Incent to Reinvigorate the Loyalty-Reward Industry with Blockchain
The Incent token crowdfund has launched today, a collaboration between cryptocurrency hub and merchant BitScan and custom blockchain platform WAVES. The purpose of this token is to disrupt a market projected to be worth $100 billion by 2020, the loyalty and rewards market, by addressing several inefficiencies.
Reinvigorating Rewards-based Marketing
The offering of companies reward schemes are little more than barter between companies and the customers, with consumers not receiving goods or services they actually want. Although the penetration of loyalty schemes and reward programs is very high, the actual use of these cards and schemes is around one-third of all users, meaning over 60 percent remain inactive.
Incent wants to take aim at this inefficiency and improve the value proposition offered to consumers with loyalty and reward schemes, proposing a shared-loyalty scheme where retailers can make use of a low-cost loyalty-as-a-service solution and still retain control over the deals to suit their audience and mark-ups.
The platform is comprised of three components; Incent, the tradeable token, a consumer-facing digital wallet, and a merchant dashboard embedding analytics and customer retention management tools.
The Incent concept is based around the idea of a loyalty margin, the difference between the benefits a consumer receives from a company and the cost to the company to run the loyalty scheme. The nature of the loyalty margin varies from industry to industry; for example, airlines and hotels have the largest loyalty margin as the marginal cost of offering an empty seat or room to a customer is relatively low. Compare this with consumer goods, and any offer means a loss in future sales revenue and some additional tax liabilities.
Thin loyalty margins are to blame for commerce’s inability to engage customers with reward schemes. By buffing up this margin, the Incent platform hopes to instill an ability to entice customers and drive repeat engagement for retailers.
Moreover, the reward currency with which a merchant uses to run their loyalty program at present possesses no value outside of their business, consequently representing a recordable tax liability, which is a major factor motivating expiry deadlines with such programs. Also, since the reward points have no value outside their business, consumers cannot exchange reward points for items they may actually want, with the company limited to offerings from their own range of products.
The Incent network has identified this as a major problem with the rewards and loyalty schemes. Such schemes are a not too dissimilar to a bartering process, where the fragmentation of rewards means there is no common currency for exchange, limiting the benefits enjoyed by the consumer and reducing the loyalty margin.
By introducing a token that can be exchanged for fiat currency, for goods and services across a range of retailers or share with their friends, merchants are relieved of any tax liabilities and consumers can be rewarded according to their preferences, driving large efficiency gains.
Rewards on the Blockchain
Incent is combining different technologies to achieve their goal to promote mainstream adoption of cryptocurrency through the exploitation of inefficiencies in the loyalty-reward industry. One of the key technologies behind Incent is the blockchain.
In selecting an infrastructure partner, WAVES was an obvious choice for Incent due to the proof of stake characteristic and the desirable functionality, including asset exchanges and fiat gateways. Since the WAVES blockchain makes it possible to create a digital asset that act as money and possesses a greater utility to consumers, a scalable rewards solution can be made available where the only cost to commercial participants is the monetary rewards they wish to offer as an incentive.
By adopting a cryptocurrency specifically for rewards or loyalty schemes, companies will able to provide a better value proposition to customers with a ‘better than money’ offer. Incent’s solution will see digital currency ‘Incent’ credited to consumers when they make purchases with participating operators. A text or email containing a link to a wallet will then be sent, allowing the user to see the exchange value against other participating retailers, as well as the value against fiat and other digital assets.
Merchants benefit from reduced administration costs, since the accounting and issuance is done on-blockchain, as well as the fine-tuning of rewards and discounts. BitScan has already developed the proof-of-concept wallet for the Incent platform and with more than 9,000 merchants who accept bitcoin in their directory, the partnership will allow Incent to gain a foothold in the market during its first phase.
The goal is to create a token a steadily increasing value, with the supply linked to merchant adoption. Each time a customer is rewarded, tokens are bought on the open market potentially increasing the value. On the first impressions from merchants, Incent CEO Rob Wilson said:
“Our engagement with the merchant community has been very positive. We have taken Incent to a significant number of retailers all of whom have shown a keen interest in the savings we offer and in our easy-to-use platform. Retailers recognise that current loyalty systems are overpriced and underperforming and are looking for something new.”
Incent’s market research, conducted in the US, UK and Australia, indicates that challenger businesses are looking for alternatives to traditional schemes and have shown interest in integrating Incent to gain a competitive advantage. For example, CEO of landscaping supplier Sure-Green John Warner says:
“Here at Sure-Green we see great potential in Incent to help us grow repeat business across our wide trade community, through the provision of rewards for custom that our tradesmen will really value at a manageable cost to our business and with no administration overhead.”
Incent’s Initial Coin Offering Launches
The Incent Initial Coin Offering (ICO) launches today, running throughout the months of October and November or until the $5 million target is reached, where interested investors can participate here. Potential investors can also learn more from the Incent ICO information pack which details the workings of the Incent ecosystem, market mechanics of the token and potential risks to the program.
Once the ICO is complete, the tokens will be sent to users WAVES wallets and will trade on their decentralized exchange, as well as other third-party exchanges. A proof of concept app can be found here and the base technology and web applications have already been built and tested. The funds raised by the ICO will be used to fund the complete development of the core applications.
While the firm initially plans to generate revenue through fees from transactions supported within the ecosystem, a secondary revenue stream will be driven from custom integrations for corporate clients. Bounties will be offered for the development of third-party plugins to achieve a network effect for Incent and once it is live in the market, entrepreneurs will be able to build their own applications on their foundation. Once the platform has been battle tested in the market, a Series A funding round is planned for the second quarter of 2017.
By introducing a truly flexible, cross-industry reward currency and at a time when consumers are increasingly demanding the ability to pay with smartphones and other devices, Incent tokens are an innovative way of dispensing rewards to consumers and encouraging loyalty.
Consumers benefit from acquiring rewards or discounts they actually want, as well as a digital token that is better than money, with an increasing value, whereas merchants can reduce the costs of such programs and take advantage of the customer retention management tools offered by the platform. Incent’s novel application of blockchain technology, combined with the use of Google Firebase to build web and wallet applications, looks to take consumers and merchants alike by storm.
More information can be found in the Incent white paper.