Their hybrid booking engine/loyalty platform approach is designed to deliver three benefits:
- A crypto wallet which can hold 100+ cryptocurrencies, plus their own GOZO token
- Loyalty rewards with GOZO token, plus the ability to exchange loyalty points from other providers for GOZO tokens
- A travel club which provides 5% to 30% discounts as well as premium airport lounge access, travel insurance and medi-jet evacuation.
According to their whitepaper, ‘By transacting with several tokens besides the GOZO token, the GOZO platform and wallet will function as a clearing house between travel and loyalty rewards, direct travel purchases and crypto tokens. This feature delivers the ability to convert a large selection of cryptocurrency directly into travel, as well as provide an easy crypto adoption pathway, with tangible benefits, for non-crypto holders into the crypto world.’
This is, indeed, commendable.
The blockchain platform underpinning GOZO is Stellar, which will support rapid, low cost transactions. GOZO are currently running a private ICO with the aim to raise US$35m via the sale of 1.8bn of their 3bn tokens.
GOZO aim to release the mobile app UI/UX to the public in Q3 of 2018 with the pre-ICO and main-ICO scheduled for Q4. The mobile app itself won’t be released until Q2 2019.
While Loyalty & Reward Co applaud GOZO for their vision, we believe one of the biggest challenges they are likely to face post-launch is implementing the ability to exchange loyalty points from other providers for GOZO tokens
To illustrate, let’s consider two examples; a large frequent flyer program and a smaller single-brand loyalty program.
Large frequent flyer programs aren’t keen on encouraging members to transfer points or miles out of their eco-systems. While they gladly support other loyalty currencies to be converted into their frequent flyer points (especially from bank and supermarket programs) they don’t tend to support transfers in the other direction. Members can redeem points or miles on consumer goods and gift cards, but the frequent flyer programs use a deliberate pricing strategy to make these options less valuable. For example, Qantas Frequent Flyers redeeming points on flights can access up to 4c per point value, but if they redeem on a $100 department store gift card they access just 0.59c per point. As a result, over 90% of all Qantas points redeemed are on flights. Thus, if a frequent flyer program were to allow members to transfer points to GOZO, it would likely be at an incredibly unattractive conversion rate which would significantly dampen demand.
Smaller single-brand loyalty programs are also reluctant to see their points leave the program. This is because the program is often designed more as a delayed discount approach. Members can earn points, and those points can be used to access a discount or gift voucher for future purchases. The brand can afford to be quite generous because the points are applied against the retail price, while it only costs the brand the wholesale price, making it win-win for both parties. If the points were to be transferred to another program, such as GOZO, the brand would need to pay GOZO for the cost of the GOZO tokens, which just isn’t something they’d be likely to entertain. If you ever want to quickly end a conversation with a retailer, just propose a concept which involves money leaving the business.
The reality is that blockchain isn’t required to support these types of transfer transactions. As mentioned, banks and supermarkets have been allowing members to transfer their points into frequent flyer programs for many years because it makes their programs more attractive. The same businesses may even support the idea of points transfers into GOZO tokens. For the vast majority of business however, this isn’t a technical system issue, but a commercial issue and one which doesn’t make sense. If it did, they’d be doing it already.
We wish GOZO all the best with their play, but caution them not to over-hype the ability for members to exchange loyalty points from other providers for GOZO tokens. It’s a tough space to succeed in, particularly for a start-up.
Philip Shelper is a specialist loyalty consultant based in Sydney, Australia who obsesses about everything to do with loyalty and rewards. His company Loyalty & Reward Co are a leading loyalty consulting firm.
Phil is the author of “Blockchain Loyalty: Disrupting loyalty and reinventing marketing using cryptocurrencies.”
www.blockchainloyalty.io is a global resource centre for everything blockchain loyalty.
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