Want to Deepen Your Customer Engagement? Gamification is the key.

According to “The State of Loyalty Programs 2013”, a report from Forrester Research, more than half of companies value their loyalty programs as strategic priorities but the bottom line is that only 16% of their customer bases are motivated by loyalty rewards. For senior executives in the marketing field, the focus of loyalty programs should be shifting from offers and discounts to engagement and emotion. As a graduate student in Northwestern University’s Medill IMC program, I have been exploring the values and strategies of integrating “Gamification” concept into loyalty programs. I found two interesting articles about the “Gamification” concept and made three suggestions for executives who want to gamify your loyalty programs strategically.

Perka post: Five factors that turn your loyalty program into a successful game

Recently, Perka post posted a great article by Zach Grossman: How to “Gamify” Your Customer Loyalty Program. It gave a definition to the “Gamification” concept and also examined the five psychological motivations that made the concept compelling: 1) the social communal factor; 2) the recognition factor; 3) the time factor; 4) the challenge factor; 5) the fun factor. Adding “game mechanics” to the loyalty programs means deeper engagement and measurable changes in customer behavior that impact the bottom line.

Loyalty360^TM: Too many loyalty programs look alike and there needs to be differentiation spearheaded by engaging experiences.

Loyalty 360^TM recently put up an article: Gamification Isn’t About “Slapping Badges on Everything”, about the inspirational speech given by Kirk, Senior Director Digital Strategy, for Bunchball, at the 6th annual Loyalty Expo. “Gamification” should be a fun thing, Kirk said. He also gave a definition to the economics of fun. According to him, a fun thing should have five key elements: a certain level of difficulty, a certain amount of friends, a certain amount of interesting strangers, a certain amount of reward, and a certain amount of opportunity.

Three Suggestions for Marketing Executives to Gamify Your Loyalty Programs Strategically

 As I digged into these two articles and analyzed other industry “Gamification” practices, I come up with three actionable suggestions that marketing executives need to consider while integrating the concept into your loyalty programs in a strategy way.

1.     It’s not about a game. It’s about engagement.

“Gamification” does not replace your content with a game like Candy Crush. It is about leveraging the psychological motivations of “game mechanics” to engage people with your product in a way that highlights the product’s benefits and adds real value. It just refines the way people interact with your content.

2.     “Gamification” cannot come stand-alone. The “reward” offers should be personalized to reflect customer’s real interest.

To a company, having a loyalty program is just like sitting on the gold line of consumer data. “Reward” offer is not just about transactions and discounts but also presents an opportunity for consumers to experience what they want.

3.     Engagement Measurement and Optimization

The final step is to measure the performance through selected KPIs and identify the areas that could be further refined. Does the game-like interface trigger more responses or viral spread of messages among consumers? Does the personalized offer create real values for the consumers? By answering these questions, you can further maximize your customer engagement.

Engagement is the currency of a digital world. Gamification + loyalty program = maximum engagement. So why still wait? Take actions now and gain an edge over your competitors.

Jessie Guo is a MS candidate in Northwestern’s Integrated Marketing Communications program and anticipates receiving her degree in December 2013. She is passionate about crafting stories based on data analysis and is now seeking job opportunities in marketing analytics and research, especially database marketing/CRM, loyalty marketing, multi-channel marketing/E-commerce and email marketing. Follow her on twitter @jesieguoxiaoxi. 

Photo source: http://blog.getperka.com/perkapost/gamify

Loyalty Programs: Driving Incremental Revenue?

I recently discovered that the 3^rd largest retailer and #1 pharmacy in the nation has plans to roll out a massive loyalty program next year. Walgreens is currently running a pilot of Walgreens Rewards in Richmond, Kansas City, and Portland. The program is based on points that can be redeemed for substantial rewards like gift cards and merchandise. Even though Walgreens is late to market behind the competition, the program seems to build a relationship with the customer over time. In comparison, CVS ExtraCare Rewards are only good for a limited time and more difficult to keep track of. The program will be tweaked based on the results of the pilot, but it seems very easy to participate and rewards customers for behavior that they would be doing anyways. This got me thinking about loyalty programs and wondering if they actually drive incremental sales.

For me, loyalty programs work. I continue to go to Starbucks over any other coffee shop so that I can get closer to a free cup of coffee. I also added a credit card to my Chase account to get double the points from Chase Rewards. If I can be rewarded for behavior that I am already doing, I am likely to increase that behavior. I suspect this is probably true of many other consumers as well. In my opinion, there are a few best practices that will help create a successful loyalty program that drives incremental sales. After all, it costs 5-7x more to acquire a new customer than it costs to keep the ones you already have. So why not give them a reason to stay?

1. Most important is ease of use. Customers don’t want to be bothered to think about their points. They should be easy to keep track of and just as easy to redeem.
2. Collect data. Use the data from member profiles to target messages, offers and optimize rewards.
3. Create an experience. Encourage your members to share their stories, pictures, etc. related to your loyalty program. This will increase engagement and allow you to have meaningful conversations you’re your loyal customers. This can also help to establish passionate brand advocates.
4. It’s all about value. Customers will remain loyal and increase their spend if they feel they are getting a true value out of the rewards. An example is Southwest recently enhanced their Rapid Rewards program by allowing members to earn points for shopping at retail partners.  Consumers want the greatest value they can get out of each dollar they spend.

What rewards programs are you loyal to?


Jessica Wesley
M.S. Candidate, Integrated Marketing Communications
Northwestern University
@jeswesley