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The Power of Gamification in Loyalty

Look around and you’ll see a lot of examples of gamification in marketing and in particular in loyalty programs.  So is this just another gimmicky social media driven tactic by companies?  Or is there some genuine strategic value that justifies its rapid infiltration into loyalty programs.

It may seem gimmicky on the surface but gamification addresses two key strategic issues for companies running loyalty programs:

1. Jump starting loyalty programs with early member engagement

2. Managing costs of generating loyalty program visiblity

The impact of gamification on these two key challenges areas warrants a separate look at each.

Jump starting loyalty programs

Rapid early engagement is key to gaining visibility, understanding and momentum in new loyalty initiatives.  AirMiles has recently been using gamification to kickstart its location based (mobile) loyalty partnerships with merchants.  Its main challenge was getting members to “check-in” (visit) the retail operations of its partners with their AirMiles app active on their mobile devices.  By creating a contest among members to see who would visit the most partner locations, they leverage gamification to rapidly get members engaged and understanding the new programs.  The top 50 would be rewarded with enhanced rewards such as double miles for those winning members whose mobile devices were fully enabled with AIR MILES location based app. 

Keeping program costs low to deliver ROI sooner

PR programs are 1-step removed from actual revenue and also a bit hit-or-miss with respect to impact.  AS a result, companies are caught between managing their costs and maintaining consistent PR efforts, including around their loyalty initiatives.  A big chunk of the problem comes from having to pay for each impression of a PR program, whether it be in the form of promotional media / list buy OR rewarding individual members for taking an action that creates engagement or awareness but does not connect directly to revenue.  

Gamification takes a bite out of that challenge by generating wide spread visibility, engagement and understanding -- while only rewards a FRACTION of the target audience.  That too those members who are most engaged and active within the visibility programs.  It’s almost brilliant how audience engagement becomes performance based without the perception of company being frugal with payments.  

Gamification drives loyalty program ROI

By taking on two key hurdles to loyalty program ROI, gamification represents an innovative new tool for loyalty marketers to improve their business impact and keep costs down.  At times the implementation can be gimmicky and short-sighted, but increasingly companies with a strategic mindset are recognizing the potential impact of gamification on the ROI of their loyalty programs.

Feb 15, 2012  



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