By Kaleido Insights Research Analysts: Jeremiah Owyang, Jessica Groopman, Jaimy Szymanski, and Rebecca Lieb
Trend: Nearly a dozen companies have announced their intent to launch blockchain-based loyalty programs and/or branded cryptotokens to encourage customer engagement.
But should your company?
Is it right for your loyalty program? Is it just hype? Should you deploy? Our analysis of what you should consider.
Keep in mind, many of these are corporate announcements of intention to launch the programs, few are currently deploying. A few examples:
- Recently, restaurant holding group Chanticleer (franchises include Little Big Burger, American Burger Co., Hooters, Just Fresh, and BGR) announced its intent to use a blockchain-based loyalty coin for rewards across its dining brands,
- Japanese ecommerce giant Rakuten just announced a token at Mobile World Congress called Rakuten Coin aimed at deriving additional loyalty from customers,
- Singapore airlines announced a blockchain based loyalty wallet across retail partners for frequent flyer loyalty wallets,
- Coffee brand Latesso announced partnership with qiibee for loyalty cryptocurrency across locations in Switzerland, Germany, Russia, Austria, and Benelux,
- A tea company rebranded to Long Blockchain Company, and their stock price tripled,
- In 2016, China Unionpay (CU), the third-largest payment network by value of transactions processed, behind Visa and Mastercard, recently announced a blockchain PoC project in collaboration with IBM to develop a loyalty bonus points exchange for its 200+ members across 150 countries,
- Snipps (digital marketing promotions provider) recently partnered with LoyalCoi,n
- Elements’ ELM token cryptocurrency miners can earn ELM for “proof of work” processing. These universal tokens can be used for shopping, airlines, movies, etc.
- Russian Burger King’s WhopperCoin announced their program
While private blockchains and branded cryptos are nascent, bleeding edge technologies with limitations, we have to ask: Why is this a budding trend? We see many potential business opportunities including:
- Fraud reduction: Blockchain reduces loyalty fraud, as members in the network have key information shared in the distributed ledger––a core feature of blockchain. It’s a “single source of truth;”
- Loyalty exchange: Interchangeable points for other currencies, including other cryptos or even fiat based currencies, this provides more value than holding points to one single company’s loyalty program.
- Transferability: Tokens could theoretically be exchanged across other businesses or services, allowing customers to freely choose how to redeem for rewards, discounts, and more, all which encourages repeat engagement. Rewards or tokens become equity, monetizable to consumers.
- More flexibility: Blockchain enables rewards to be more easily tracked, transferred, and allocated into micro-redemptions. In addition, new modes of engagement (e.g. tied to specific content consumption; IoT product use; biometric authentication; beacons; local or regional campaigns) could be more easily scaled up or down across loyalty networks.
- More cost effective: Creating or expanding loyalty programs across affiliates is historically very time- and cost-intensive, especially considering systems integration. A distributed ledger can significantly reduce development, integration, reconciliation, and security costs.
- Low(er)-risk: As blockchain-based applications go, loyalty programs are relatively lower risk initiatives than those involving capital markets, healthcare, or other highly sensitive data.
Risks and Challenges:
This nascent space is fraught with froth, due to media hype, low barriers to entry and more.
- So. Much. Hype. Many of the announcements are not fully deployed systems, but rather a promise. In general, the blockchain space is brimming with more press releases than at-scale deployments (most enterprise blockchain projects are in PoC today). Some of these large companies are likely following the popular trend of tech startups launching ICOs (initial coin offerings) to raise funds.
- Token fatigue, sigh: Consumers may soon feel overwhelmed by all the token offerings, and eventually become apathetic (as many have of current, disconnected loyalty programs)
- “What’s Blockchain?” steep learning curve: Customers like loyalty programs––it’s unsure if they’ll see more value in a blockchain or token-based loyalty program.here are multiple steps to educate customers, as well as encourage them to download, setup, and manage token wallets and accounts.
- But will it scale?: This remains an issue, particularly involving public blockchain networks or programs with high volume transactions, including other charges against the scaling issues with blockchain as an overall industry.
