Loyalty programs are critical for customer retention and lifetime value—but most of them no longer work.

Despite massive investment, over 70% of members remain inactive. Points are scattered across programs, rarely redeemed, and difficult to use. Brands incur mounting liabilities, while consumers see little real value. The market is saturated, fragmented, and inefficient.

Key Issues:

• Zipf Curve Dynamics: A small group of users earns the majority of rewards, while the rest earn too little to care—driving disengagement and inactivity across more than half of enrolled users.
• Trivial Reward Models: Most programs follow a basic cashback logic (e.g. 5% off next purchase), offering minimal perceived value. Points often expire before reaching a meaningful amount, resulting in low redemption.
• One-Dimensional Data: Loyalty systems typically capture only transaction history from the brand’s ecosystem. This narrow view leads to generic rewards and weak personalization.
• Customer Inattention: Loyalty communications are often ignored due to low-value offers and lack of relevance. Competing for attention in a saturated loyalty landscape makes it harder to build lasting engagement.
• Expensive, Ineffective Partnerships: Traditional coalition programs are hard to execute, offer little differentiation, and impose high integration costs—especially for smaller brands.

Loyalty programs are underperforming because they are shallow, fragmented, and operationally outdated. A new model must deliver broader utility, better data integration, and real value to reverse the declining engagement trend.

Why Tokenization Is the Solution

Loyalty points are already financial instruments—issued against deferred liabilities and logged on brand balance sheets. Yet they lack liquidity, transparency, and standardization.

Tokenization fixes this:

• Turns points into interoperable digital assets—usable across brands, channels, and apps.
• Adds liquidity and real-time settlement—redeem instantly or trade across the Quboid network.
• Enhances data traceability and ownership—all actions are verifiable on-chain.
• Aligns brand and consumer incentives—users earn more useful rewards, and brands gain more loyal, engaged customers.

Unlike bonds or real estate, loyalty tokens are governed by brand rules, not government regulation—making them easier and faster to tokenize.