Incentivizing Behavior and Loyalty with Dragonchain
In a previous publication, we discussed how businesses can use a loyalty and rewards program for customer engagement. With more than 90% of companies using some sort of loyalty program, it's evident that they bring value. And it goes beyond customer engagement. According to LoyaltyOne, "87% of companies are primarily using loyalty data to optimize member experience, 60% for measurement and forecasting, and 48% for marketing." Turns out, businesses are using the data collected through loyalty programs to guide their decision-making process and they're not the only ones.
Nearly seventy percent of customers make decisions based on loyalty and rewards programs. These programs influence consumer decisions on when, where, and how much to spend on purchases. If a retail loyalty program can bring value to both the consumer and the business why stop there? Why not apply the underlying foundations of these programs internally to the business?
Today we're looking at how businesses can affect the behaviors of their partners and employees through incentivization using Dragonchain's patented loyalty and rewards system.
Joe Roets first combined the use of blockchain and incentivization at Disney. While there, Joe and the team held two courses, one business-related and the other more technical. Oftentimes Disney teams would come to Joe with problems that weren't really a technical issue but rather a human behavioral issue. Joe's answer to these problems? Apply transparency and scarcity to affect behavior.
Behavior modification refers to the techniques used to change undesirable behaviors into desired ones. The idea behind behavior modification is that desired behaviors should lead to positive consequences and ultimately undesired behaviors should fall to the wayside.
The use of behavior modification has an array of implications. Sometimes we see behavior modification as a way to get children to clean up their room or brush their teeth. Other times we see healthcare experts use behavioral modification as a means of interacting with non-compliant patients.
Behavioral modification employs four methods including positive punishment, negative punishment, negative reinforcement, and positive reinforcement.
Positive punishment is normally used to avert negative behaviors and involves adding a consequence that will discourage someone from repeating an undesired behavior. For instance, adding assignments to an employee as a punishment. A negative punishment on the other hand takes away something as a punishment for undesirable behaviors.
Most of the decisions we make are directed by emotion and self-interest. To improve results, a business may impose some penalty or punishment for undesirable behaviors. With positive and negative punishment the attention is on the negative and, over time, can lead to poor employee morale as those who do meet expectations may feel undervalued.
On the other hand, negative reinforcement is when someone is encouraged to modify their behavior to avoid something unpleasant. The most effective out of the four methods is positive reinforcement, otherwise known as behavior modification through incentivization.
According to the Behavioral Economics Guide, people often change a certain behavior that they wouldn't otherwise if the result exposes them to an ongoing external positive reward. Using incentives to change behaviors can encourage employees to strive toward desired behaviors and help maintain outcomes. Let's look at how businesses can incentivize behavioral modification beyond a traditional customer loyalty program.
Behavior Modification through Incentivization
A well-run business relies on interconnected employees, departments, and partners to ensure everything is operating smoothly. Using incentives to modify and maintain behaviors helps to create a more efficient environment to better meet the goals of all parties involved.
Every employee is tasked with a specific job that connects to another employee or group of employees within the organization. There may be times where an employer needs to motivate teams to become more cohesive and efficient to create better quality outcomes and relationships. Let's look at an example.
Imagine an employer has two teams that rely on each other to accomplish a process. The work that Team A performs is directly related to the ability of Team B to meet its goals. However, oftentimes different teams within a company don't know what each other is doing. This lack of transparency makes it difficult for teams to know they can rely on each other to consistently meet their deadlines.
Dragonchain believes the first step to solving the lack of transparency between employees is to put as much data on-chain as possible. Once a process is on-chain, productivity becomes provable and can lead to earned incentives because teams deliver on time and they are not making mistakes. The type of incentive or positive reinforcement used is up to the business and can be anything from recognition to physical rewards.
Teams that aren't meeting expectations and aren't following a defined process efficiently or accurately won't receive incentives and over time will fall to the side. Ultimately, the long-term effect is quantifiable as the more efficient teams persist.
For Process Improvements
Beyond providing a means to incentivize employee behavior, with data on-chain, businesses can now analyze what is working and what is causing friction. In other words, is there something Team A is doing that if adjusted could be better for Team B? Or, is Team A doing something outside of the process that if adopted would create a better environment for all?
Knowing what all employees are doing along a defined process allows for a "window" into any event, positive or negative, that without it companies sometimes would be unaware was happening. Businesses can remap the process and improve the system over time, all the while rewarding people who are following the process best.
We can affect the behaviors of business partners through incentivization as well. A blockchain-based supply chain provides proof of every event along the chain. Incentives can be used to motivate partners to routinely meet specific criteria such as delivery times or fresh products. Those partners who do not meet specified terms are not rewarded and eventually won't be used anymore.