- Hands off my data. Brands will have to collect less personally identifiable information (PII) data for these programs. Not only because of GDPR, and inability to scale, but will have to limit how much PII can be put on a shared network. This also means data aggregators and brokers become less relevant to loyalty programs.
Kaleido Insights’ Recommendations: Deploy blockchain for your loyalty program if:
- You’re poised to experiment with an emerging technology that reshuffles economic benefits of loyalty programs, in favor of brand, affiliates, and customers,
- You’re ready to deploy significant upfront marketing spend to educate customers on what and how to use blockchain,
- Your company is a holding company with multiple disparate brands, products, locations, and systems,
- You’re part of a partnership with multiple companies that all share a common loyalty program, but the systems are not well interconnected,
- Current partnerships aren’t delivering meaningful business ROI; are too cumbersome or costly to scale; customer loyalty is not growing,
- You’re frustrated with the loyalty vendors in your market, and want to give them notice, there’s a new distributed way to maintain customer loyalty,
- Your customers deserve a more flexible loyalty rewards program, and you want to empower them (key segments: early adopters, millennials, crypto-enthusiasts).
We’ve compiled a short list of a few vendors, including: Elements, Loyyal, LoyalCoin, Blockpoint, leave a comment if you hear of others.
Learn More: Kaleido Insights
We’ve published a number of reports on Blockchain including “Blockchain and IoT” and “Business models of Blockchain” and more, to learn more about our advisory, education and speaking services, contact us at Kaleido Insights.
Image from Pixels
Crowd Companies’ member organizations consistently work to overcome challenges while leading their teams in adapting to, and thriving within, the Collaborative Economy. Their efforts to connect with new the crowd behaviors have not gone unnoticed.
2015 Crowd Companies Awards Recognize Collaborative Economy Excellence:
At the Crowd Companies “Main Event” in San Francisco on Oct. 6-7, we presented awards to five member companies that have exhibited excellence in the creation and execution of Collaborative Economy programs. The following companies have proven ROI as a result of their dedication and initiative deployment in the areas of on-demand integration, crowd collaboration, brand innovation, and enablement of makers and marketplaces. Below are photos of Angus Nelson of member success and I, presenting awards at the council event.
Whole Foods Market: On-Demand Integration Award
The On-Demand Integration Award recognizes Whole Foods’ partnership with the Instacart marketplace to provide on-demand grocery delivery services to its customers in 15 U.S. cities. Through this partnership, Whole Foods Market offers its customers the convenience of online grocery shopping, delivery, and pickup without having to handle the logistics themselves. Whole Foods’ partnership with Instacart has resulted in more than $50 million in sales from 160 stores nationwide, and in-store Instacart ads have created a higher lift of product sales.
Swisscom: Crowd Collaboration Award with Swisscom Friends
The Crowd Collaboration Award recognizes Swisscom’s utilization of the crowd to bolster its customer service efforts in a free online community. Swisscom Friends, run on Mila, solves customer needs by connecting them with nearby tech-savvy professionals to provide support for small product/installation issues. In a public interview, the company announced results from Swisscom Friends, including: offloaded support requests from traditional customer service department, enhanced self-care, increased customer satisfaction, and the potential for low-pressure sales upgrades.
BMW: Brand Innovation Award with DriveNow Car Sharing Program
BMW: Brand Innovation Award with DriveNow Car Sharing Program. The Brand Innovation Award recognizes BMW’s provision of car-sharing services through its DriveNow program. Members of BMW DriveNow use the brand’s mobile app or website to locate BMWs (fueled and electric) available for on-demand rental within the business districts of San Francisco, Vienna, London, and many German cities. By actively becoming a supportive member of the Collaborative Economy, BMW has publicly indicated that the German DriveNow car-sharing program is profitable.
Autodesk: Maker Enablement Award
The Maker Enablement Award recognizes Autodesk’s empowering the Maker Movement from the CEO on down through offering access to its design software, tools, and programs to the creative masses. Through providing free software and curriculum to schools, educators, and students; offering 17 personal design and creativity apps; inspiring maker communities through Instructables and Creative Market; and offering an artist-in-residence program at its San Francisco workshop, Autodesk has showcased its commitment to furthering the power of makers to design, build, and innovate.
