This new startup uses blockchain technology to offer discounts and promotions

AirMiles, independent of the airlines, is a company that brings in hundreds of millions of dollars per year in revenue. Groupon has been valued billions of US dollars, even after the business challenges it has faced.

The sky-high valuations of these companies show investors have confidence in the future of this loyalty and reward-oriented business model. And yet, there are still many challenges delivering the kind of superior value to customers that investors are looking for.

This was one of the reasons for the big crash in Groupon’s stock price after it hit a high of $28, soon after its IPO. Since then, innovation in the loyalty space seems to have reached a plateau.

That is about to change. A new blockchain project, GATCOIN, will use blockchain and mobile targeting technology to simplify and extend the means by which retailers connect with their customers. They are banking on blockchain and utility tokens to be the solution to acquiring and keeping new customers.

The trouble with discounts

The 💜 of EU tech

The latest rumblings from the EU tech scene, a story from our wise ol' founder Boris, and some questionable AI art. It's free, every week, in your inbox. Sign up now!

The main issue that businesses face when it comes to discounts, rewards, and coupons, is making them relevant to the customer and profitable for the company. Very often customers see promotions as being more hassle than they are worth since they often require further spending to be redeemed.

From the business perspective, these promotions are hard to get right. Not valuable enough means they are ignored by the customer. Too valuable, the business may incur a significant loss that doesn’t lead to more sales in return. Generous promotions often attract customers that are unlikely to convert into loyal customers that return to the hotel or restaurant[d] (a notable flaw in Groupon’s business model).

The existing situation makes it very difficult for businesses to hit the sweet spot where discounts lead to increased profits in the medium- to long-term. In the old days, it was the labor of collecting coupons. Now customers have to decide if they will suffer the hassle of downloading and using new apps specific to each business. This also makes it harder for companies to gather data for market research and customer targeting. A coordinated approach could drive a more comprehensive and coordinated collection of data.

Bridging the gap with tokens

Several aspects of blockchain technology can remedy this. A platform that customers can use to easily connect with brands offering discounts is made even easier with a dedicated utility token for this purpose. As the GATCOIN team explained:

“The GAT System will enable merchants to issue Merchant Tokens to a mass consumer audience with minimal set-up, allowing them to quickly adopt token usage as part of their overall marketing strategy.” This isn’t a single standalone cryptocurrency, but an entire omnichannel platform including:

• Cash Tokens: used as pre-paid cash to buy products and services
• Discount Tokens: used as discounts to subsidize the regular cash price of products and services
• Loyalty Tokens: used to replace loyalty points to redeem rewards
• Gift Tokens: used as gift vouchers to send to friends and family
• Travel Tokens: used as portable currency to spend globally in network merchant stores.

The GATCOIN platform enables a range of choices for businesses to diversify and streamline their processes for marketing. They can also reap secondary benefits, as described by GATCOIN CEO, Simon Cheong:

“Merchants will obtain invaluable data on token circulation, token usage, consumer spending preferences, and customer demographics. Efficient use of this data brings benefits to both merchants and consumers. Merchants can engage directly with a more relevant target audience. Consumers can receive offers that align with their preferences and interests.”

Reach out and grab someone

GATCOIN isn’t just innovating with blockchain technologies. It is going to combine them with mobile targeting technology; their patent pending A-Drop™ technology will be a vital part of the platform.

Cheong explains that A-Drop™ (from airdrop) will “allow merchants to reach out to people close to their premises real time. They will be able to select the exact people fitting their best potential customer profile and give them — for free — relevant loyalty points delivered directly into their mobile.”

This will cause a rise in mobile social media sharing as people, after receiving freely distributed loyalty points directly to their phone, share the results with friends. They can even tell their friends in the area to walk by and get their own points. This kind of Pokemon-Go style sharing will bring people into the retailers’ ambit and generate excitement about the platform.

SK Planet Japan is ready

The Pokemon-Go connection may seem coincidental, but it is Japan where the technology will be first deployed. SK Planet Japan will implement the GATCOIN platform across 60,000 retail outlets across a range of world-class brands it manages in Japan.

“Japanese consumers regularly lead the world in early adoption of new technologies and this occasion is no exception. They will be the first to be able to trade tokens from multiple retailers and enjoy free loyalty points. SK Planet Japan’s current mobile gifting programme, COTOCO, a unified loyalty programme, will be migrated to the blockchain and integrated with the GATCOIN platform.”

GATCOIN, as a diversified platform, allows more options for businesses but also more benefits. Of course, challenges remain regarding the uptake of cryptocurrencies. The GATCOIN team are hoping the features and build of their Ethereum-based platform can overcome concerns of those unfamiliar with how cryptocurrencies work, according to Cheong.

“We believe that many, if not all of these concerns can be addressed by creating a controlled environment in which enterprises can deploy digital tokens to a mass consumer audience, thereby mitigating risks that might otherwise negatively impact technological adoption, brand  value, and potential regulatory concerns.”

GATCOIN’s token pre-sale ended on November 28th. The full token sale is starting next month.