The evidence keeps coming in, like a series of nails in the coffin of conventional loyalty. Every week it seems there’s another study that shows traditional reward schemes just don’t deliver value.
Most recently, we’ve seen research indicating that holders of one of the ‘Big Four’ credit cards would receive only $12 of rewards from $24,000 of spending – which in many cases wouldn’t even cover the annual fee. In the course of just two years, rewards have plummeted by 96%.
That brutal cut was driven by central bank policy, rather than (in this instance) commercial realities. The Reserve Bank of Australia recently reduced the fees that banks were allowed to charge each other to process credit card transactions. Those fees had been used to fund rewards schemes. ‘It was basically a nice profit margin that was built into the system for them,’ explains Peter Marshall of Mozo, the price comparison site that carried out the research. ‘That’s been capped so it’s reduced the income stream. We’ve seen a range of responses to that – there’s reduced points earning, lower caps on how much you can earn, but also higher annual fees on some cards.’
That development is the perfect illustration of Closed Value. Customers are given points with one hand so long as the banks can keep taking that value away with the other hand; as soon as the cash cow keels over, the rewards dry up too. It’s always been a zero-sum game.
That’s one factor we always knew would drive adoption of our crypto rewards programme. Customers aren’t stupid, and they vote with their wallets. Offer something more valuable than the competition and they will make the switch.
By millennials, for millennials
One of the other major factors driving Incent adoption, and crypto more broadly, is one we always believed to be the case but have been surprised to see it confirmed so clearly. We’ve always had one eye on the wider economic picture: the fact that since the Global Financial Crisis, there aren’t many ways for people – especially young people – to invest and make a return. Baby Boomers have priced them out of property and the stock markets, and they’re likely to be heavily indebted by their education before they even draw their first pay cheque.
And so it’s not surprising that millennials are the ones leading crypto adoption. Tech-savvy are left on the sidelines of conventional saving and investing, and they are seeing a golden opportunity in digital assets and seizing it. BraveNewCoin’s Andrew Gillick has written about this demographic effect, and recently given an interview on the same topic on The Constant Investor.
As of next year, millennials will overtake boomers as the largest generational cohort. Significantly poorer than the older generation, who are now retiring en masse, the question becomes: Who will be left to buy the next stock market crash?
Crypto offers millennials potentially the same opportunities that the stock market offered boomers 35 years ago in their peak earning years. By now it should be clear that crypto didn’t die with the last downturn. There’s going to be a role for high-quality cryptos driven by real demand and real network effect, both for everyday use and as an investment. As we’ve said before, we’re hoping to play a meaningful part in that process.