Loyalty-Driven Gamification: Fostering Customer Engagement and Retention

We’ve explained before how important customer loyalty is for any business, and a returning clientele’s support is even more important for smaller businesses. Those dedicated customers help a business thrive and grow as they recommend your products or services to their friends and family. This is why loyalty programs are a key strategy for customer retention, especially in e-commerce. However, any loyalty program needs to be well designed to effectively foster customer engagement. One of the strongest methods is gamification. We’ll explain what gamification is and how you can start to gamify your loyalty program below.

What does gamification mean?

Gamification or gamifying means applying game-design elements to non-game contexts. This can refer to systems like point scoring, rankings, leaderboards, badges, competition, and other game elements. Along with loyalty programs, gamification like this has been applied widely in multiple industries and settings. Workplaces have used gamification for increased productivity. Schools and educational software have used gamification to encourage learning. Many athletic apps even use gamification to motivate physical exercise. Furthermore, government organizations and researchers have considered gamification to improve voter turnout or reduce the occurrence of traffic violations.

Why is gamification effective?

The wide use of gamification alone should suggest its effectiveness. This is because game-design elements have been shown to create more retention and interaction with a system. Gamification plays on innate desires for being rewarded, often with visual and audio indicators that add some fanfare to mark the victory. Some other game systems, such as collective goals or leaderboards, also build on human social tendencies of cooperation and competition. Altogether gamification is extremely motivating and for businesses that means fostering healthy and active customer engagement and dedication.

Gamified Loyalty Programs for Small Businesses

Many loyalty programs already use some principles of gamification. The most widely used is point collection systems, where customers gain points for all or certain transactions. These points can then be used to redeem discounts or other bonuses. This can be immediately rewarding, but there are other ways to design a strong loyalty program and drive more engagement and retention through gamification.

Ways to Create a Strong Gamified Loyalty Program

• Simple is Effective: Sometimes a complex game can be satisfying to learn, but the most popular games are those that are easy to pick up. It’s the same for gamifying a loyalty program. When it isn’t clear how a customer gains points, badges, titles, or other rewards, the loyalty program quickly becomes confusing, unrewarding, or even frustrating. Both potential earnings and rewards should be clear. For example, make it simple how each transaction will gain a certain number of points or contribute to earning a certain rank or title. This clear communication about what can be earned helps to further motivate customer engagement.
• Titles, Ranks, and Other Recognition: Point systems are familiar territory for most loyalty programs. However, they can quickly lose appeal if they are the only system. An effective way to start rounding out a gamified loyalty program is other rewards and recognition, such as titles or badges featured on customer profiles that are earned for certain customer engagement. These could be tied to points. For example, earning a certain amount unlocks a VIP title that offers better discounts, things like free shipping and more point collecting opportunities. However, loyalty is created and can be gamified through other engagements, which leads us to our next point.
• Moving Gamifying Beyond Gamifying Transactions: There’s more to customer engagement and loyalty than just repeating business. Gamification is a great way to leverage and encourage true loyalty. For example, titles or badges could be given for repeated business over years. You could also offer exclusive experiences or event attendance. You can reward those who follow your social channels, where you could also then offer opportunities to get more points or create community goals. Points, discounts, and titles can also be given for referrals or recommendations, motivating customers to help your business grow.
• Audio and Visual Recognition: The key here is recognition. Along with clear systems, the recognition of titles, and the practical rewards of discounts, a key part of gamification is visual and audio systems that reflect progress and success. It might seem silly, but seeing a bar fill shows progress. Some fanfare with animations of spark and/or confetti and a celebratory tune for earning a title or new rank provide the audio and visual feedback that motivates further engagement.

Start Gamifying Your Loyalty

With how effective gamification is, you’ll likely want to start gamifying your business loyalty program or start building one. Thankfully, this doesn’t have to be done from the start. Many loyalty program platforms help you create a loyalty program that suits your business and customers, such as smile.io. If you’re ready to start encouraging and fostering more customer engagement and retention, contact our web experts at Rosewood Marketing. They will help you determine the right system while our marketing team helps devise the game-design elements for your business.