Gamification as a concept is not necessarily a new one, although the term itself may very well be. The basic premise of gamification is that it uses game mechanics for non-game applications. It employs the use of game elements to leverage a participant’s sense of challenge, competition, and reward to educate, change attitude or behavior and inspire action.
Mobile gaming is now big business with 2.2 billion gamers across the globe expected to generate $108.9 billion in game revenues in 2017, the largest segment being smartphone and tablet gaming at 42% of the market. Marketers and retailers are always on the lookout for new ways to gain an innovative edge in an increasingly competitive environment. And more and more brands across industries are adopting gamification as a tool for consumer engagement marketing as well as generate loyalty and brand advocacy.
Post Gamification Customer Engagement Metrics:
47% Client Engagement
22% Brand Loyalty
15% Brand Awareness
Gamification can be used to garner consumer loyalty in a number of different ways:
Gamification is very effective in ensuring consumer participation in programs. It is effective because it incentivizes consumers to perform certain actions by appealing to their competitive nature. For gamification to be effective, brands must make participating a seamless part of the user experience. They will be more likely to participate if they have fun doing it. Gamification can be used to introduce existing consumers to new versions of a product, to demonstrate features, or when customers are renewing their existing subscriptions.
Perhaps the best example of how status and achievement can drive participation is Four- Square’s Mayor program. Customers could “check-in” to different local establishments, with the person with the highest number of check-ins earning the title of “Mayor” of that establishment. This simple badge ensured users kept competing with each other, and constantly returning to the establishment.
By creating the right incentive schema and publicizing it appropriately, you can choose almost any form of customer behavior desired to reward that aligns with your business objectives, and enables you to closely track ROI based on these specific behaviors and user activity. Gamification is very effective at driving specific forms of consumer behavior desired by marketers, be it filling out registration forms, taking surveys, influencing word of mouth or creating referrals.
American Airlines AAdvantage Passport Challenge gave AAdvantage loyalty members a chance to turn their virtual adventures into real-life travels. Tapping into the power of social media and gamification, American Airlines set out to boost engagement from loyalty members following its merger with US Airways. The results far exceeded expectations:
Dropbox provides users with free incremental storage for specific user behaviors such as completing tutorial levels and referring friends, which has proved to be enormously effective.
A well-accepted rule of thumb is that customer acquisition costs are generally 4-6 times the costs of customer retention. Gamification has its biggest impact in ensuring customers keep coming back. In addition to points for purchase, providing users with a sense of achievement and competition while having fun and staying engaged for longer stretches of time provides real retention benefits.
As illustrated in the frequent flyer programs example, having status tiers with associated perks ensures that customers keep returning and participating in programs for reasons beyond just the points they get.
McDonald’s has been leveraging gamification in a more literal sense with its Monopoly game that it has been running for thirty years (since 1987). The game is single-handedly responsible for a significant lift in same-store sales and works by both bringing in consumers who might have eaten at another burger chain (acquisition), and by bringing them in again and again (retention). In 2010, McDonald’s increased its sales by 5.6% in the USA through this program, with many people engaged in impulse buying just to get tickets. They doled out over $500 million in prizes in 2014 which gives you a sense of how impactful it must be.
There are a few general rules of thumb when it comes to applying gamification techniques to loyalty programs that practitioners should keep in mind:
Make it social: A key component of gamification is recognition, so always look at integrating social media into your ideas.
Reward participation: Give new members bonus points for simply showing up (ensuring they get over the startup inertia described earlier).
Not too hard, not too easy: A key challenge for most gamification techniques is to ensure it is easy to participate but not too easy, so participants get a sense of achievement.
Engender friendly competition: Things like leaderboards and public badges indicating levels of achievement are effective ways of getting your customers to compete with each other for recognition.
Clearly dene the goals: Make sure consumers understand exactly what they need to do to achieve their reward; also, design program levels so goals feel within reach.
Surprise and delight: A very effective gamification technique is giving a random reward or freebie to members at unexpected times.
As consumer engagement and retention are key to building long term consumer loyalty, gamification is proving to be the innovative edge in an increasingly competitive environment, allowing marketers to increase their sales, acquire and retain customers. With the increase of new shopper technologies like Augmented Reality and Virtual Reality to create differentiated, personalized customer experiences, in the short-term we are likely to see a lot more gamification in marketing strategies.
While gamification is a very effective tool, practitioners need to take care to use it in the correct context, and not overuse it. Simply adding game mechanics to your programs won’t automatically make them better. Without clear expectations and thoughtful application, gamification can mislead and frustrate customers, or even worse, drive unwanted behaviors.