GAMIFICATION IN LOYALTY PROGRAMS

FADO Go
5 min readDec 7, 2022
Gamification in loyalty programs

Customer loyalty is a value that any company or brand desires, especially when the business environment is becoming more and more competitive and all markets are changing at a fast pace, much faster than before. The combination of gamification and loyalty programs is an innovative idea that not only excites the customers but also enhances their experience. So what is gamification and how can it be applied in loyalty programs?

Read more about: The Key to Building Brand Loyalty

What is gamification?

Gamification uses game mechanics and experience design to digitally engage and motivate people to achieve their goals. (Gartner). To be specific, gamification refers to the use of game design elements in non-game goods or services to encourage value-creating behaviors such as increased consumption or greater loyalty. (Hofacker, Ruyter, Lurie, Manchanda, & Donaldson, 2016).

The importance of gamification

Gamification prioritizes human inspiration. In essence, gamification is a product design that focuses on people instead of focusing on features to make the most of the excitement of users, people’s participation.

Most of the systems from software, applications to education, healthcare, etc today are designed to focus on features, just to solve some tasks or a certain problem, but not too much attention to the excitement factor of users and participants. Meanwhile, people-centered design with a deep sense of emotions, motivations assumes that products and programs should be designed to hit these motivations and emotions directly to fascinate users to the highest level. A recent Forrester study found that emotional connection drives customer loyalty far more than factors like ease or effectiveness.

That is why game elements and techniques are being used in loyalty programs. The simple reason is because games have traditionally been created with the purpose of entertainment and making players happy to participate. Over decades of development, games have become masters at engaging and inspiring participants.

Benefits of gamified loyalty programs

Gamification in loyalty programs offers customers additional incentives that work together with a brand’s core value proposition to motivate desired actions such as more repeat purchases or increase overall spend. The concept of gamifying loyalty has gained rapid recognition in recent years and is about to witness an explosive growth. A report from Markets and Markets indicated that the global gamification market is expected to grow from $9.1 billion in 2020 to $30.7 billion by 2025.

One of the most significant benefits of gamification in loyalty programs is that it helps increase customer loyalty. 27% of millennials say they would stay in a loyalty program that included a competitive game or social aspect. (COLLOQUY). The figure proves that people enjoy gaming, or to be more specific, they are interested in a fun and thrilling adventure. Bringing customers positive emotions and values with entertainment, this strategy can reward customers to accumulate points, redeem gifts, rank members, etc. This helps customers feel special and also an important part of the business.

Moreover, gamifying loyalty programs can also help drive customer engagement. According to a report conducted by Snipp, gamification strategies can lead to a 100% to 150% increase in engagement metrics. An interesting game will make the user experience more enjoyable and increase customer satisfaction. Gamification helps participants to both interact with the clients and be entertained with fun games. In terms of psychology, customers are more likely to prefer gaming than other traditional methods.

The higher the user engagement, the higher the conversion rate. Using gamification is one of the best ways to achieve this goal. Snipp’s report stated companies that added gamification elements specifically within their loyalty programs increased registration conversion rates by 50%. Gamification has the ability to convey messages naturally, not too forced. Users will accept ads with a relaxed mentality because they think that the game is not heavily about advertising, so they are more likely to respond to calls to action. Thereby, customers will have a deeper impression of the message, easy to remember and bring them positive emotions. In addition, if the game combines with rewards such as coupons or vouchers, the conversion rate will increase even more.

How to use gamification in loyalty programs

Determining target customers

This is the most important step. If companies do not understand their target customer well. They will only waste money without results. Establishing a list of who customers are, what interests they have, or what platforms they use to access the internet, etc. will help companies build a game scenario that is more suitable for them.

Conducting research

Try the games that have been created to understand how they work. What kind of rewards they offer and how they incorporate product placement. There is nothing better than formulating an own game strategy like trying out what others have done to see if these methods work.

Setting up incentives

Determining what can be used to reward customers, a product sample or a promotional coupon might work best. There needs to be a clear motivation to make the game work with customers effectively. What can be given? What can companies receive? What do the customers need? All need to be carefully evaluated to avoid failure. Also consider what offers the competitors have, or ask the audience what they like to receive.

Optimizing games

The game needs viral elements and the main purpose is always to get participants to receive brand-related gifts. It helps increase brand awareness. Therefore, simplifying the game is essential.

If the game requirements are too complicated. Participants will quickly get bored and stop playing. So it is necessary to know how to simplify but still create excitement for participants. Besides that, do not forget to add challenges into the game since players love to be challenged.

Clearly defining the goal of the gamification strategy

Quantify the outcome of a gamification strategy to make sure it is valid or to see if there are any changes. Integrating analytics tools that provide statistics on user engagement including playtime and achievements and user levels to gauge players’ ability to keep coming back to the game. If these statistics do not show positive signs. Then companies need to make the necessary changes to attract customers back.

Gamification has existed for a long time in life, through the activities of businesses and brands, but has not yet formed complex forms like today. As that complexity changes over time, the need for brands to enhance the customer experience and the consumer’s need to make the shopping journey more enjoyable is on the rise.

Building highly effective gamification requires designers to have a high level of expertise and experience to be able to reduce risks and avoid wasting unnecessary things for the business.

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