Intuit: Marketplace Enablement Award
The Marketplace Enablement Award recognizes Intuit’s commitment to the rapidly expanding marketplace of freelancers and independent contractors within the Collaborative Economy. Its launch of QuickBooks Online Self-Employed enables contractors to manage business and personal finances, handle taxes throughout the year, and easily meet compliance requirements, including with partnerships with a variety of organizations in the ridesharing space, and Peers.
Congratulations to all the well-deserved winners! We look forward to seeing our members mature and deploy in the coming year and plan to continue our awards in 2016.
Above image: Social Business Replicated by Collaborative Economy, Ver 1.1If you’re a social business professional, you’re in a prime spot to advance your career to the next phase: the Collaborative Economy.
For over ten years, I was a social business professional. I helped Hitachi launch their program as a full time employee in 2005, started this Web Strategy blog, joined Forrester Research, and became a founding partner at Altimeter Group. I saw the genesis, evolution, maturity, and integration of an entire market in less than a decade.
Today, another decade later, I’m witnessing the birth, growth, and emergence of the next phase of social connection: the Collaborative Economy. In social media, people created media and shared it on social networks. In this next phase, people are creating physical goods in the maker movement and by crowdfunding, and sharing them in revolutionary movement that we call the Collaborative Economy.
In the preceding graphic, you’ll see that many of the Social Business software players that I’ve researched are now replicating in the Collaborative Economy space, from profiles, data, APIs, apps, analytics players, corporate platforms, and more. I’ll be sharing this graphic and other data at my keynote at LeWeb in a week where I’ll be forecasting 2015 the Year of the Crowd.
Social Business was a fast-moving industry that’s starting to integrate into corporations. If you saw how that industry birthed and grew, and were a leader or practitioner, you’re ahead of the pack and can grow your career in this next phase, the Collaborative Economy.
If you’re a Social Business professional, here are a few resources to get you caught up to speed:
(Above pic: Thousands of HK protesters link their phones together using Bluetooth to become their own internet –overcoming the government ban on social media sites. Photo credit: Alex Hofford)
If you thought peer-to-peer-based Uber, Airbnb, Lyft and Lending Club were disruptive, you haven’t seen anything yet.
People are empowered –through commonly used technologies
Previous revolutionaries have used pitchforks, wagon barricades, pamphlets, signs and drums. Today’s revolutionaries are using Firechat. It’s not just for revolutionaries, as I just downloaded Firechat. If you want to communicate during an emergencies, in the subway or on a plane, you can download Firechat too.
Seven month old app enables the crowd to become the internet
Seven month old Firechat enables people to become the internet themselves by turning their phones into a network, bypassing access to the worldwide web. The preceding picture shows Hong Kong protesters “armed” with smartphones, using their devices as a single, united network to communicate, call in resources, talk to media, and tell their story globally – even when the government had shut down many internet services. This video tells first hand.
Firechat enables the crowd to connect to each other as one resilient network
Meet Firechat, the app for crowds, communities, and revolutionaries. Downloadable for free, Firechat enables you to chat with other people around you WITHOUT the internet. That’s right, it uses Wi-Fi and Bluetooth signals to create a “mesh network” where individuals can pass messages to each other on a peer-to-peer basis. It can also be used on the grid for further access. When it was first launched in March, Taiwanese protesters quickly adopted Firechat.
When would such a use case be common?
