creation of a new asset class without central banks) happen in loyalty? These are questions we will explore in this series.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.