The way we interact online has changed with each new technological revolution to hit the internet. Browsing on our mobile devices wasn’t possible until the advent of wireless broadband, and the short bursts of communication we now prefer, thanks to social media platforms like Twitter, were once the realm of email exclusively. Payments have changed as well, with services like PayPal making it easier for commerce to move online and across borders. The next tidal change to the internet will come as blockchain technology is increasingly adopted, and there are already companies using it to develop infrastructure for the future.
A purposeful application of blockchain is its ability to create efficient ecosystems for business, using tokens that are a medium for exchanging value transparently. Called cryptocurrencies, these tokens are much more than speculative assets, and can be used by customers to interact with online service providers. Cryptocurrency has proven its usefulness to many industries, and its next killer app is in retail, where it can drive customer engagement, brand loyalty, and help build more creative marketing funnels.
Retail and Engagement
For retail on the internet, termed eCommerce by most, competition is fierce. Customers have near unlimited access to every product or service imaginable, and shorter attention spans than ever. There are entire industries dedicated to helping merchants capture the interest of these fickle potential customers, using paid and unpaid methods to boost positioning in search engine results, promote via social media, and more. There is no doubt that reaching new customers for online businesses is difficult, but bringing them from the internet to a physical location is even harder.
The methods that brick and mortar stores deploy to bring online customers into the offline world vary in their efficacy, and this marketing niche is much less mature than online-to-online customer acquisition. The platforms currently in place to drive walk-in business are frustratingly hard to optimize and deliver inconsistent return on investment to merchants. There is no way to measure how likely a visiting customer is to return, nor any guarantee that those who receive a coupon or discount will take advantage of it. All a merchant can do is make their offer as enticing as possible and provide a good experience when customers do arrive. Accordingly, a lot of value slips through the cracks.
The Blockchain Solution
Many businesses have opted to use blockchain to lower their overheads, raise money, and give customers a new way to take advantage of services. A combination of the immutable decentralized ledger to record all transactions, cryptocurrencies to denominate the value of data, and smart contracts to automate business functions makes transacting between stakeholders autonomous and inexpensive. For online-to-offline retail marketing, the addition of another component—gamification—will give cryptocurrency the potency it needs to serve this unique purpose.
The B2C models that cryptocurrency projects employ currently are unsustainable, and largely speculative. Those who crowdfund a venture by buying its tokens do so to achieve a return on the token’s rising value relative to fiat money and use its eventual business applications as a reason to speculate. For instance, a company that uses cryptocurrency to rent out cloud storage space on the blockchain might enjoy a coin with high volume, but few that take advantage of the underlying service itself. These companies have created value, but value that doesn’t return to their own business. Gamification is what innovative retail blockchain companies like HotNow use to ensure this doesn’t happen with their platform.
HoToKeN is a cryptocurrency that HotNow will reward to potential customers who interact meaningfully with a merchant’s online presence through activities like participating in mini-games, writing reviews, posting on social media, and more. With this token, customers can get bigger and better deals on the products and services from their favorite brands, creating a more insular, tangible give-and-take system that is worthwhile for both sides. This idea contrasts heavily with the status quo, where customers see advertisements for a discount and either redeem it for free or buy it (like with Groupon). This delivers little value to the business besides a onetime customer, but HotNow uses fun interactive games to drive valuable brand engagement, and only then rewards incoming customers with a discount.
To drive customer retention, HotNow tracks the level of activity between individual users and their favorite businesses, and assigns them a ‘score’ like a credit score. Users with a high score have a history of participating positively with HotNow merchants, and can therefore borrow HoToKeN in bulk for use at these stores. Essentially, this model incentivizes a brand’s biggest advocates and ambassadors with the same kind of monetary gain that they might get for speculating on the token, but in a much more productive manner that keeps funds flowing through the system.
The concept of cryptocurrency will take the underdeveloped idea of online-to-offline retail marketing and make it more tangible, measurable, and consistent. Customers gain a bigger stake in the businesses they choose to support, and in turn, businesses obtain more value from the customers they win. It’s now up to companies who recognize the benefits of cryptocurrency solutions to adopt them and encourage their partners and customers to do the same. Nevertheless, with innovative solutions finding new use cases daily, it’s only a matter of time before this paradigm shift is realized.