Incent, Waves and the Rewards Revolution

The loyalty and rewards sector is broken. Blockchain has a lot to offer in fixing it. That’s just what BitScan will do with the Incent programme, launching on the Waves platform later this year.

Incent Launching on the Waves Platform

The loyalty and rewards sector is broken. Blockchain has a lot to offer in fixing it. That’s just what BitScan will do with the Incent programme, launching on the Waves platform later this year.

Loyalty programmes are popular. From Frequent Flyer miles to Starbucks points, the principle is simple: give customers a token that can be spent at your store or business, and they will keep coming back. It’s an idea put into practice not just by the big global brands who can afford smartphone apps and credit card-style loyalty cards but by hundreds of thousands of small outlets who run schemes with paper cards and stamps.

The reality? Not many of them work nearly as well as they should, and some even end up costing businesses money. Customers don’t spend a large proportion of their rewards – a look in your own wallet will probably confirm that – and merchants don’t receive the benefits of repeat custom. Moreover, there is some risky maths involved. Every time a reward is issued it represents a liability to the merchant. If too many customers redeem their rewards without buying anything else, profitability will be hit. So the schemes are, bizarrely, predicated on a large proportion rewards not being redeemed.

Transferability

These loyalty points are almost always non-transferable by design. One reason is that if you can transfer tokens, they become more valuable to customers – and a greater liability to merchants. Imagine if you could send all your unwanted loyalty points to a friend, who would then spend them. That’s a problem for businesses who want to incentivise repeat custom, but on their own terms.

Make a token truly transferable, though – say, by using a popular blockchain platform – and you dramatically change the economics of the situation. Imagine the Starbucks ‘Star’ token was as transferable as a crypto coin. Now you open up secondary markets as the tokens trade on exchanges. Starbucks will redeem 15 tokens for a cup of coffee, so it’s reasonable to expect one Star to approximate a 15th of the price of a coffee, with some small discount. A Star token is now not a token similar to a casino chip: it is a form of parallel money. It has real value.

BitScan and Incent

Crypto business hub BitScan is launching a scheme like this, using the Waves platform due to its highly flexible approach to token issuance and trading. Whilst the Starbucks example above is a basic illustration, Incent will be a more sophisticated approach.

Participating merchants will be able to configure what proportion of the transaction they divert back to the customer as Incent. This is important because different businesses have different profit margins. They can also configure what discount they offer for customers to pay with Incent. So a customer might pay $100 and receive $5 worth of Incent at current market prices – which could be worth $6 at the merchant’s own store. BitScan acts as primary broker, with merchants paying a slice of the transaction to them, and BitScan sending the appropriate amount of Incent to the customer’s smartphone app. Of course, if customers want to send their Incent to someone else, or trade it on an exchange (including on Waves itself, against many different national currencies) they can, reacquiring the cash value.

It’s not hard to see the value of this proposition. The more merchants sign up for the scheme, the greater buy pressure there is (some proportion of tokens will always be bought off the open market, with some being newly-issued). Thus the price of Incent should gently and steadily rise over time – benefiting merchants, customers and the initial investors who will fund the final stages of development and marketing. And remember, Incent is not a token that can only be traded with one business. As such, it has value and so there is no forward liability to merchants who issue it. Everyone wins.

Development and marketing

It’s a great pitch for those who recognise the power of blockchain technology for transforming the rewards sector. But a good pitch isn’t enough any more. There have been too many crypto projects that got stuck in development, or turned out to be vapour.

BitScan has spent months developing some remarkable software that allows merchants to configure the terms of how they issue and redeem Incent (see screenshots). The proof-of-concept is already up and running. The crowdfund, scheduled for October, will raise the money required to bring it to market and integrate it into merchant systems.

bitscan, incent

bitscan, incent

On which subject: there has already been significant interest from businesses in the UK and Australia. At present at least one business ($4 million annual turnover) has signed up on the grounds that they recognise the potential for growing their business, with two others seriously considering their involvement. That means being able to hit the ground running with few delays.

The Incent ICO is scheduled for October(pre-ICO early bird discount in September), with the first businesses going live with the scheme in the new year. For more information, keep an eye on http://bitscan.com/articles and the Waves Slack.