When cryptocurrencies first began as a way to create decentralized digital currencies, they were primarily used by techies and finance experts — individuals who understood the intricacies of crypto and how they could build up a sizable stash of digital currency.
Fast-forward to today, and things have changed drastically. Hundreds of millions of people around the globe use cryptocurrencies, with nations such as Nigeria seeing adoption rates as high as 32 percent.
There are many factors that have played a role in this trend, from trading apps and play-to-earn games, to influencer endorsements. Each of these has helped bring cryptocurrency into the mainstream. As usage accelerates among businesses and everyday customers, some believe crypto-based loyalty rewards could soon become the next big trend in e-commerce.
To learn more about this growing trend, I recently spoke with Mike Ross Kane, Co-Founder and CEO of Hydrogen, a no-code platform that helps companies offer their own branded debit and credit card products. As his insights reveal, understanding the potential for crypto rewards could prove key for your future e-commerce success.
What the rise in crypto rewards means for companies
Rewards programs have long been a way for companies to generate customer loyalty. From grocery stores offering discounts at gas stations, to clothing retailers providing gift certificates that must be redeemed during a future two-week period, companies have been quite creative in how they have kept customers coming back for more.
Eventually, however, these types of rewards can begin to feel the same to the average customer. As Kane notes, crypto rewards offer something new and unique that gets the attention of online shoppers.
“Crypto rewards can be a great way to build customer loyalty. Bitcoin is now worth over a trillion dollars. There has never been more interest in crypto assets. It’s very important to differentiate a rewards program from competitors. It’s no longer enough to simply offer more ‘cash back’ on purchases, businesses must continue to find innovative ways to attract and retain customers — and crypto rewards are the perfect way to achieve that.”
As Kane reveals, the brands that have already dipped their toes in the waters of crypto rewards have enjoyed big dividends. “Multiple companies have launched crypto rewards programs in 2021 and amassed waitlists of 250,000 or more. There is incredible pent-up demand for crypto rewards. If you’re an SMB, imagine what potentially adding thousands of customers to your pipeline can do for your bottom line.”
As this example illustrates, becoming an early adopter can be a major competitive advantage for e-commerce brands. Forward-thinking businesses that implement a crypto rewards program will gain far more attention from crypto enthusiasts, helping boost their customer acquisition and retention efforts. The longer a brand waits to implement such a program, the more likely they are to get lost in a sea of similar rewards.
Key considerations in launching a crypto rewards programs
“E-commerce businesses should tailor their crypto rewards programs to their brand and their customers,” Kane advises. “For example, you could offer crypto rewards where users earn their preferred form of crypto for each dollar spent at your store. Some brands even go so far as to create their own cryptocurrency, which can then be used exclusively on items on their site.”
E-commerce brands that plan to offer a crypto rewards program can also look into accepting cryptocurrency payments. Even if your current customer base doesn’t have significant demand for making crypto payments, the more payment options you provide, the easier it is for site visitors to complete their checkout.
Such measures can show that your crypto rewards program is more than just a bid for attention. You don’t have to be a tech-oriented brand to accept crypto payments and implement a crypto rewards system.
Of course, there is no denying that cryptocurrencies have proven to be quite volatile. For example, while Bitcoin’s value is currently over $60,000, this wildly popular cryptocurrency has seen its fair share of dips and spikes — dropping as low as $5,000 near the start of the COVID-19 pandemic.
Other cryptocurrencies can be even more volatile — and because of this, e-commerce brands should be careful in how they market their crypto rewards programs to customers. “Companies should make sure their customers are aware of the risk of holding cryptocurrency assets,” Kane says.
“We always recommend any company speak with qualified legal and accounting professionals before offering this feature. You don’t want to find yourself on the hook, because customers feel like they were cheated or suffered a loss from your rewards program.”
Clearly communicating what the rewards program entails, including details on the type of currency your rewards program will use and the potential risks involved, will provide a seamless and enticing experience for customers.
Of course, continuing to offer a more traditional rewards program for users who aren’t interested in crypto will ensure that you have something appealing for every visitor.
Are crypto rewards in your business’s future?
“While a crypto rewards program isn’t going to appeal to every customer, at the very least, it’s worth giving serious consideration,” Kane concludes. “Becoming an early adopter of this feature could give your company greater access to a tech-savvy base with high spending power. Even if crypto doesn’t seem to be a great fit initially, it’s important to consider how this type of program could help you target a new audience.”
One thing is certain: more and more e-commerce brands will undoubtedly be using rewards programs as a further step toward fully embracing cryptocurrency.