How Blockchain Technology is Impacting the Customer Experience

by Maria Marino
November 01, 2018

There are a few fundamentals that underpin any effective customer experience program:

  • Culture – Building and nurturing a true customer-centric culture.
  • Governance – Your mechanism to turn the CX flywheel as a team such that you and your peers are inspecting your customer feedback, then resourcing the required investments.
  • Measurement and insight – Trending your numbers and uncovering the “why” behind the data.
  • Voice of the Customer – Customer “listening posts,” from social listening to operational metrics to survey data.
  • Communication – Creating a line of sight for customers from their feedback to your actions, creating trust and incentivizing more feedback.

You’re likely doing all of this already… so what could create a breakthrough from incremental improvement to a game-changer for your customers’ journey? Perhaps, Blockchain technology.

Blockchain offers potential to remove friction from customer interactions

Let’s start with blockchain fundamentals—and I’m not talking Bitcoin—but rather the general-purpose technology that underlies applications like Bitcoin.

Blockchain is distributed, immutable and secure

Blockchain is:

  1. Distributed – Blockchain relies on the structure of a ledger, comprised of “blocks” or transactions that are verified by a distributed network. Each validated block adds to the ledger, in an organized sequence, which brings us to…
  2. Immutable – Once a block has been entered in the ledger, it is codified, time stamped and permanent and, in a public ledger, inspectable by all parties.
  3. Secure – Each block is secured by a cryptographic “hash” that ensures the security of every block added to the ledger. For example, in the case of Bitcoin, it’s a community that generates these hashes and the miner who creates the winning hash earns Bitcoins.

Interesting, but how does that benefit me and my customers?

Blockchain has the potential to remove two big costs for you—and cost is a proxy for friction in your customer journey:

  1. The Cost of Verification
  2. The Cost of Networking

The Cost of Networking means your cost to organize all the players involved with a transaction. Think of a single interaction your customer initiates with you – for example adding services. There is a buyer (the customer), the seller (your company) and other vendors (perhaps the shipping company or the firm that supplies a device). If there are lots of actors to coordinate to facilitate this, presumably it’s a high cost for you to organize, and may result in a fragmented or lengthy delivery process to your customer.

A blockchain-driven platform can gather these actors into that distributed network and have them participate across this network. If they comply with pre-defined “consensus rules,” the need for intermediaries to organize their activity is removed. The use of tokens associated with underlying monetary value can be used to incent the actors to participate and facilitate the transfer of value across the network.

The Cost of Verification is the cost you bear to authenticate your buyers, and the friction your customers encounter by having to provide “proof” of their identity — for example, providing bank statements or prior bills.

Blockchain technology has the potential to bring the cost of verification and networking close to zero

Blockchain technology has the potential to bring these costs close to zero, and for your customers, a smoother, even instantaneous verification. This is done using a “smart contract,” which pre-defines the contractual attributes required for a customer transaction, and digitally codifies those attributes.

You might build existing intermediaries or third parties into your smart contract to provide information. If they’re participating on the blockchain platform of your choice, it can be provided automatically, and dramatically reduce the time and costs to conduct the same verification manually. Because the verification process is built into the code, the data coming into your contract should come with integrity already assured.

What makes a good opportunity for you to take advantage of a blockchain platform?

The opportunity is ripe when you have (1) high transaction verification costs and (2) high networking costs along your customer journey.

Can you identify examples in your customer interactions that bear these costs? If you removed that customer friction, how much faster would the revenue be realized by your organization? How about incremental customer happiness?

Blockchain technology offers a breakthrough opportunity for companies—particularly those operating with legacy systems and where powerful intermediaries are in place who hold critical information required to transact with your customers.

We should all be investigating this game-changing technology now and determining the IT roadmap for blockchain technology adoption to drive a customer experience benefit. The early movers will gain a massive CX jump, and a competitive differentiator with a smoother customer journey.