Stablecoin issuer Circle announced on Tuesday that it had signed a Memorandum of Understanding (MOU) with HKT, a major player in technology, media, and telecommunications.
The main objective of this collaboration is to explore opportunities for creating blockchain-based loyalty solutions tailored to Hong Kong’s merchant landscape.
Circle-HKT Collaboration
According to the blog post, Circle’s expertise in Web3 services, combined with HKT’s merchant network and customer engagement resources, will allow the two companies to develop Web3-powered loyalty solutions to improve consumer interactions with merchants, potentially creating more interactive engagement experiences.
In an official statement, Jeremy Allaire, co-founder and CEO of Circle, said:
“We are excited to collaborate with HKT to bring our Web3 Services to the forefront of customer loyalty innovation. This collaboration is a testament to our commitment to helping businesses unlock the potential of blockchain technology to create value-driven customer experiences, redefining loyalty programs, and providing merchants with the tools they need to thrive in the digital economy.”
Well-known companies like American Express and Marriott have seen notable engagement and revenue per customer, partly due to the strength of their loyalty offerings. These types of programs have also become popular with Gen Zs and millennials in Hong Kong. However, consumer expectations around them have shifted over time.
Circle cited a Statista report stating that the global loyalty market is valued at approximately $5.57 billion, with 70% of consumers indicating that loyalty programs play a significant role in their purchase decisions.
Recognizing the advantages of on-chain loyalty programs over traditional methods, the crypto firm launched its “Smart Contract Platform” in March this year to create integrated on-chain loyalty options within applications, making reward earning and redemption a smooth process for users.
Blockchain Benefits in Loyalty
A recent Deloitte report highlighted that traditional loyalty and rewards programs are failing to achieve their full potential due to several key challenges. These include account inactivity and low redemption rates, which hinder program effectiveness and customer engagement.
Additionally, time delays in processing rewards and high transaction costs contribute to inefficiencies, further exacerbating issues related to system management and customer acquisition. The report also points to low client retention as a critical concern, suggesting that these programs struggle to maintain ongoing customer loyalty and engagement.
The company believes that blockchain could eliminate many inefficiencies.
“So we know what is behind this lack of execution efficiency – fragmented and clunky systems that depend on centralized administration requiring the coordination of multiple parties through trusted intermediaries to move processes along the value chain. Ironically, blockchain answers this problem by taking trust out of the process and decentralizing it.”
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