Table of Contents

Narrowing Down a Use Case for Shared Loyalty in Travel

Building upon the previous article, to fulfill Generation Z’s new needs, this use case explores a more decentralized approach, while prioritizing a limited scope of functionalities to expedite demo development

Defining a Use Case to Develop

At Encora, aiming to showcase the potential of Web3 in the travel industry, we have built a shared loyalty program demo that expands upon the decentralization concept introduced in our previous article. This use case allows any player or group of players within the travel sector to adopt and implement it as a journey towards Web3. While currently limited to smart contract functionalities, the program addresses the following challenges:

  • Generation Z Traveler Pain Points:
    • Loyalty points are typically limited to specific issuers, preventing exchange or transfer.
    • Valuable user reviews generate no income for reviewers.
  • Industry Pain Points:
    • B2C platforms and large service providers need wider reach, while smaller providers lack resources for in-house loyalty programs.
    • All stakeholders want to maintain control of their loyalty program rules while seeking new revenue streams.

Our blockchain-based shared loyalty program aims to address these needs by catering to the diverse actors within the ecosystem.

Gen Z Traveler’s Shared Loyalty Program

  • Platform Signup & Rewards: Travelers automatically receive shared loyalty points upon registering.
  • Cross-Provider Earning: Booking with any provider, regardless of their own program, earns travelers shared loyalty points.
  • Double Incentives: Travelers can potentially earn both platform and provider points where applicable.
  • Multi-Channel Earning: Points are awarded for purchases, reviews, and review confirmations.
  • Community Currency: Points are transferable, fostering collaboration and trust amongst travelers.
  • Reward Redemption: Points are directly usable within the platform for services and experiences (demo prioritizes provider points first, followed by shared points).

Service Providers (Airlines, Hotels, Travel Agencies, etc.)

  • Define Loyalty Exchange Rates: Providers determine the exchange rate between USD and points (both for purchases and redemptions) based on this specific use case.
  • Review Incentives: Providers can define the number of points awarded to travelers for each review or confirmation.

B2C Travel Platform

  • Registration Points: Define the number of loyalty points awarded to travelers upon registration.

Decentralization by Design:

The underlying blockchain network facilitates decentralization by allowing any participating organization to manage their loyalty point policies, including:

  • Setting loyalty exchange rates (USD for purchases and redemptions)
  • Assigning loyalty points per interaction

While these features are readily available on the blockchain, the user interface displays a limited selection for simplicity.

Use Case Assumptions

  • Large service providers might be open to exploring shared programs for customer acquisition and brand loyalty enhancement.
  • The B2C platform can ensure service fulfillment for point-based purchases through tiered service levels or partnerships with smaller providers.
  • Gen Z travelers are willing to provide data and share reviews in exchange for program rewards.
  • Any company or consortium within the entire travel ecosystem (service provider, travel platform, or software-as-a-service company) can invest and leverage this platform to enable transition into Web3.

 

Use Case Ecosystem and Incentives

This chart summarizes the ecosystem's operation within the presented use case. However, it intentionally focuses on functionality, omitting the decentralized design for simplicity. This means that any participating organization (B2C travel platforms, service providers, etc.) can easily implement loyalty point policies. As the blockchain infrastructure supports these features, they can be readily enabled upon request.

Furthermore, the chart assumes that the B2C travel platform will be incentivized to implement the blockchain-enabled loyalty program based on the described benefits (mentioned below).

Who?
Ecosystem Member
What does the member do?
Main Functions at the Ecosystem
Why do that?
Incentives
Travel Platform     • Enables and integrates the ecosystem
• Provides secure infrastructure (blockchain)
• Manages loyalty point transactions (smart contracts)
• Sets loyalty points upon registration(*)
• Access to new markets and customer segments
• Enhanced brand reputation through innovation and customer satisfaction
Service Provider • Offers travel services
• Sets loyalty point exchange rates
• Sets loyalty points per review/confirmation
• Reduced marketing costs through a shared loyalty program
• Access to a wider customer base through a loyalty program
Gen Z Travelers • Books and uses travel services
• Generates reviews and shares experiences
• Earns and redeems loyalty points
• Connects with other travelers 
• Loyalty rewards within different brands
• Greater flexibility in using points across providers
• Opportunity to monetize content and influence (review incentives)

 

Key Takeaways

  1. To meet the evolving needs of current and future travelers (Generation Z), travel ecosystems must adapt and prioritize elements like fostering a sense of belonging, offering digital products to increase experiences, and cultivate trust as their core.
  2. Prioritizing basic ecosystem functionalities can still provide a compelling set of incentives for a Web3 travel community. Starting small facilitates iterative testing and refinement of the model.
  3. Decentralization has been strategically enabled within the blockchain solution to streamline the process of managing loyalty points upon request. This approach allows any stakeholder in the travel industry, or a group of them, to collaborate with Encora and gradually transition into the Web3 era.

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