How Blockchain Will Transform Customer Experiences
Two months ago, one of our contributors wrote about blockchain. The topic resonated among CMO.com readers, so we decided to dig even further to better understand blockchain’s implications for our industry.
While trying to wrap my head around what the heck a SMAC stack was for an article I was working on last June, I confessed my confusion to a close friend who also happens to be a VP-level information technology executive. His reply: “Be thankful you don’t have to explain blockchain.”
Turned out I didn’t have to because one of our contributors, Figurr CEO David Cooperstein,did the honors. The topic resonated among CMO.com readers, so we decided to dig even further to better understand blockchain’s implications for our industry and customer experience professionals. Of course, we reached out to Cooperstein again, along with other industry experts, for their points of view.
Here’s what they told us.
David Cooperstein, CEO, Figurr:
When http and HTML arrived as technical protocols, no one knew how revolutionary they would be in uprooting the balance of power between brands and consumers. Blockchain is a similar disruptor, changing the underpinnings of contractual or financial transactions. From a customer experience perspective, it will have plusses, like enabling new payment options for intangibles like media and better ways to manage privacy. It will also trigger some concerns, like how marketers will handle customer identity when those IDs may hide behind distributed transactions. If uses of blockchain emerge the way web protocols did, expect even more power to shift to consumers, and consequently more startups that monopolize the use of this data.
Blockchain has the potential to be one of the more revolutionary technologies of our lifetime, but it is still early innings. Blockchain can automate contract fulfillment, consolidate identity management, and simplify supply-chain logistics; from a consumer perspective, it can provide peace of mind through enhanced security and verification.
The shared economy—also known as the distributed economy, the peer-to-peer economy, the mesh economy, the collaborative economy, and collaborative consumption—has been growing in importance over the last decade and is anticipated to be a fundamental part of global commerce over the next 10 years. This kind of economy is built around collaboration and the sharing of both human and physical resources, putting humans at the center of its ecosystem. Although it goes by many different names, what draws each manifestation together are core ideas of collaborative creation, production, distribution, trade, and consumption by both individuals and businesses.
The rise of the shared economy has been driven by a combination of societal and technological changes. Transactions most commonly take place through online marketplaces, peer-to-peer networks, mobile applications or digital platforms, which have significantly reduced transaction costs so that they are viable and easy to use for all participants. The internet, combined with location services such as GPS-enabled smartphones, means suppliers and consumers within the same geographical location can be brought together easily. And direct public feedback loops and social networks offer a means to validate reputations and build trust.
However, risks and challenges are associated with this kind of economic activity—the principal challenge being a question of trust and security. Accenture believes that trust is the cornerstone of the digital economy. But establishing trust in the shared economy can be more challenging for participants who lack the public recognition and goodwill that global, national, or even local brands can bring.
In order to meet rising customer demands and expectations, and securely establish trust, businesses will need to rethink how they deliver new, more sophisticated services in conjunction with their ecosystem partners. And to do that, they’ll need to rethink how they rely on and share data within their ecosystems. Enter distributed computing technologies such as blockchain.
Blockchain offers the promise of instant, seamless, secure transactions in the shared economy. It also offers a means for financial services providers, who might otherwise find themselves disrupted or disintermediated in these economies, to establish new core roles as key providers of trust. These companies could, for example, provide services through distributed computing technologies in the form of loans, payments, or insurance, thus guaranteeing secure payments and transactions for customers. Indeed, this kind of role offers the potential to acquire a huge number of new financial services clients within the shared economy network.
And with the involvement of trusted third parties, the quality of products and services bought and sold within these networks will increase, since the identities of participants are permanently stored and can be accessed publicly, and previous activities are logged with associated reviews and reputation scores. As the shared economy continues to grow, and as fast and easy access to reliable shared data becomes the cornerstone of collaborative consumption, these technologies look set to offer a revolutionary solution for customers and businesses everywhere.
The promise of creating a public ledger, in an effort to strip away the anonymity that real-time bidding affords digital ad placement, should provide a positive impact on the customer experience. Today, ad code is being mishandled on a number of fronts. One aspect is publisher sites which provide multiple ad placements on a page, regardless if the advertiser is fully cognoscente of the distribution. In many cases, this creates a poor user experience. Using a blockchain approach, such as Bitcoin, should curb this practice. If publishers are no longer getting paid for displaying ads in an unsanctioned manner, the motivation will diminish and the user experience will improve.
One of the core functionalities of blockchain is to act as a secure method to exchange data (of nearly any kind) between two disparate parties without the need for an intermediary. As such, blockchain will lead to major changes in the underlying technologies and methodologies of many industries. These changes could be as simple as improving an inventory and tracking system within a large organization, or could move directly to interacting with a customer’s payment processing. In any case, there are potential benefits for end users and consumers if the implementation of blockchain is done thoughtfully. It is certainly possible to simply replace a database system with blockchain, but it would be of greater benefit to an organization and its customers if the implementation expanded their abilities, or reduced any intermediary actions.
As an example of a potential hidden customer benefit, it would be possible for a business accepting blockchain payments to offer a discount to its customers, as there is no need for a merchant services company to act as an intermediary performing payment verification. The examples being explored by various startups and industries are endless, and there are many blockchain implementations we have yet to even dream of.