- With friends are on a plane that doesn’t offer Wi-Fi
- Camping with a troop of scouts
- In the desert at Burning Man when the weather goes bad
- In the subway with a group of colleagues
- At a concert or sports event when cell infrastructure overloads
- Austin during SXSW as cell networks are crammed from selfies
- At a protest when a government disables social media or the internet
- On a cruise ship in the middle of the ocean with your extended family
- For victims and first responders after a natural disaster
- In a foreign country where you’re concerned that someone might be sniffing your data
- In a village in an emerging country, where people have phones
Firechat enables P2P communication, bypassing centralized powers
Firechat enables people to connect to each other, peer-to-peer, without relying on a central telecommunications source, like an ISP, a government, or other system. In fact, in the last few hours, Firechat has been reported to have been downloaded 100,000 times, especially by Hong Kong protesters who are demanding people’s democracy after the government shut down the internet. Bruce Schneir, a top electronic security expert, writes the following:
“Firechat is theoretically resistant to the kind of centralized surveillance that the Chinese government (as well as western states, especially the US and the UK) is infamous for. Phones connect directly to one another, establish encrypted connections and transact without sending messages to servers where they can be sniffed and possibly decoded.”
Part of a broader suite of products – nearly impossible to stop
I had a chance to get some answers from Christophe of the Firechat team. The parent company is called Open Garden, which has the mission of: “…helping build a new decentralized mobile Internet.” The only way to stop Firechat is: Forbid people to download it (impossible through P2P file sharing), disabling power to a phone, or confiscating the phone. When it comes to speed, he told me that news broke of the closure due to weather at Burning Man on Firechat before it hit Twitter. In a remote area, the P2P network was stronger and faster.
Security and identity still questionable
I asked the team, how safe and secure is it, really? They responded, “Firechat is a public chat app. Everything that you type is public. Our mantra is, ‘do not use your real name or type anything you would not want someone else to read,’ But give us enough time and you’ll see what we come up with…” They mentioned that, in the future, they may be able to develop new forms of verified identity. I’ve seen these emerge in now defunct apps like Honestly, which verified if you had a real LinkedIn account without disclosing your name or identity.
Requirement: Adoption and Proximity
It’s also key to note that Firechat requires density and velocity to work well, adoption strategy is key. Also, users must download the app –before a severe outage –meaning adopting is required. There’s two scenarios: People anticipating to connect while going off the grid while traveling, or two: in response to an emergency, opposition from powers. The software worked well in dense SF (the second most dense city in USA) but when off the grid in the suburbs there were not folks in immediate proximity available to create a mesh network, see screenshot.
Forward looking thoughts:
- Expect Facebook, Twitter and Google to acquire or build these mesh technologies. Expect Facebook, Twitter and Instagram, each of which has been blocked by various governments, to develop this same P2P technology, enabling their experience to be shared all the time, regardless of a central power.
- A distributed network puts centralized telecom players on notice. This poses interesting questions to governments, internet service providers, telecommunication companies, and even marketers who rely on platforms like Facebook or Twitter. We’ve already seen the rise of FON, a peer-to-peer Wi-Fi device that enables people connect. This is more of the same.
- This is part of the continued trend of the crowd-based collaborative economy. I’ll likely include Firechat in some aspect of the next iteration of the Collaborative Economy honeycomb framework, as the next step is enabling people to share the physical world with each other using this P2P communications network.
The bottom line: People are empowered to get what they need from each other using commonly available technologies. It means the crowd is becoming like an organized company – and that they will bypass inefficient institutions. Get your organization ready now.
This was originally posted on VentureBeat, with a wide array of comments and reactions. Silicon Valley has been espousing sharing, making, community through the latest startups like Lyft, Airbnb, LendingClub and more. Yet is Silicon Valley really leading the example? While generalizations can put people off, I wanted to take a stand on some broader trends we see. I’ve received reinforcing and disagreeing feedback, all which I’m open to learning more from.
Photo by Adam Foster
Here’s what Silicon Valley can learn from good old Midwestern values
Silicon Valley startups like Uber, Lyft, Airbnb, Lending Club and others that empower people to get what they need from each other command extensive market attention and sky-high valuations. This Collaborative Economy prospers on the rise of local neighborhoods in home-sharing, friendly human connections with fist bumps in peer-ride sharing, and the ability to share money with each other at better rates than banks.
A year ago, I spoke with an insurance company in Iowa. They shared with me that, while these new startups are interesting, they aren’t really anything new. They reminded me that the Midwest has been participating in these friendly behaviors for a century and a half. They said “Jeremiah, this isn’t new. It’s called being a good neighbor.” What they said stuck with me for months until I decided to understand how Silicon Valley is trying to emulate Midwestern values.
