• Harnessing Blockchain for Enhanced Customer Loyalty in the Travel Sector – Image Credit Unsplash+   

Traditional travel loyalty programs are not meeting customer expectations, causing frustration and disengagement.

Integrating blockchain technology in loyalty programs can revolutionize customer engagement, providing flexibility, autonomy, and interoperability.

As the travel industry grapples with maintaining customer loyalty in an increasingly digital world, Can Taner, CPO at Bitpace, suggests blockchain technology could provide a solution. Traditional loyalty programs are failing to meet the expectations of today’s tech-savvy customers, leading to high levels of dissatisfaction and disengagement. According to the Bond Brand Loyalty Report 2024, half of all travelers find the inflexibility of these programs frustrating, and almost a third have abandoned them entirely.

Traditional loyalty programs operate within closed-loop systems, restricting customers to one brand and offering limited redemption options. As customers interact with various brands and accumulate points, the inherent limitations of these systems diminish the perceived value of these points, leading to high disengagement rates. Consequently, brands face the risk of stagnation in a world that increasingly values digitized, seamless travel experiences.

Travelers today expect more than just airline miles or hotel discounts. They demand flexibility, choice, and control over how they interact with brands and redeem their rewards. For them, loyalty programs should function as a currency, not just a one-way ticket to rewards tied to a single brand. In response, the travel sector is exploring innovative technological solutions to revamp its approach to customer loyalty.

With its decentralized methods and tokenized assets, blockchain technology offers a creative solution to this problem. Loyalty programs can become more dynamic and customer-focused by embracing these new technologies. However, integrating blockchain into the travel supply chain is not without challenges, as evidenced by projects like Winding Tree, which cited unpreparedness and the need for more trust in blockchains within the travel sector as reasons for discontinuing their tokenized loyalty program.

Nonetheless, Taner suggests that if businesses adopt a collaborative attitude and allow customers to transition between brands, beneficial mechanisms can evolve, leading to potentially remarkable long-term paybacks. Tokenized loyalty systems powered by blockchain technology radically depart from existing models. By converting travel points into digital assets on the blockchain, these systems create intrinsic value and transform how points are earned, redeemed, and valued across different ecosystems.

Blockchain technology also enables real-time, cross-border transactions, eliminating the delays and complexities associated with traditional loyalty systems. It simplifies conversions and eliminates geographical restrictions, providing convenience for businesses and consumers. For businesses, this approach allows deeper penetration into the international customer base, while consumers enjoy greater freedom and choice in using their rewards.

However, implementing such decentralized schemes requires extensive preparation from travel companies. This includes choosing a permissioned blockchain to operate on, designing interchangeable loyalty tokens within the travel ecosystem, deploying schemes on a secure decentralized ledger, and ensuring compliance with evolving regulations.

Taner argues that traditional loyalty programs are insufficient for today’s travelers. As customer expectations evolve, businesses must adapt their engagement strategies accordingly. Blockchain technology offers a fresh, customer-centric approach by enabling flexible, interoperable, decentralized loyalty systems. By adopting these new models, the travel industry can reinvigorate its loyalty programs, increase customer satisfaction, and drive growth in the digital age.

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