Too Good to Be True? Understanding How Blockchain Revolutionizes Loyalty Programs.

Abstract

In extant loyalty program (LP) studies, one of the main challenges is to keep customers motivated in participation behaviors and achieving financial goals. While some companies have initiated efforts to use blockchain (BC)-based distributed ledgers and smart contract capabilities to reduce LP operating costs and enhance customer experience, academic assessment of BC application in the LP context remains in paucity. In this paper we establish a theoretical framework to explain the effects of BC on LP participation. Guided by the self-determination theory (SDT), we illuminate how the BC-based natures influence the relationship of varying customer motivations (economy, autonomy, competence and relatedness) and perceived value, which consequently induces participation behaviors. We outline 4 propositions to depict the conceptual mechanism based on the theoretical framework, and then employ a case study to illustrate how a BC-enabled LP scheme can help enhance customers’ involvement in a point exchange environment.