Being a Silicon Valley resident, I asked my Midwestern friends to share with me what Midwestern values mean to them. I tweeted a call for responses, then graphed how people responded. While there was always some variation, a major theme developed around a strong work ethic, modest integrity and helping others. These three tenets formed a common thread: I heard from my colleague, Angus Nelson of Wisconsin, about “the value of working hard”; and from Ben Smith, a Kansas City resident, about the classic Midwest value of integrity: “Your name and reputation are your most prized possessions.” From Zena Weist of Kansas City, I learned about helping others, “A stick of butter and a smile, and no need to pay me back.”
So, how are Silicon Valley’s latest Collaborative Economy startups stacking up to these Midwestern values?
To start with, both the Midwest and the Silicon Valley share a similar work ethic. While Silicon Valley workers start the day later than Midwestern farmers, who are up and at it hours before dawn in the heartland, they do work well into the evenings and even on weekends. Tech startups offer many employee benefits to keep people on campus, enabling satisfying, round-the-clock environments. Despite different working hours, both Silicon Valley and the Midwest share the same ethic of hard work.
Yet, while folks in the Midwest take pride in their individual integrity and humility, Silicon Valley has some lessons to learn here. From ride-sharing companies fighting dirty to unethical executive behavior, from a self-righteous 1 percent viewpoint to the further divide of the rich and poor, Silicon Valley’s meritocratic culture means those that win win big — and think they have a divine right to flaunt it. I’ve seen many a roaring Ferrari or whirring Tesla in front of makeshift homeless tents in San Francisco’s tech neighborhood, the SoMA district, where I often work.
The Midwestern value of helping others without expecting reciprocation is best summarized by the “stick of butter and a smile” axiom when a neighbor is in need. Silicon Valley’s traditional come-get-mine attitude rewards the disruptors and the fiercest competitors. While San Francisco boasts that nearly one of every eight residents are millionaires, a vast majority are not living at middle class standards and are struggling just to get by. The potential for a backlash is rapidly increasing.
When it comes to the three major Midwestern values that Collaborative Economy startups are enabling: Strong work ethic, modest integrity, and helping others, Silicon Valley, as a whole, still has a lot to learn.
But with that, we should acknowledge that the new technologies that enable ride-sharing, home-sharing, and money-sharing are built on powerful platforms like social networks, mobile devices, and apps can extend the barn-raising spirit to all cultures beyond the Midwest.
These new technologies are enabling us to connect to strangers in a human way, as trust data is collected from ratings and rankings features, from social networks for verification of social circles and from mobile devices to help us navigate and find idle cars, homes, and goods.
Remember that Iowa insurance company who appropriately corrected me for glowing over the new Collaborative Economy as just being a “good neighbor”? I responded that these new technologies enable all of us “to be good neighbors to strangers.” They agreed.
We can all benefit in this Collaborative Economy, enabled by both empowering Silicon Valley technologies and Midwestern ethics, leading to further integrity and neighborliness.
Jeremiah Owyang is the founder of Crowd Companies.
Crowd-based business models and marketing are no stranger to the Web Strategy blog –and now we’re seeing the same effect impact non profits, including the much discussed (and debated) ALS Ice Bucket Challenge. I was curious on the actual impacts of this controversial crowd challenge, and decided to tally up some of the numbers. In this above embedded slideshare, you’ll see facts on buzz, assumptions on water usage, influencer impact, money raised, and bottom line of total donated dollars.
Also, in case you’re wondering, I was challenged by Scott Monty, I accepted the ice shower (over my garden –in a nod to our drought) and also donated to ALS —you can enjoy my washed up video, here. Lastly, top non profit thought leader Beth Kanter has questioned if this effort can be replicated, and even found other non-profits are emulating or “charity jacking”.
Cruise through the embedded slides above –to see some of the stats of this crowd based effort.
Update: Over the last few days, I’ve started to think about the causes of this blue moon event. I put together this handy guide, so if your boss, client, or charity wants to create their own, they have a simple ten step guide.