Gamification is a Valuable Customer Retention Tool

by Bistriti Poddar |

Gamification is a Valuable Customer Retention Tool

Gamification is gaining traction in every industry and becoming more popular than ever before and there are numerous brands trying to capture the addictiveness of a competitive game and applying it to customer behavior. It’s a great marketing tool to prompt customers to come back for more, thus generating loyalty and brand advocacy. According to Gartner, by the end of this year, more than 70 percent of the Global 2000 companies will implement some kind of gamified initiative. Gamification, when done right, can be very effective at retaining valuable customers. TechValidate states that 30% of companies that used loyalty gamification improved registration conversion rates by more than 50%.

Brands realize that if they successfully engage their customers, they achieve a 55% higher share of wallet, and one of the prime customer engagement solutions is using games that reward customers for playing and shopping with you. Gamification triggers intrigue and excitement leading to interactions with your brand and improved customer emotional engagement. It taps into customers’ desire to compete and win. For example,  customers take a fun lifestyle quiz and that helps you give insights into what type of products they prefer and this information can be useful in personalizing your marketing efforts and customer touchpoints like email marketing, targeted ads, etc. Besides, gamification methods like referral programs are also useful for brand awareness where existing customers help find new ideal prospects through word-of-mouth.

Some of the most common elements used in loyalty gamification are:

  • Leaderboards
  • Game design and architecture with meaningful stories
  • Virtual currency
  • Redeemable points or experience points
  • Achievement levels
  • Achievement badges
  • Teammates can bring in competition and cooperation – critical to motivation
  • Performance graphs to show user performance over time

McDonald’s uses gamification through its Monopoly game which has been in existence since 1987 and is responsible for significant spike n same-store sales. Customers receive various promotional incentives that bring them back over and over again. McDonald’s saw an increase in sales by 5.6%  in 2010 in its USA program. Most of the customers have confessed that they would go there to eat everyday to collect the tokens for their monopoly board.

Similarly, Nike+ was launched in 2006 to track user data like running, speed and time in an effort to keep users fit and active by using gamification. The app also allowed users to view the status of other users and compete with friends and stay engaged. The app has  leaderboards for different time frames updated weekly or monthly where app users can see who’s on top.

Here’s how you can use gamification to retain customers:

  • First and foremost, know your objective. What are you trying to achieve? What customer behavior are you trying to drive? Everything needs to align with your business objectives so that you can closely monitor ROI based on these customer behaviors and user activity. Ensure that the customers can understand exactly what they are supposed to do to win their reward; also, design program levels so that goals are realistic.
  • Knowing who your customers are, is vital. Identify the key demographic that engages with your brand the most and make sure your gamified loyalty program is specifically tailored to meet their needs. For example, if your audience is predominantly millennials, then your choice of game will be very different for your main customers as compared to Baby Boomers and retirees.
  • Make sure it is easy to participate while maintaining the sense of challenge so that participants get a sense of achievement. Starbucks Rewards offers its customers challenges like, “Try each of these items between this time period to collect 150 Bonus Stars”. It’s engaging and fun for the customer, while it encourages customers to try new things recently added, it also allows Starbucks to push new items on the menu.
  • Surprise and delight them with spontaneous rewards like a random reward or freebie at unexpected times because people love surprises. Incremental prizes like limited-time promotions or a chance to win exclusive prizes with the “Scratch & Win” promotion by SMS or push notification, keeps them invested in the loyalty program and motivated to keep racking up points and redeeming rewards.
  • Allow and encourage customers to post their loyalty program status and rewards progress on social media. This is a highly effective tool for stimulating competition (as well as garnering new referrals). However, you can also integrate “leaderboard” sections into your brand’s digital loyalty app, so that customers can track real-time status of their performance as well as view how their friends and family are fairing.

A coordinated and strategic approach to gamification will enable companies to derive benefits in the form of increased customer retention, engagement and revenue growth.

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