Gamification can revolutionise retailers’ loyalty strategies

Most people have a natural desire to win – whether through collecting points, completing a journey or simply having their customer loyalty recognised. 

Retailers are turning to gamification to satisfy the fundamental human desires to achieve recognition and rewards and gain status and achievements. At the same time, gamification encourages engagement and amplifies marketing results. With the value of mixing in-person and online loyalty initiatives already well recognised, gamification is the new tool to encourage engagement outside stores, inspiring customers, revealing new products and ultimately, increasing sales. 

Besides being a fun and effective way to enhance customer engagement, gamification can encourage consumer behaviours such as logging into an app to try a new product or sharing a recommendation on social. It can boost brand awareness, increase conversion rates, and help retailers encourage customers to share more personal information that can be used to structure more personalised digital marketing campaigns. 

The most successful gamification programs strike a balance between simple participation, active and consistent engagement and competition. Whether it be a confetti-blasting spin-and-win or a weekly gifting of promotional discounts, these tactics ultimately reward the consumer for continued engagement with the brand.

Research by CataBoom – an SaaS-based gamification and rewards platform in the US that Mastercard partners with to develop and execute games for loyalty programs – shows that when a brand adds a game to its loyalty program its website traffic will increase by as much as 50 per cent and its subscriber base by 25 per cent. 

Once consumers are on a brand’s website or app, playing a game, having fun and learning about the company, it creates an opportunity for the brand to promote its products and drive sales.

What is gamification?

Gamification is defined by Cambridge University as “the practice of making activities more like games to make them more interesting or enjoyable”. Put another way, it makes routine stuff more fun. Typical elements of game playing include point scoring or competition with others as an online marketing technique to encourage engagement with a product or service. 

An example is in the US restaurant industry where companies are using gamification in their loyalty programs to better understand their customers and make dining experiences more personal. 

Mastercard recently worked with a quick-service restaurant to develop a localised multi-step challenge-based campaign packed into a single “game board.” Fully digitised into the mobile app with API support, multiple levels of rewards could be unlocked. By completing challenges, users were given rewards in real time while online engagement grew. 

The result: a 4.5-times increase in purchase frequency during the campaign and a 2.3-times increase in post-campaign purchase frequency. 

From the luxury sector right through to supermarket chains, retailers are recognising the power of loyalty programs in building customer loyalty – after all, loyalty is the foundation of ongoing engagement and sales.

What are the benefits of gamification for loyalty programs?

Consumers now expect businesses to understand their needs and unique contexts across every channel, so businesses are rethinking what loyalty means for the company and its customers. Forward-looking loyalty executives are opening the closed loop of their traditional loyalty programs to create brand ecosystems. One of the strategies being deployed by many is introducing gamification into their loyalty solution. 

One of Southeast Asia’s largest retailers worked with Mastercard to enhance its loyalty program and make it more engaging with customers on an individual level. 

Mastercard’s solution was to launch the program as a lifestyle platform offering its millions of members a personalised experience through a mobile application, anchored by a gamification board. Today the program includes more than 2000 brands with loyalty, payment and retail functions consolidated into a single mobile experience. 

By definition, gamification must be engaging, and using an app can hyperpersonalise the experience. The Southeast Asian retailer successfully created a gamification experience with is used by customers daily. One year after its relaunch, the program reported a 60 per cent year-on-year increase in app engagement and a 15 per cent increase in spending by participants. Thanks to the hyper-personalisation gamification offers, the number of mobile downloads increased by 147 per cent and the number of monthly active users doubled.  

What are the best practices in loyalty gamification?

Any gamification strategy must be seamlessly embedded in a brand’s loyalty strategy to ensure customer engagement and retention. Some best practices advised by Mastercard include:

Ground the gamification strategy in objectives: Decide what you want to accomplish and build around that. Whether your goal is to cross-sell between brands or to have more loyal members download your app, it’s important to establish a strategy around well-planned goals.

Make customer exposure a habit: Gamification is best when it’s not used merely as a one-off activity. Create a routine of gamification experiences for your customers. For example, if you post a game as a weekly event, customers will recognise the pattern and return to find the next instalment. Many gamification providers have automated the game-creation process, making it easy to build new games and keep the consumer experience fresh. Customers who return frequently can become true brand ambassadors for your program.

Connect the games to a conversion activity: Games can be entertaining, but gamification opens up a two-way street in which the customer enjoys a playful experience and the brand opens up an avenue for potential conversion. Whether games are shared via email or mobile app, they can deepen the relationship with the customer. For example, by linking a survey to a scratch-off game, the customer can be invited to provide feedback on their purchase or provide some additional profile data for a chance to be rewarded with a free item.

What’s next for gamification?

Mastercard expects loyalty gamification will expand its reach and evolve with time as more and more customers engage with existing programs. As gamification becomes more personalised at scale, the power of loyalty programs will be strengthened by more engaged members.

The engagement of a customer who logs in to a loyalty program daily and spends time playing a game there is vastly different to that of someone who visits occasionally. As more and more companies recognise the value of loyalty gamification, solutions will be refined to reflect consumer preferences and interests, leading to a personalised and differentiated experience. 

Mastercard also expects that gamification tactics will continue to evolve along with technology – from the increasingly widespread use of Web3 to the growing popularity of Al, companies can leverage technology to learn more about what motivates their customers. 

Mastercard works with brands to develop and execute loyalty strategies that drive stronger customer relationships, offering loyalty products and services for the world’s top loyalty brands to inspire greater loyalty, through smarter offers and better engagement, rooted in faster and richer data. Mastercard offers strategic loyalty consulting including program design, diagnostic services and customer journey mapping, along with loyalty platform offerings. To learn more, request a demo.