We find out more about loyalty programs on the Blockchain delivered by qiibee, a decentralized, Ethereum blockchain-based loyalty ecosystem.
Its name, which is derived from qii for energy and bee for the one of the world’s most important insects, is not the only different thing about this company. It is also looking at a Token Generation Event (TGE) next year.
A TGE is different from an ICO in legal terms according to co-founder and CEO Gabriele Giancola. Incorporated in Zug, the heart of the Crypto Valley outside Zurich, Giancola says that the Swiss like to keep things above board and that hosting a TGE is easier to run than an ICO and certainly it makes issues like regulation much more straightforward. Currently there is a hardcap of 70,000 ETH to be raised in Q2 of next year. The token is a qiibeePoint or QBX.
qiibee is a classic example of a traditional technology solution pivoting onto the blockchain for two main reasons: scalable data capture and security. qiibee began life trying to solve the loyalty program platform. Giancola and his brother, both co founders, looked at the loyalty program space and saw a lot of problems.
Loyalty Programs are big business. The market is estimated to be worth $300billion and research points to 80% of all adults in the Western World belonging to one or more loyalty schemes. However, membership of multiple loyalty programs can have limited value as many accounts are inactive.
Loyalty programs are often fragmented meaning each program operates different terms and conditions. So while the average American may have joined up to 29 programs they will only use less than half of those. Given the large marketing budgets spent to acquire new customers, brands are missing out on a big chance to radically impact on their customer base.
In 2015 qiibee developed a proof of concept pilot with limited numbers: some 20 local brands and 800 customers. As Giancola says: ‘We wanted to see if we could create a unique eco system, a single platform for multiple brands to operate. Back in 2015, it was about homogenisation of the platform and so we scaled it up in 2016.’
2016 saw a huge leap in numbers and brands. With more than 100,000 customers and 900 brands the brothers began to acquire serious feedback. Brands such as Subway and Eat.ch joined the program.
The user base was 45% male, 55% female with a mean age of 25 years. Typically they were on the platform five times a week, averaging 27 minutes per session. The feedback was vital according to Giancola.
‘During the scaled up project we created a lot of data, sensitive data,’ he says. ‘’ That meant we felt the platform was exposed and open to potential hackers. We knew we had a solution to a problem but we needed to find a technology to support it.’
Enter the blockchain. Reduction of risk and cost were both key elements offered by the blockchain.
‘We also discovered that we were not able to provide a loyalty solution that suited every brand,’ says Giancola. ‘At this point we realised that qiibee was valuable as an independent loyalty platform – that we could bring the benefits of blockchain to brands.’
This ‘aha’ moment tallied with their research. ‘Brands are sometimes too focused on their loyalty program to realise that the customers were feeling pain. This is where we could add value.’
Building an infrastructure upon which brands can add their own applications was a direct extension of their thinking. ‘We wanted to take the headache away from Brands and build in better value to their – combined – loyalty programs,’ he says.
Creating an eco system for loyalty programs also has a very real benefit of eliminating complex and costly liabilities of un-redeemed / outstanding rewards. ‘We discovered that in a real world use case, Mariott International (the hotel chain) had to account for liabilities generated from their loyalty program in the order of $2.6bn or 25% of their total liabilities. This is ungoverned spending. We knew we had a solution.’
The qiibee plan is to build a distributed blockchain application and present SDK (software developer kits) to brands wishing to take part. Core to the qiibee platform is the qiibee token and wallet. Interested brands purchase qiibee tokens and set an internal exchange rate on their rewards.
A customer earns rewards from brands which they can value as qiibee tokens. They can then subscribe to other loyalty programs on the qiibee eco system and spend qiibee tokens across multiple products. They can use the qiibee wallet to exchange out into fiat or other cryptocurrency coins.
The concept is very simple. It is also very attractive to customers who weary of trying to keep track of their different rewards across different companies or platforms. Consolidation of rewards to buy other products is also very appealing to customers.
There are also two other interesting aspects to qiibee. The first is that brands like what Giancola and his team have done. They respect the background in loyalty research and pilots undertaken. They like the idea of not having to invest in their own blockchain and to piggy back on qiibee. Giancola also reckons the other possible competitors in the industry will probably join up as co-operators.
‘Typically we come up against consultants in this area or software developers looking to create a kick-ass loyalty program for different brands. In either case, we say join us. Join our eco system. It works for us.’
In a second but complementary development the qiibee eco system, with multiple loyalty programs cooperating, can address the secondary issue of changing or rewarding customer behaviours outside of simple spending.
‘We’ve been approached by insurance companies that would like to reward customers for good driving by reducing premiums. Or other brands that want to incentivise customers to do their marketing for them – by sharing content on social media for example,’ says Giancola.
‘When there is an integrated loyalty program that is valuable and switchable between brands, then we will see value added to the system.’
We look forward to their TGE next year and to see if the cryptocurrency investor community reacts any differently to TGEs as opposed to ICOs. With the current SEC action against ICO Munchee, TGEs may be the way to go.