Crypto.com Finds Loyalty Programs Are 2-Way Street

For a loyalty program to be successful, customers need to see it as a two-way street.

This means that politely announcing that you have canceled your best-in-class rewards program is not the best way to maintain customer loyalty. Or retain customers.

Or if you're in the crypto space, don't let these customers take your torch and virtual villa.

The Crypto.com exchange met this week when the value of the krono token (CRO) fell from around 35 cents to 11% in two hours and more than 22% the day after Sunday (May 1). ) prize reduction announcement.

According to the statement, premiums for high-tier Obsidian (those who block cryptocurrencies worth at least $400,000 in the tariff program) fell from 8% to 2% per month, and from 1% to zero at the lowest level. Existing customers are given a grace period of six months.

The decision, described by Crypto.com CEO Chris Marshalek as "closer to the long-term sustainability of our card program," was reconsidered the following day.

Marshalek wrote on Twitter the following day: "The community spoke out loud about the changes announced yesterday in the card program." "We attach great importance to the community, we hear you and we always listen to you. As a result, we consider the price of card bets.

So what happened? Simply put, cryptocurrencies are a way to earn interest through loans. However, instead of lending it to traditional borrowers, you lend it to those who use it to earn the right to issue cryptocurrency, which helps augment and protect a type of blockchain called proof of stake – a process that is less polluting than energy. intensive. Bitcoin and Ethereum required.

See also: PYMNTS DeFi Series: What is Stacking?

While much of this happens in decentralized financing (DeFi) projects, it can be difficult, and many centralized exchanges can handle it for clients. For example, Coinbase offers a 0.15% to 5% reward for placing various cryptocurrencies stored in your account.

Since almost all cryptocurrencies under the Visa and Mastercard brands are debit cards, users have a lot of cryptocurrency left blank, so it makes sense to collect them for interest.

However, the Marshall program was quickly reviewed. Obsidian card rates are back at 5%, but the lowest level remains at 0%. The three intermediate tiers ended up with 3%, 1.5% and 0.5% - lower than the original, but better than before.

Crypto.com's reaction to this move is not surprising. In an April PYMNTS survey of cryptocurrency consumers in the United States, 26% said they were “too” or “very” interested in using cryptocurrency when shopping at retailers that offer bonuses and discounts.

See also: Consumers of cryptocurrencies in the United States: use of cryptocurrencies when shopping online and in stores.

In fact, rewards are “a powerful motivator for cryptocurrency purchases like any other purchase.”

It intersects with many other loyalty cards. Another PYMNTS study found that 87% of consumers with store-issued cards use them for shopping. According to 42% of the members of this group, the main reason is access to bonus programs.

Read more: Rewards programs are the main reason why consumers use store cards

do not do it

Here are the two main results.

First, don't tell your customers the good news, especially the best.

Responding to a comment on the Reddit r/CryptoCurrency forum with 4.9 million participants, one participant commented on the abuse: "It's true, if they had spoken to the user base before and probably I wouldn't have done it on the roadmap.. Don't get mad! »

Second and most importantly, don't run an unstable loyalty program.

This last section is probably the one that more cryptocurrency companies and entrepreneurs should pay attention to, especially when it comes to interest rates, as many programs have interest rates that are high enough to be considered too risky.

Although bonuses are paid out hourly, double-digit rates are easy to find. For example, leading cryptocurrency exchange Binance offers rates from 1.4% to 25%.