Impact of Blockchain Technology applications on LRPs Matrix

The above mentioned blockchain applications for LRPs systems, if applied, will influence the current state of the LRPs archetypes. As presented in the previous chapter, through the cross-case synthesis of this multiple case study research, the researchers extracted several common dimensions that characterize both the Stand-Alone Program and the Multi-Vendor Loyalty Program. Hereafter, the impact of the blockchain applications will be considered by the researchers, and the extracted LRPs dimensions will be presented. The impact is summarized through a impact matrix (Table 5), ​and, moreover, each impact is individually presented below. Finally the Matrix composed by the two case studies is extended to comprehend the blockchain impact and makes a comparison.

Level of interoperability Potentially a single ledger on blockchain shared by all companies participating in the loyalty program, can make transferring points simple, fast, secure and cost-effective.

Program Speed Blockchain smart contracts executed automatically will allow near real-time point management; Invoicing and payment settlements between partners; Instantaneous redemption and issuance of points and rewards​.

IT Infrastructure Complexity

Blockchain ledger will remove the need of a centralized storage as well as the requirement of providing security and validity on the data. Additionally, smart contracts will substitute the current issuance and redemption management of points. Customer data will remain part of the legacy system.

Depth of data collected Points issued as tokens with unique identification will be registered on the blockchain and can be tracked. Therefore, by allowing to trace an immutable point journey the companies will be able to extract more powerful and reliable data on how customers spend points through the network of companies.

Customer freedom of choice

The blockchain based loyalty can enable more companies to collaborate, consequently providing more choices for discounts.

Additionally, by having a single ledger can enable customers to exchange points to each other, increasing their freedom of choice.

Customization Level With specific data gathered from unique loyalty tokens, companies will be able to tailor better discounts and offers to individual customers.

Table. 5: Blockchain Applications on LRPs dimensions - Impact Matrix

First of all, a new blockchain platform application can improve the overall ​level of interoperability of the system. The blockchain platform can be used to provide a single ledger which, in the context of LRPs, will connect companies willing to establish their LRPs.

Therefore, LRP providers, administrators and customers are able to interact in a immutable system with less friction and high security. Thanks to technical capabilities of this application companies may collaborate freely.

Regarding the​program speed for executing tasks such as managing the points or transferring and updating the token balance of the customers, there is the potential application of smart contracts. The researchers found that currently points are transferred through cumbersome processes among program partners. Smart contracts, properly programmed, can perform several tasks such as invoicing as well as payments between program partners and due to the automatic execution, the process may be performed in real-time. Additionally, if the points are managed instantaneously a customer may see its points accredited almost seamlessly, and therefore the customer may be able to redeem the points at a faster rate.

Thanks to the blockchain application the ​complexity of IT infrastructure used to sustain the program will be reduced. On one hand, the space needed for data storage of transactions will not be an issue, given the transfer of the data on the common ledger, and therefore the presence of a centralized database will not be mandatory anymore. Then, the issuance and

redemption system for the point management will be replaced through the smart contract technology which will run on the common ledger without requiring any company resources.

Finally, the infrastructure employed to ensure the security and verifiability of the data, previously stored in the centralized database, may be removed, given the encrypted nature of the blockchain data and because of its immutability. Therefore blockchain will partially unify the LRP IT infrastructure

The ​depth of the data collected ​through the loyalty program will also be improved thanks to the technical capabilities of the digital token. In this context, the technical aspects of the blockchain technology, namely, the unique identification of the points issued through the blockchain will be exploited. In fact, implementing such a type of system will shift the current approach, which considers all the points as equals. The company will be able to trace the journey of every single point, allowing the data analyst to extract new information about customer behavior from an ubiquitous source.

As a byproduct of the abovementioned blockchain applications the ​customer’s freedom of choice can potentially also be improved. In particular, the new platform will enable collaboration with a greater amount of companies, and consequently may offer more discounts to customers. Moreover, the exchange of points between customers will be possible, providing customers with other options of how to manage their points and therefore increasing their freedom of choice providing a high freedom of choice to the customers.

The last byproduct of the application of digital tokens will be the improvement of the ​level of customization of the rewards to individual customers. Using blockchain will provide the ability of collecting unique immutable data so that the companies can analyze this new set of data and therefore, potentially, they will provide the customer with personally refined and customized discount offers.

Finally, through the analysis of the effects of the blockchain applications on the LRPs archetypes dimensions, the researcher have extended the existing matrix to the new LRP blockchain archetype created (Table 6).

Returntool (private)

Nectar (coalition)

Blockchain (decentralized) Dimensions

Level of interoperability Absence of interoperability

Intermediated Interoperability

Free Interoperability

Program Speed Fast Slow Instantaneous

IT Infrastructure Complexity

Fragmented Partially Unified Partially Unified Depth of data collected Mono-sector Multi-sector Ubiquitous Customer freedom of

choice

Low Medium High

Customization Level Generic Segmented Personal

Table 6 : LRPs archetype matrix & blockchain