Gamification in Loyalty Programs: Why Its So Important?

Just imagine—a maze of challenges in which players can earn points and rewards as they navigate through the game. They can unlock badges, level up, and climb up the leaderboards. This is typical of a video game. But what if your customers can enjoy this experience as they engage with your loyalty programs? Welcome to the new world of loyalty programs, which have game elements infused into them! The term ‘gamification’ was coined in 2002 by British computer programmer Nick Pelling, who developed a game-like interface for ATMs and vending machines. The concept became highly popular and gained widespread usage in many business functions. Gamified loyalty programs not only help you provide your customer with immersive experiences but also enable you to build a deeper connection with them. A recent study has found that about a third of customers want game elements in loyalty programs. And as per another study, 60 percent of customers are more likely to purchase your brand if they found the gamified elements interesting. This blog post explains why gamification in loyalty programs are the need of the hour as well as their benefits and types. Read on and thank us later.

Reasons to Add Gamification in Loyalty Programs

Here are some compelling reasons to add game elements to your loyalty program:

1. Appeals to human nature

Video games (or digital games) are addictive. They tap into the basic aspects of human psychology, such as the desire for competition and achievement. Gamification injects a healthy dose of excitement and entertainment into your loyalty program. You can infuse game elements in your loyalty programs to appeal to the innate human nature. By doing that, you can turn regular digital loyalty programs into super exciting and engaging games!

2. Highly cost-effective

Striking the right balance between the cost of the program and the value of the rewards is one of the major challenges in digital loyalty programs. But gamified loyalty programs are extremely cost-effective. One of the best things about them is that they manage to engage customers as well as incentivize their participation without providing a tangible reward! If you get the gamification right, then you don’t have to worry about funding your loyalty programs. By providing virtual incentives and rewards, gamified loyalty programs incentivize participation and make customers feel rewarded.

3. Increased engagement

Did you know that an average customer belongs to 16.7 loyalty programs? In such a scenario, companies find it difficult to engage with customers and provide them with the right rewards. By gamifying their loyalty programs, brands can attract customers to try the games, captivate their attention, and reward them.

4. Infuse life into your digital loyalty programs

When feeling down and out, people turn to social media, funny reels, web series, cute cat videos, peppy music tracks, and video games. Now, just imagine what if your customers open your loyalty program app when they feel bored. That’s possible when you infuse the right game elements into your loyalty program. By doing that, you can transform your reward program into a virtual wonderland where customers can escape boredom and monotony.

5. Facilitate healthy competition among members

By gamification your loyalty program, you’ll facilitate healthy competition among the members and that would lead to more engagement and create a vibrant and close-knit community. Be it while collecting badges, climbing up the leaderboards, and earning loyalty points, members compete against each other with a common objective. This sort of competition isn’t aggressive but can enhance camaraderie among members. Suggested Read: How to Use Gamification in Loyalty Programs [pafe-template id="10457"]

Benefits of Gamification in Loyalty Programs

Gamification loyalty programs come with a wide range of benefits and they can boost sales, enhance customer loyalty, and generate impressive returns on investment for your business. Here are some benefits discussed in detail.

1. Higher brand engagement, loyalty, and awareness

A study conducted by Snipp Interactive, a Canadian marketing company, found that businesses that incorporate gamification into their loyalty programs witnessed a 47%  rise in engagement, a 22% growth in brand loyalty, and a 15% surge in brand awareness. The findings of the study are sufficient enough to highlight the most important benefits of gamification in loyalty programs.

2. Improved customer spending and retention

Gamification in loyalty programs can motivate customers to spend more. By integrating addictive game elements into their loyalty programs, businesses can encourage customers to enhance their average order value and make additional purchases. This results in higher customer retention and a reduction in churn rate.

3. Boosts social sharing

Did you know that gamification in loyalty programs can enhance social sharing by almost 25% and comments by 13%? A new study found that. Also, several studies revealed that customers who engage with gamified loyalty programs are more active on social media than those who don’t engage with loyalty program gamification.

4. Understand customer preferences

To paraphrase Gabe Zichermann, noted Canadian-American author and entrepreneur, gamification is one-quarter technology and three-quarters psychology. When customers and loyalty program members engage with reward programs, they provide valuable insights into their preferences, behavioural traits, as well as likes and dislikes. These insights prove to be extremely valuable for companies.

5. Higher ROI

Gamification loyalty programs provide a much higher return on investment (ROI) compared to their non-gamified counterparts. Let’s look at some stats. Moosejaw, the apparel giant, experienced a jaw-dropping 76% boost in sales and an astounding ROI of 560% after implementing their gamified loyalty program. Starbucks, the iconic coffee chain, saw its revenue skyrocket by a staggering USD 2.65 billion and gained an impressive 25%  increase in loyal customers thanks to its game-changing Starbucks Rewards app. Tennessee-based logistics company Kenco reported a 45% increase in its sales after gamifying its loyalty program.

Types of Gamification Loyalty Programs

Here are some types of gamification loyalty programs:

1. Challenges, obstacles, and tasks

As contradictory as it may sound, challenges and obstacles bring satisfaction and pleasure. There is something special about facing challenges and figuring out ways to overcome them. Many brands have used challenges, obstacles, and tasks in their loyalty program to encourage customers and program members to complete the tasks and overcome the challenges. Such loyalty programs give a rewarding feeling to members.

2. Milestones and streaks

While some customers and loyalty program members are turned on by challenging tasks, some may not be as adventurous or competitive. However, they may be willing to give their time and attention for a specific number of days to get rewards. For them, milestones and streaks can work like a charm. A good example of a milestone and streak loyalty program is logging into the loyalty program app for a certain number of days consecutively and winning a reward.

3. Achievement badges

Be it Facebook’s ‘Top Fan’ Badge or a virtual ‘gold medallion and red ribbon,’ these virtual achievement badges can provide a lot of motivation to existing customers and inspiration to many new customers. Even though the badges aren’t tangible, they offer something extremely powerful that attracts the eye. It’s like a brand conferring you an honorary title right beside your name!

4. Leaderboards and teams

Leaderboards, in the context of contemporary loyalty program, are digital versions of large boards that display the ranks of leaders in a contest. These digital boards show customers their achievements vis-à-vis other people. Leaderboards can be a good idea to show customers where they stand in comparison to other members. It results in healthy competition. [pafe-template id="10457"]

By and large,

Gamified loyalty programs appeal to human nature and tap into basic psychological desires for competition and achievement. In the present digital age, when many customers expect brands to infuse game elements into loyalty programs, a lack of gamification can affect a brand’s image and credibility. At LoyaltyXpert, we have a loyalty program for a wide range of businesses across industries. If you are looking to infuse game elements into your loyalty program and provide your customers with a unique experience, contact our team of loyalty experts to know how we can help.