OST Loyalty 2.0 — The halfway look-back
OST Loyalty is an add-on for the e-commerce software cs-cart (online stores and marketplaces) that creates a customer loyalty program based on OST Simple Token, an easy-to-use side-blockchain for the crypto-currency Ethereum (ETH). It is the result of our participation in the first “hackathon” OST KIT Phase 2. This series will discover our progress for OST KIT Phase 3 to integrate the user wallet into OST Loyalty.
Customer points as a loyalty program
Personally we already experienced the influence of customer loyalty programs to collect “points” years ago. As consumers we had no higher interests in such programs at that time. Because the benefits were very limited, as it usually just offered a discount to buy other products (which we might could get for the same price somewhere else).
One major company that addressed most downsides of this programs in Germany is Payback. They allow customers to earn points in every participating store (most known retailers are their partners) when the customers show their Payback customer card, in a credit card format, to the cashier. Customers can then use these points for discounts on specific products (we know this already) or … change it into fiat-vouchers and use them on all participating stores. Even though it is a very small cash back, people like using it and mostly even forget their concerns about their data privacy. Nowadays Payback supports countless different and major retailers (also online) in Germany, Italy, Poland, India and Mexico.
This makes it very convenient for people as they like to collect, save and get benefits, and they can use it in all their favorite local and online stores.
In Switzerland, some of the bigger market players (“oligopoly”) have their own point programs like “Supercard” from coop and “Cumulus” from Migros. This exists, of course, also in other countries. Loyalty programs are “in” and they work to attract and lock-in customers, more or less depending on their functions. Interestingly, a large number of customers don’t use their points. Instead, they collect them but rarely spend them. It seems that the point collection is the most important part of this loyalty program journey. In most cases the points are getting deleted after some inactivity/non-spend time. This can result in frustration sometimes.
You also find this feature of “points” nowadays in most e-commerce software (sometimes as an extension). But in all cases, the points are just saved in a local database and are often bound to a specific company (some exceptions like Payback exist). Transferring them somewhere else is not possible.
Why OST Loyalty
After seeing the success (and spread) of point-based loyalty systems and hearing about the OST POC Phase 2, it was clear for us, that this would be the perfect (mass) adoption use-case for OST branded tokens. It would allow companies to offer customers a “branded points” based customer loyalty program with low service fees, hosted, in a distributed ledger (blockchain). These tokens are “owned” by the customers, are transferable and have a real value that even increase over time (when companies staking OST). All properties, that the traditional loyalty systems are lacking of.
We started as an e-commerce startup years ago, and became e-commerce specialists on our road. The systems that popped up that time and caught our attention were Shopware, Magento 1 and finally CS Cart. As we had good experiences in the latter system as it allowed us a flexible integration (which also has its downsides), it was our first choice to realize a proof-of-concept for a “points” loyalty system extension based on OST branded tokens. We believe that this is definitely a very useful traditional marketing instrument, for which OST Simple Token is the perfect answer.
After finishing POC Phase 2, we noticed, that there were also other teams working on something similar like “Craft Loyalty Tokens”. And over the last two weeks in Phase 3, while communicating actively with the OST Community, we noticed that there seems to be a huge demand for loyalty systems on all major e-commerce platforms. This confirms our own impressions that a customer loyalty and reward system are the perfect simple use-case for OST “as-it-is” and will help its adoption.
We and the community would like to see at least the following e-commerce systems covered in the near future:
- Shopify
- WooCommerce / WordPress
- WIX
- Magento
- Shopware
Other teams are welcome to pick them as their project! Maybe we can cover one of them in another OST Simple Token hackathon?
Current progress
As you can read in our weekly articles, we successfully upgraded our PHP API Wrapper, which you can find on Github here, to support the latest wallet features of OST KIT. Right now we are finishing the implementation of the wallet functionalities this week.
As a more detailed look-back, please refer to our weekly article series:
- OST Loyalty 2.0 — Week 1: The Kick-Off
- OST Loyalty 2.0 — Week 2: The foundation
- OST Loyalty 2.0 — The halfway look-back (this article)
- OST Loyalty 2.0 — Week 3: The wallet
- OST Loyalty 2.0 — Week 4: The Stage
- OST Loyalty 2.0 — The finalization
