Over the past two months, I’ve been part of the advisory team which helped launch the first blockchain loyalty program into the Australian market; EZToken Rewards. This was truly ground-breaking stuff
This is a different kind of loyalty program and one that’s very new to the Australian consumer. Essentially, instead of standard loyalty points that we’re all so used to, the member is rewarded with a cryptocurrency called EZToken.
EZToken is a floating currency, which is actively traded on cryptocurrency exchanges. This means that the value of EZToken is not determined by the program operator (i.e. like Qantas Frequent Flyer or Flybuys), but rather, by the simplest of economic forces; supply and demand.
Back in January 2018, an ICO was held to progress EZToken’s vision and build out their product. An ICO is an Initial Coin Offering (similar to an IPO), where a finite quantity of crypto-tokens is created and then sold to investors to raise capital. EZToken then engaged Loyalty & Reward Co’s services in April 2018.
From there, it took only 2 months to bring the program to market for its launch in Brisbane on 26 June 2018; a massive achievement.
Throughout this project we encountered several obstacles that threatened to derail it, none more obvious than the legal and regulatory hurdles that came with setting up a program which, by its very nature, could allow members to trade their earnings on an exchange for other cryptocurrencies and ultimately, fiat currency. Whilst we came up with an interim solution under the existing loyalty exemption, the ultimate goal of securing exchange trading functionality may be pending the approval of an Australian Financial Services Licence. Read more here. The point is, creative thinking saved the day.
Learning 2: It’s possible to go from ICO to having a working product in a short space of time
Many blockchain companies that have gone through ICO’s will ultimately fail. This is because they a) have no real-life use case for their crypto-tokens and b) have little operational or executional know-how, meaning that after they’ve raised the money, they have no idea on how to get the most mileage out of it to actually deliver to their vision. EZToken Rewards succeeded where others have already failed because they played to their strengths in product development and had the good sense to bring in the loyalty experts to handle the rest.
Learning 3: The retailers love the program
Establishing a retailer network is one of the hardest, if not the hardest, thing to do when launching a brand-new loyalty program. Because of the fluctuating value of the currency in this program, our positioning to the retailers was that members will become addicted to seeing where the value is at, multiple times a day. For the retailer, the key is that members see value in the reward program currency, because that goes hand in hand with ongoing and increasing earn activity.
Learning 4: The members love the program
It was really interesting seeing the high levels of engagement from customers who are typically a lot less engaged with programs that are already well-entrenched in the market, such as major frequent flyer and supermarket programs. Cryptocurrencies have been positioned as the start of a new, decentralised global economy and whether we agree with it or not, that has mass appeal to the younger generations coming through whose combined spending power is only getting bigger. Ultimately, this segment will dictate what has the most relevance and what will fade into obscurity.
Max Savransky is Loyalty Director of Loyalty & Reward Co, a leading loyalty consulting firm based in Sydney. He has 10 years’ experience within the loyalty industry including roles at Mastercard Loyalty (Pinpoint), Silverneedle (Next & Sage Hotels) and Pureprofile. As Loyalty & CRM Manager at HOYTS, he launched the highly successful partnership with Qantas Frequent Flyer, including a world-first Qantas Points in-store redemption proposition. He is an active cryptocurrency trader.