Blockchain, and the myriad of cryptocurrencies it has spawned, is the most significant technological innovation since the dawn of the internet. It has the potential to revolutionise how we organise society, how we are governed and the way we do business. But what is it and what impact will it have on Customer Experience (CX)?
What is blockchain technology?
A blockchain is a shared digital ledger of records that is visible to all parties and secured via cryptography. This networked database maintains a continuously updated and validated record of ownership and value.
Think of this digital ledger like a Google Doc. The traditional model of collaborating on a document was to use the "track changes" feature. You'd send me something; I'd open it, modify it, save it and send back to you. But on Google Docs we can work on the same doc simultaneously with each change being recorded instantly. Similarly, on the blockchain, we simultaneously see and update the ledger, of which – despite being distributed among many people - only a single version exists.
Via this global, shared and trusted network, we can transfer and validate data, value, documents at scale without lengthy processing times, expensive processing fees, or intermediaries. The benefits of this digital ledger technology are trust, transparency, speed and efficiency. Accordingly, the technology is also known as the “Internet of Value”.
Although there is plenty of hype around specific cryptocurrencies and concerns around the bubble created by speculative investors, the real-world impact of blockchain is very tangible.
Over a billion dollars of venture capital has been invested into blockchain startups, and thirty of the world’s largest banks have joined a consortium to design and build blockchain solutions. More than 24 countries are investing in blockchain. For example, Singapore’s Central Bank is exploring placing a tokenized form of the Singapore Dollar (SGD) on a digital ledger technology.
Blockchain and Customer Experience
So what does Blockchain technology have to do with CX?
The fundamentals of customer experience are rooted in the trust that a customer places in a brand. Trust that an organisation will be true to its word, live up to its brand promises, provide the product or service as specified and not let the customer down.
According to The Harris Reputation Quotient, the top four factors that negatively impact corporate reputation are
- lying or misrepresenting facts about a product or service (80% of Americans interviewed)
- intentional wrongdoing or illegal actions by corporate leaders (again 80% of those surveyed)
- security or data breaches (74%), and
- product recalls due to contamination that may cause illness (66%)
Since the fundamental benefits of blockchain’s digital ledger technology are trust and transparency, the technology logically has enormous potential to transform customer experience. Here are four reasons why it is transformative for CX
- The technology enables peer to peer transactions without the need of a trusted central third party or intermediary, meaning brands can interact directly with customers and have greater level of influence over the customer journey.
- Cryptography enables increased security and protection of data and identity, meaning customers can own and monetise their own data leading which will lead to a re-imagination of customer loyalty programs.
- Data is immutable thus reducing fraud, increasing transparency, meaning the provenance of an asset, a claim about a brand, or company performance is indisputable. This could include NPS scores, customer retention rates and product defect rates.
- Near real-time settlement means friction in a transaction is eliminated and risk reduced. As more customers interact with blockchain applications, the bar of customer expectations for an effortless experience will be raised.
Companies that adopt this technology will be transparent, not hiding behind obscure contract terms and conditions, and will build trust, for example by overhauling outdated loyalty programs to build unique, traceable customer rewards. Blockchain is therefore a big deal for customer experience professionals enabling organisations to build propositions that create genuine value and long term loyalty for customers.
For further reading on blockchain and how it works I would recommend Don Tapscott’s excellent new book “Blockchain Revolution” and for a preview watch his Tedtalk: How the blockchain is changing money and business. To understand how marketers and CX pros should prepare for the blockchain world, I would recommend reading Jeremy Epstein’s excellent e-book “The CMO Primer For The Blockchain World: How This ‘Trust Machine’ Impacts Branding, Customer Experience, Advertising And Much More.”
And if you are a podcast listener I can highly recommend the following shows for an in-depth and accessible discussion and analysis of bitcoin and other blockchain technologies.
Kevin Rose interviewing Andreas Antonopolous, author of Mastering Bitcoin:
Tim Ferris interviewing Nick Szabo who developed the concept of smart contracts: