The Coming LoyaltyCapital Bull Market

Never heard of LoyaltyCapital? Don’t worry, it’s a relatively new concept. My company Ribbit.me is a startup in the loyalty and rewards industry. Our patent-pending tech stack utilizing distributed ledger (blockchain) and smart contract technology is introducing revolutionary value innovation to the industry and with it the need to define new terminology.

In the context of our business, LoyaltyCapital is the economic value created by the union of actions between and by two or more agents, such as a producer and a consumer.

Let’s use an example we are all familiar with, staying at a hotel. Two actions are required for that hotel stay to happen. One, the consumer has to value that hotel over somewhere else. Two, the hotel has to provide a hotel experience the consumer values over somewhere else. Without both actions, it’s not going to happen. When both actions do happen the value created is LoyaltyCapital, which is the sum of the consumer’s loyalty to the hotel and the hotel’s loyalty to the consumer.

Here we have two agents: a hotel and a consumer. How do we maximize the LoyaltyCapital generated between and by these two? This is the challenge existing loyalty and rewards programs are trying to solve. Despite best efforts, they’re struggling because there is a problem: value friction.

Back to our example, what if the consumer could pay for their room with a partner airline’s miles directly at the hotel counter? What if the consumer received their hotel points at check-in rather than a week after check-out? What if the hotel points were “smart,” autonomously increasing redemption value during the consumer’s stay and customized for specific services they’ve valued in the past? What if the hotel issued the consumer “In-Stay Points” that they could use to reward employees who increased the value of their stay, and in the process providing feedback to increase the value of future stays?

Would the consumer value that hotel more? Of course, they would! As they value it more, LoyaltyCapital increases, hotel revenues increased, and their satisfaction increases. All we need to do is remove that annoying friction.

Blockchain and smart contract technology remove that friction. Think of it as a frictionless value layer, a smart internet of value, that can be injected into any currently existing loyalty program or redemption network. With the introduction of a frictionless value layer, the generation and sharing of LoyaltyCapital become a dynamic, multi-lateral, multi-agent flow of both data and fungible value.

This paradigm shift in value innovation will propel the $65B/year US loyalty and rewards industry into an explosive bull market expansion of LoyaltyCapital generation.

Greg Simon

CEO & Co-Founder

Ribbit.me