The inclusion of an incentives plan between multiple partners creates a new way for businesses to work together towards a common goal. As an example, environmentally conscious businesses may incentivize partners to lower their carbon footprint. To prove interested parties are following through with carbon reduction plans, partners can provide on-chain proof of carbon emissions to receive discounts for products or other benefits.
For Audits and Compliance
When processes and procedures are on-chain businesses can more readily produce documentation for audits and measurable proof of compliance. Real-time internal audits allow a business to know that a process is or is not being followed and its outcome. Businesses can then provide a proof report to an auditor, a regulatory agency, or a partner to prove they are compliant.
Creating an incentivization program for employees to maintain compliance in a regulatory or company policy helps ensure employees are following the same process and protects the business against fines and malpractice.
For example, an incentivization program in a healthcare facility could help hospitals prove compliance and lead to increased patient safety and decrease errors. One of the first departments a patient visits is registration. Under HIPAA regulations, registrars are required to confirm that the patient in front of them is indeed the person they claim to be and is not committing identity fraud. The fines associated with fraud for the hospital can be upwards of $50,000 (USD) per infraction, depending on the tier. An incentive program for accurate registrations can help ensure accuracy and decrease the risk of fines.
Beyond incentivizing individual employee behavior to maintain regulatory compliance, these incentives can have a rippling effect through the path of care for a patient and lead to process improvements.
After registration, the patient may go to the imaging department. The imaging staff is relying on registration to send the proper identifying information along with the patient. It is the technologist's responsibility to ensure they follow HIPAA compliance and are imaging the correct patient. If the information does not match the technologist must go back to the registrar to have the information corrected, delaying patient care.
Documenting errors on-chain can identify a specific employee who needs additional training or areas where the process breaks down resulting in a more systemic issue and a process improvement plan may be warranted.
Businesses can even incentivize partners to follow a regulatory process. For instance, a business may want to incentivize a contractor to ensure they are following all OSHA standards and best practices. Perhaps incentives for most days without a workplace incident moves the contractor to the top of the list for the selection process.
Whatever behavior a business wants to incentivize, Dragonchain has unique ways to make an incentivization program flexible and scalable so businesses can create an incentivized atmosphere that spans its entire ecosystem including customer, employee, and partner.
The Dragonchain Advantage
Incentivization with Smart Contracts
Dragonchain's behavioral modification incentivization system is completely customizable per Enterprise and even per situation within the Enterprise. The use of smart contracts will automate processes and provide a definitive interpretation of contracts. This flexibility allows businesses to fine-tune an incentivization system for better analytics and performance.
Our smart contracts are unique as they can act as their own oracles. These smart contracts can be programmed to execute at specific time intervals and execute based upon events or state changes on other blockchains or traditional systems. This ability allows businesses to craft a completely customizable and automated incentivization system.
With our patented Smart Contract Orchestration system, businesses can add, update, or delete any step in a workflow process without a complete rewrite of the smart contract. Businesses using smart contracts to distribute incentives for process improvements can use smart contract orchestration to easily remove or add steps to an already in place process without disrupting the entire process.
Businesses can craft an incentivization program with varying degrees of complexity. From a simple smart contract, like automatically rewarding employees who punch in on time every day of the month with a free coffee from the cafeteria, to something more complex. Imagine a smoking cessation program with different rewards at specified milestones.
Dragonchain's incentivization system uses the passage of time as a consensus mechanism. Employees and partners of a company can use time-based process improvement incentives to award based on a score specified by the business, normalized from 100 to 1000. Once the employee or partner receives a specified score, incentive rewards are distributed. These rewards can be distributed via points or a token, including a non-fungible token (NFT).
The decision to use tokens for the distribution of incentives is one left to the business. Dragonchain's incentivization system is flexible enough that a business can transition from a points-based system to a token or NFT access system easily as the need arises.
Dragonchain Distinct Features
No matter the use case, every Dragonchain application comes with a few key features that set us apart from other behavioral incentive systems.
With Dragonchain, all private data remains with the individual business unless explicitly permissioned otherwise. This gives businesses the ability to adhere to privacy regulations such as GDPR.
Our patented interoperability system, Interchain, allows any business to connect to any system for true flexibility. An incentives program can be written in any language without the need for specialized blockchain training. Each business system is independently scalable and can be hosted in any cloud or on-premises environment.
Transactions are immediately available for real-time assessments and quality control and result in a traceable record decentralized to Bitcoin and Ethereum, leveraging approximately $4 billion (USD) per year of measurable security behind every transaction.
Businesses can use incentives to modify the behaviors of their partners and employees as well as identify areas of improvement for a more efficient workflow process. Dragonchain has the tools to build a cohesive program for inter-department efficiency and cross-business partnerships to create a strong relationship between partners.
To get started with your incentivization program contact us today!