Introduction: Loyalty programs

Loyalty programs are a popular marketing tool used by businesses to reward customers for their continued patronage. These programs typically offer discounts, special promotions, or other incentives to customers who make repeat purchases. While loyalty programs can be effective at retaining customers, they have also been criticized for being ineffective, costly, and boring. So, can loyalty programs be beneficial? And how can we make them entertaining?

 

The Benefits of Loyalty Programs

Research has shown that loyalty programs can be effective at increasing customer retention and generating repeat business. According to a study by Accenture, customers who are members of a loyalty program are more likely to recommend the business to others, and they are more likely to make repeat purchases (Accenture, 2013). Another study by the Harvard Business Review found that customers who are members of a loyalty program spend 12-18% more per year than non-members (Harvard Business Review, 2014).

In addition to increasing customer retention and generating repeat business, loyalty programs can also help businesses collect valuable data about their customers. This data can be used to personalize marketing messages and improve the customer experience.

 

The Downsides of Loyalty Programs

Despite the benefits of loyalty programs, there are also some downsides. One of the biggest criticisms of loyalty programs is that they can be expensive to implement and maintain. Businesses need to invest in technology, personnel, and rewards to make the program work, and the costs can quickly add up.

Another issue with loyalty programs is that they can be boring. Many loyalty programs offer the same rewards and incentives that customers have come to expect, which can lead to a lack of engagement and interest.

 

Gamification as a Solution

One solution to the boredom problem is gamification. Gamification is the process of adding game-like elements to non-game activities, such as loyalty programs. By incorporating elements such as challenges, rewards, and leaderboards, businesses can make loyalty programs more engaging and fun for customers. Smart technology has become an integral part of the upbringing of Millennials and Gen Z, making them a prime target for businesses. However, these age groups are known for having a noticeably short attention span, which means that relying solely on conventional loyalty features is unlikely to be effective.

One example of a business that has successfully incorporated gamification into its loyalty program is Starbucks. The Starbucks Rewards program allows customers to earn points for purchases, and they can redeem those points for free drinks, food, and other rewards. The program also includes challenges, such as “Star Dashes,” which encourage customers to make additional purchases to earn bonus points.

But not all gamified loyalty programs have to be “earn and burn”. Farfetch uses a program based on spending tires. Depending on which tire you are, you can benefit from different perks like free shipping, private member’s sale, personal styling etc. 

 

Now let me give you some more facts:

• In an article Gabe Zichermann (the guy talks a lot about gamification; he wrote books about it; TedTalks; the whole shabang; he’s an expert) says that customer acquisition can be raised by 700% through a gamified system (Zichermann, 2013).

• You-kay Chou (another expert in gamification) talks in his article on how Domino’s Pizza: created the gaming app Pizza Hero and increased sales revenue by 30% by letting customers create their own pizza with an app. He also talks on how Teleflora gamified its store with a social engagement scheme offering points for actions, increasing traffic from Facebook by 105% and conversion rates by 92% (Chou, 2020).

• With a 2-week contest, Lawley Insurance closed more sales than the previous 7 months combined (Engelhardt, 2012).

• A gamified system can increase website visits by 108.5%, and can see a conversion rate of 9.38%. (Kirkpatrick, 2011)

 

Conclusion

Loyalty programs can be effective at increasing customer retention and generating repeat business, but they can also be expensive and boring. Gamification is a solution to the boredom problem, as it can make loyalty programs more engaging and fun for customers. By incorporating game-like elements, businesses can increase customer engagement, loyalty, and satisfaction. At the end of the day, 93% of marketers declare they love gamification for a reason, right? (Georgiev, 2020)

 

Sources

Accenture. (2013). The Accenture Global Consumer Pulse Survey.

Chou, A.Y. (2020). A Comprehensive List of 90+ Gamification Cases with ROI Stats. [online] Yu-kai Chou: Gamification & Behavioral Design. Available at: https://yukaichou.com/gamification-examples/gamification-stats-figures/.

Engelhardt, Tom, LevelEleven (2012). Sales Gamification Case Study: Lawley Insurance. [online] Available at: https://www.slideshare.net/leveleleven/lawley-pipeline-and-actvty-log-contest-presentation

Georgiev, D. (2020). Top Gamification Statistics of 2020: Next Level Gaming. [online] Review42. Available at: https://review42.com/resources/gamification-statistics/

Harvard Business Review. (2014). The Value of Keeping the Right Customers. Retrieved from https://hbr.org/2014/10/the-value-of-keeping-the-right-customers

Kirkpatrick, David, MECLABS, content: M., design: Scott McDaniel, code: Steve Beger (2011). B2B Gamification: Bold strategy in conservative industry increased website visits 108.5%. [online] MarketingSherpa. Available at: https://www.marketingsherpa.com/article/case-study/bold-strategy-in-conservative-industry

Zichermann, Gabe, HuffPost. (2013). Gamification: The Hard Truths. [online] Available at: https://www.huffpost.com/entry/gamification_b_2516376.