5 Ways to Gamify Rewards and Win at Loyalty Programs

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For many of us, the earliest memories we have are of playing with our siblings. Play is an important aspect of a child’s development and an integral part of our adulthood. Play comes easily to us. It is something we enjoy doing, and therefore something we engage with, because we find that it inherently benefits us in some way. It is no wonder then that businesses are hoping to capitalize on the benefits of gamification to engage and retain customers in their loyalty programs.

Traditional loyalty programs utilize the ‘points’ methodology to gain traction. Think airline or retail customer reward point programs. According to recent studies, only 46% of loyalty memberships are active; which means approximately 54% of members are actually inactive1. In the wake of technology advances, immense competition and increased ‘choices’ for customers, companies must rethink their approach to loyalty programs.

Enter gamification.

Companies that successfully engage their B2B customers realize 63% lower customer attrition, 55% higher share of wallet, and 50% higher productivity – Gallup2

Gamification as a concept has existed for a number of years. Rajat Paharia, author of Loyalty 3.0, describes gamification as “The process of taking something that already exists – a website, an enterprise application, an online community – and integrating game mechanics into it to motivate participation, engagement and loyalty.”

Consider these statistics:

  • 87% of North American retailers are planning to use gamification to engage customers within the next five years. 70% of top 2000 companies are using it right now
  • 181% more retailers plan to use gamification within loyalty programs in the next five years3
  • 30% of companies using gamification improved registration conversion rates by upward of 50%4

The 2017 Colloquy Loyalty Census states that 53% of US consumers identified ‘ease of use’ as the main reason for participating in a loyalty program over other parameters, such as, ‘gives me great discounts’ (39%) and ‘easy to understand’ (37%). Also, the #1 reason why consumers (57%) abandon loyalty programs was that ‘it took too long to earn points or miles’.

The fine art of gamification

So how do you make gamification work for you? Here are five tips to take your loyalty program to the next level.

Fun = Competition
The idea of gamification is to introduce an element of fun into an activity. There’s no better way to do this than making it a little competitive. Some companies go the ‘leaderboard’ way and some go the way of Foursquare, with their hugely popular ‘Mayor’ tags. Epic battles were fought between users to become the Mayor of a particular coffee shop or restaurant. in short, great engagement is good fun.

VIP = Exclusive
Customers love the exclusivity of an elite club. In addition to extra benefits, it makes them feel that they share a special relationship with the brand and that goes a long way in building loyalty. In a gamified loyalty program, membership to the elite club can be the result of an ‘achievement’. When customers achieve a particular goal, as in the Starbucks’ green or gold stars program or in the Elf Beauty Squad, they become part of that exclusive set of customers with additional benefits.

Reward = Experience
Some reward programs, such as Verizon’s ‘Up’, make scoring points difficult, but the process of redeeming a reward is easy and attractive. Customers of Verizon’s reward program earn just 1 credit for every $300 they spend. While that seems a little steep, customers can redeem their credits against awesome experiential rewards, such as concert tickets, Apple Music subscriptions, Uber money and more. Verizon even throws in daily perks for good measure.

Value = Everything
For many customers, one of the disincentives of a loyalty program is the difficulty in garnering reward points. Many customers abandon loyalty programs just because it takes too long to earn rewards. Companies now reward everything – purchases, social media mentions and sharing, participation, account opening anniversaries, referrals, dollar value of purchase and more. With gamification, it is possible to have different types of rewards for each action, ensuring that everybody wins. For example, the Erin Condren Insider Program gives customers an additional 50 points every month when they share their Erin stories on social media. Customers also get a $5 coupon when they join the Erin loyalty program.

Random rewards = Enchanted Customers
Similar to Easter eggs in gaming parlance, random rewards delight customers and keep them engaged. Everyone likes to win something. This is especially true when being present and participating is valuable enough to be rewarded.

Designing gamified reward programs requires a keen understanding of what motivates your customers and how to tap into their motivators to keep them engaged. When done well, loyalty programs have a definite impact on the bottom line. It’s all in choosing the right motivators or the right combination of motivators. Identifying the right gamification strategy with the right rewards will elevate your loyalty program and keep your customers engaged.

References:

  1. The 2017 Colloquy Loyalty Census Report
  2. http://www.gallup.com/services/169331/customer-engagement.aspx
  3. http://www.snipp.com/blog/2017-06-21/the-power-of-gamification-participation-engagement-loyalty/
  4. https://conversionxl.com/blog/optimizing-customer-retention-gamification/
 

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