What is block chain technology?
A block chain is a digitized, decentralized, public ledger of all crypto currency transactions. Initially it was an accounting method for the virtual currency Bitcoin, block chains using a distributed ledger technology (DLT) and can be featured in a variety of commercial applications today.
Block chain technology is like the internet in that it has a built-in robustness. By storing blocks of information that are identical across its network, the block chain cannot:
- Be controlled by any single entity.
- Has no single point of failure.
Block chain is regarded to possess highest degree of accountability and there will be no missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved.
In a simpler language, block chain is an ever-growing list of interlinked records or ‘blocks’. These blocks are cryptographically secure and resistant to any external tampering. A block chain functions as an open, decentralized ledger that effectively keeps track of transaction between two parties in a permanent and verifiable way. Above anything else, the most critical area where Block chain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.
The technology behind crypto currencies like Bit coin and Etherium may not be a household name just yet but it has been gaining traction fast and although the future of the said crypto currencies may still be up in the air, the Block chain itself is bound to stick around for the long haul. It has opened up a world of possibilities and can potentially revolutionize the way existing technologies and business processes function. With that in mind, we will focus on how block chain is likely to affect Customer Relationship Management down the road.
Role of BlockChain technology in CRM
Before we discuss the role of block chain technology in the CRM domain, it is important to understand the critical features of BlockChain technology.
Some of the key features of BlockChain technology are
- Transparent and incorruptible solution
- Decentralization format
- flawless security features
The block chain network lives in a state of consensus, one that automatically checks in with itself every ten minutes. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens in ten-minute intervals. Each group of these transactions is referred to as a “block”. Two important properties result from this:
- Transparency: Data is embedded within the network as a whole, by definition it is public.
- It cannot be corrupted: Altering any unit of information on the block chain would mean using a huge amount of computing power to override the entire network.
Technology yielding to flawless security features
Benefits of using BlockChain Technology in CRM
Enhanced security features
- A block chain is literally a chain of blocks, where each block contains transactional records. Each block is connected to blocks before and after it and is cryptographically secured such that participating users are assigned network keys in order to restrict unauthorized access. It is evident that the majority of the CRM databases are hosted on cloud servers.
- Additionally most CRM databases are presently hosted on cloud servers. Although cloud security protocols have come a long ways, Cloud security concerns are not completely unfounded. These are mainly centralized systems and thus, have an inherent single point of failure.
- Comparatively, block chains are decentralized and distributed across regularly synchronized peer-to-peer networks. This makes tampering nearly impossible as it would require massive computing power to access the entire block chain. Consequently, chances of fraud and repudiation are also eliminated.
Highest degree of transparency
- Since it is decentralized, Block chain can allow your company to securely and transparently deal with your customers without the need for a financial institution such as a bank or a third party broker to facilitate this.
- The elimination of these ‘middlemen’ will also bring about greater efficiency and speed in all your dealings.
Reliable user privacy control
- It is important for the CRM systems to address issues related to breach of security and privacy of data by adjusting how they handle customer data.
- Owing to its decentralized and secure nature, blockchain gives way to the idea of a self-sovereign identity.
- It can store and encrypt personal information and verify this upon inquiry without actually sharing any specifics with the concerned parties, granting users greater control over their identity.
Accuracy in Data avoiding duplication
- CRM users all over the world have to deal with inaccurate or duplicate data at some level. With blockchain in place, a customer can have their very own personal block that presents companies with a unified and accurate picture of their personal information, past transactions, subscriptions, etc.
- Hence, blockchain helps these companies circumvent the issue of inaccurate, obsolete and duplicate data records altogether. This consequently yields better insights into customers and helps businesses engage them more effectively.
Loyalty programs and benefits
- Loyalty programs aim to drive profits by adding value to the customer experience. However, due to their variable mileage, volatile value and associated privacy concerns, they prove to be cumbersome for customers and yield a low ROI.
- With block chain consumers would have a single decentralized wallet, compatible with all brands. They would not be bound by the rules and limitations of individual brands and point redemption would be greatly simplified.
- The consumer will have far greater control over the whole experience and brands will complete for their wallet by offering them better deals.
Application of Blockchain technology in CRM Arena
The blockchain technology enhances the CRM functions by promoting more avenues to transform loyalty points in to payment method. It also facilitates peer to peer exchange of loyalty points leading to a wide network of value based CRM.
Major advantages of CRM using block chain
- Merchants are rewarding customers at point of transaction and this motivates the customer to be loyal and refer new customers.
- Customer databases are created for answering queries and customer issues in a rapid, customized manner without any ambiguity.
- Increases the scope for brand coalitions leading to multivariate customer experience at a single point.
Implications of CRM using block chain
With such significant opportunities come some profound implications. These implications will determine which brands lead and are able to differentiate their customer propositions through the use of this technology.
Adopting Blockchain to build customer propositions is likely to:
- Increase redemption of incentives, rewards and promotions. Customers will be able to exchange these offers and this will increase redemption. This will be seen as positive (rather than a cost) to brands that recognize this will bond and engage customers.
- Mean that the experience and interactions are increasingly controlled by consumers not brands. In a Blockchain world there is very little need for intermediaries who dictate processes and add costs.
- Require brands to genuinely engage and build long term loyalty – not the promise of great rewards that are never fulfilled.
- There is more transparency and accountability – an end to hiding behind obscure terms and conditions. Auditable, self-executing contracts will be the norm between consumers and brands
- Unique, traceable customer rewards – for the first time companies will have a real-time view of behavior, incentives and rewards by customer.
In creating an indisputable record of relationships, behaviors and value exchange, Blockchain will disrupt customer marketing like no other technology. Most excitingly, consumer-driven and peer-to-peer relationships are becoming possible in ways that we can only start to imagine. The onus will be on marketers to do what they do best: understand customers and build propositions that support repeat engagement. Block chain will not only change how we approach CRM but has the potential to fundamentally revamp business operating models in general. With the technology still in its preliminary phase, this seems like a bold claim to make. However keeping in the view all that it’s capable of, we believe it is a justifiable one.