Accelerating Profitable Partnerships Through a Blockchain Loyalty Platform

Airlines rely on loyalty programs to engage and incentivize infrequent travelers and generate direct revenue.
Since 2016, our airline client has taken customer engagement to the extreme by striving  to make their loyalty program points a lifestyle ‘reserve currency’.
They utilize Loyyal’s platform to bolster their program’s perceived value among members via increased liquidity of their miles, expressed via  a greater number of profitable earn partners and more relevant redemption partners.

• Partner onboarding is time consuming and expensive
• Operational costs associated with integration prohibit integration with seasonal, niche, or event-based partners
• Each new partner adds to the already substantial operational expenses associated with liability management

Across loyalty programs increasing the number of profitable earn partners and more relevant redemption partners is constrained by time and cost to integrate partner programs and systems, along with the operational costs required to manage and control programs and liabilities. For large enterprises, partner integration can take upwards of 6 months or more, and tens of thousands  of dollars in technical resources. As profitable to the program, or attractive as they may be to members, integrating seasonal, market specific, smaller niche, or event-based partners is generally cost-prohibitive. Even for existing integrated partners, managing travel & hospitality loyalty programs points earning and redemption, along with multi-billion dollar liabilities can cost hundreds of operational personnel annually.

Our airline client partners with a regional ridesharing service, similar to Lyft or Uber. Ride-sharing customers earn airline miles with each ride. To reconcile the cost, the ridesharing partner traditionally sent logs of airline loyalty members account numbers monthly, with the intention that our airline client would append the earned miles to their Member’s account. In practice, the airline received the file and uploaded it as a batch and compared it to the transactions recorded in their legacy loyalty platform. The results would be extracted and and mismatched records would be returned to the ridesharing partner. The ridesharing partner would again reconcile the mismatched data and return the records once again to the airlineThe airline loyalty team extracted monthly partner billing files from the legacy loyalty solution with validated member transaction lists, and would then invoice the ridesharing partner. The ridesharing partner then matched the airline’s validated member transactions file to their own records, and approved, or disputed the invoice. The ridesharing partner would return any data mismatches to the airline for verification. The airline manually reconciles mismatches and resubmits records to the ridesharing partner for payment. This process would be replicated across the tens of partners the airline partnered with. Before Loyyal, this reconciliation process yielded a 30-60 day points latency for customers.

• Simple click-through partnership form with minimal integration and operational processes
• Instant partnership access to all programs on the network
• Real-time knowledge of where each loyalty point is, how it was earned, and how it has been redeemed.
• Real-time snapshots of program balances and liability.
• Streamlined reconciliation and settlement
• Selective, controlled, data sharing between all programs and partners

Imagine that in near real-time, loyalty programs could partner with a simple click-through form with minimal integration and operational processes. The click through form would include details of terms and exchange rates. Certain events or conditions could trigger one time of points or exchange rate. By joining the Loyyal network, loyalty programs could partner instantaneously with any other program on the network, all for limited integration and operational management

Now imagine knowing in real-time where each loyalty point is, how it was earned, and how it has been redeemed. Loyalty programs would know exactly how many of their currency’s points have been earned and redeemed  with partners and vice versa, creating a real-time snapshot of balances and liability. Reconciliation and settlement would be streamlined as there would be an immutable ledger of all transactions and points ownership that could be as transparent as the parties to the partnership agree to.

Now imagine being able to see your loyalty program partners’ data and being able to selectively share your data with partners in real-time at revenue with near-zero IT time & effort. Partners could identify customers who occasionally flew with them but always stayed with a particular hotel chain and develop real-time incentives to change consumer behavior.

Loyyal’s platform was designed to enable companies to record and manage incentive transactions such as traditional loyalty program earning and redemption events, along with the myriad of additional customer engagement behaviors. These other engagement behaviors can include actions such as geo-check-in’s, social media posts, and more. This unique approach to storing the core transaction data on the Loyyal Distributed Ledger, with a secure, parallel Corresponding Transaction Ledger on a storing additional metadata related to the primary transaction itself, enables a secure, permissioned set of data exchange between partners.

Our airline client’s primary goal is become a ‘reserve currency’ and help customers see more benefit from their loyalty program membership through both earning and redemption partners that are relevant in their daily lives and ideally those that members engage with more frequently than they take flights. Since more partners can equal increased revenue to the program, the secondary goals are to simplify the partner on-boarding process, and at a lower cost than previously possible.

In our airline client’s first use of Loyyal’s platform was to create a partner connection with a premium car service, similar to Lyft or Uber, enabling members to use their airline points for continued journey through the ride service. The marketing proposition is for members to use the very points earned on their flight to pay for their continued journey by car on arrival.

The airline client has a node on Loyyal’s platform, where they can create individual wallets on the blockchain for every enrolled loyalty program member, establish the ride service as a partner connected via blockchain, mirror member points balances from the traditional loyalty system, control business rules for transfers and access permissions for member wallets, accept and validate transfer requests from their member app, process the transaction passing value from the member’s account to the ride service, track and report on transactions in near real-time, and use the subsequent data to support reconciliations and settlement with the ride service.

Technically,  the airline system adds validated member IDs to the blockchain once. Partners append accrued mileage balances to the member IDs. Blockchain verification validates the member data. The airline extracts the partner’s accrual data, updating member records and issuing a partner invoice. The partner matches the invoice to the files added to the blockchain and executes the payment.  The net effect – a two-way cumbersome reconciliation/verification process replaced by single step with distributed trust.

The first reaction of most organizations is concern about the visibility of such transactions to the public, or competitors. It is important to note that identifying information about the transaction on the Loyyal Distributed Ledger is obfuscated with a Unique Universal Identifier (UUID) as a first order level of protection.  The Corresponding Transaction Ledger provides an additional layer of security, with partner-by-partner access control being administered by each participating company, via controls embedded in Loyyal’s platform. Discrete sharing arrangements can be established on a partner-by-partner basis, controlling shared access to data right down to individual fields.

Where necessary in order to maintain compliance with data privacy legislation, the platform can support ledger-based authentication that an individual member has proactively given permission to link their account data between partners.  This is most typically provided by consumers in response to some form of additional bonus incentive or benefit for having done so.

Traditional loyalty platforms are not able to scale or adapt to meet the increasingly complex expectations of customers. Our airline client is future-proofing their loyalty program with Loyyal’s blockchain-based platform, enabling faster loyalty program partner onboarding and building more comprehensive pictures of customer behaviors, without the costs, timelines, or complexity traditionally involved.