Gamification in Loyalty Programs: Why Its So Important?

British computer programmer Nick Pelling, who developed a game-like interface for ATMs and vending machines, coined the term ‘gamification’ in 2002.

Since then the term seeped into many business functions. Gamification in loyalty programs means loyalty programs with game elements.

Did you know?

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.

In this blog post, we will discuss the reasons to add gamification in loyalty programs, benefits of gamified loyalty programs, types of gamified loyalty programs, and best practices for gamification of loyalty programs. Read on and thank us later.

Reasons to Add Gamification in Loyalty Programs

Here are some compelling reasons to add gamification elements into your loyalty programs:

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 gamification elements in your app-based loyalty program to appeal to innate human instincts. By doing that, you turn regular digital experiences into gamified loyalty programs that are exciting and engaging.

2. Highly cost-effective

Striking the right balance between cost and value is a challenge in any loyalty management platform. But gamified loyalty programs prove highly cost-effective. They keep customers engaged using gamification modules, reducing the need for costly tangible rewards. By providing virtual incentives, gamified loyalty programs make customers feel rewarded and satisfied. This is a powerful example of how smart gamification features lower costs and boost loyalty.

3. Increased engagement

Did you know an average customer is a member of over 16 loyalty programs? In this competitive space, it’s hard to stand out. That’s why many companies are turning to gamification examples such as spin-the-wheel, challenges, and point boosters. These drive excitement and repeat engagement. A well-designed gamification loyalty program attracts users, captivates them, and creates memorable customer journeys.

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 opened your app-based loyalty program instead? With smart gamification elements, you can transform your reward app into a mini virtual playground. Such gamification modules add vibrancy to an otherwise transactional system and increase app opens and time spent.

5. Facilitate healthy competition among members

By gamifying your loyalty programs, 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. Gamification elements such as leaderboards and achievements build a strong emotional connection with your brand.

Benefits of Gamified Loyalty Programs

Gamified 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 with gamified loyalty programs witnessed a 47 percent rise in engagement, a 22 percent growth in brand loyalty, and a 15 percent surge in brand awareness. These findings show why brands are investing in loyalty program software that includes built-in gamification features.

2. Improved customer spending and retention

Gamified loyalty programs can motivate customers to spend more. By integrating addictive game elements and gamification modules into their loyalty programs, businesses can encourage customers to enhance their average order value and make additional purchases. This results in increased average order value and lower churn, which are key goals in any loyalty management platform strategy.

3. Boosts social sharing

Did you know that gamified loyalty programs can enhance social sharing by almost 25 percent and comments by 13 percent? 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 gamified loyalty programs. Gamification features promote brand organically and provide a boost to marketing efforts.

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 gamified reward programs, they provide valuable insights into their preferences, behavioral traits, as well as likes and dislikes. These insights prove to be extremely valuable for companies. These behavioral cues help you fine-tune offers. This is where a smart loyalty management platform becomes an essential tool for analytics-driven personalization.

5. Higher ROI

Gamified 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 percent boost in sales and an astounding ROI of 560 percent 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 percent increase in loyal customers thanks to its app-based loyalty program powered by gamification. Tennessee-based logistics company Kenco reported a 45 percent increase in its sales after gamifying its loyalty programs. These numbers are not outliers. They are the result of investing in the right gamification modules and aligning them with your customer lifecycle.

Types of Gamified Loyalty Programs

Let’s explore some popular gamification examples used in today’s gamified 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 programs to encourage customers and program members to complete the tasks and overcome the challenges. Such loyalty programs are integrated into modern loyalty program software and 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 an app-based loyalty program for a certain number of days consecutively and winning a reward. The gamification module builds habit and rewards consistency.

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. They are classic gamification features. 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! These badges are often built into loyalty management platforms.

4. Leaderboards and teams

Leaderboards, in the context of contemporary loyalty programs, 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.

Best Practices for Gamification of Loyalty Programs

In today’s age, many organizations are gamifying their loyalty programs more than ever before but only a few of them are doing it the right way. Gamifying loyalty programs can be effective if organizations follow some key best practices. Here are some of the best practices.

1. Know what you want

Unsurprisingly, this is one of the most basic gamification best practices. Be clear on the goal. What is it you want from gamifying your loyalty programs? So, before starting to gamify your loyalty program ask the following questions. Do you want more engagement from customers and channel partners? Want more sales? Want to generate buzz around your products and offerings? When you are clear about your objective, you have higher chances of achieving desired objectives from our loyalty programs.

2. Mix a variety of rewards

One type of reward doesn’t work for everyone. For instance, it isn’t just sufficient to give out discounts. Nor is it enough to dole out cash rewards. Offer something different every single time. It could be exclusive items, early access, or recognition. Offer a mix of tangible rewards such as discounts, products, and cash rewards and intangible rewards such as exclusive content, recognition, early access, and more such rewards.

3. Give feedback fast

In gamification, feedback matters a lot. As the saying goes, “feedback is the breakfast of champions.” And you don’t want to make those who engage with your gamified loyalty program any less than champions. So, the most effective way to do that is to give feedback and give feedback fast. If your loyalty management platform is good enough, it will create a special place in the hearts and minds of the people who engage with your loyalty program.

4. Tailor gamification elements for different segments

“First you harmonize, then you customize.” This quote by noted singer and songwriter Wilson Pickett can be applied to gamification in loyalty programs. The gamified elements in loyalty programs should be tailored for different customer segments. You can only do that by knowing your customer better. Offer rewards or challenges based on what they like, what they’ve done before. Tailor gamified experiences to customer preferences or past behaviors to make them more engaging.

5. Enable social sharing

In the age of social media, adding a social sharing element in gamified loyalty programs is no longer a ‘nice-to-have.’ It’s a must-have. Regular users of social media platforms like to share everyday updates as well as their accomplishments. The wins in gamified loyalty programs are no less share-worthy for them. And manufacturers must ensure their gamified loyalty programs users are able to share all their progress and achievements via social media platforms.

6. Ensure the redemption process is easy and rules are transparent

If the redemption process is easy, then the gamification of loyalty programs would be highly fruitful. That’s why the most important thing manufacturers should do is to ensure that claiming rewards is easy. A smooth redemption process would keep people coming back. Apart from that, make sure the rules are highly transparent and easy to understand.

7. Add new content and regular updates

Last but not least, new content and regular updates can be a game changer in gamification of loyalty programs. When an organization maintains constant touch with its customers and loyalty program users through its content and updates, it is more likely to achieve its goals than an organization that doesn’t add new content and updates regularly.

Conclusion

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 gamified loyalty programs for a wide range of businesses across industries. Whether you need a full-scale loyalty management platform or an app-based loyalty program, we have the tools and expertise to elevate your customer loyalty. If you are looking to infuse game elements into your loyalty programs and provide your customers with a unique experience, contact our team of loyalty experts to know how we can help.

Ready to make loyalty fun? Let our experts show you how to use gamification to turn casual users into loyal fans.