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Having Fun and Making Money: Why Gamification Is Good for Business

November 16, 2020

In this article you will learn:

Everywhere a consumer looks these days, there’s an ad for something. Whether it’s in their social media feed, a pop up when they’re surfing the web, a vast portion of the emails they receive or while they’re watching TV, consumers are barraged by companies trying to sell them a new product, have them visit a store or take advantage of the latest online deal.

The cadence of advertising, offers and promotions is so intense that consumers have learned to tune it all out… unless of course it’s something that catches their eye and fuels their competitive nature. That’s why 70% of top 2000 companies are using gamification to engage customers now, and 87% of North American retailers are planning to use this strategy within the next five years.

What is Gamification?

If you ever played the McDonald’s Monopoly game in the 1990s, competed with other athletes on Nike Fuel, or joined the current day My Starbucks Rewards Program, then you probably know a little bit about gamification marketing.

Gamification techniques in marketing apply elements of game play – competition with others, point scoring and awards – to encourage consumers to engage with brand, product or service in a fun, entertaining way. The result could be points that show progress, badges to display achievements and leaderboards to identify individuals success compared to others. For example, individuals can earn points for ordering a coffee in the My Starbucks Reward Program, and achieve higher levels to get better rewards and a higher status.

Gamification Benefits

The primary gamification benefit is user engagement. By drawing consumers in with a fun activity, they can learn more about your brand than if they were to simply visit your website or watch a video. Plus, since feedback is often provided in real time, consumers can feel like there is two-way communication with your brand and take pride in performing well or getting a positive response. Gamification can raise engagement and loyalty by an average of 30%, when you consider the time spent onsite, repeat visits and viral distribution.

Gamification also encourages consumers to be their best. Consumers will want to work harder and take on new tasks to prove that they're outperforming others. Winning something, even just a free cookie or small giveaway, could be enough to keep consumers coming back to your brand. Applying gamification marketing can also help you increase your audience and reach. Since gaming is popular and often spreads virally among fans, this is often a great way to attract younger generations, such as millennials and Gen Z.

But gamification goes deeper than just getting and holding consumers' attention. As individuals play the games, brands have a unique opportunity to gather a wealth of customer behavior data and insights into their activities. With this information, brands can improve operations, discover new products that may appeal to customers, identify new marketing opportunities, determine potential new audiences, and better personalize offers and promotions to improve the bottom line.

Combining gamification and personalization is a sweet spot for marketers, according to some key industry studies.

  • Customers’ online activity grew by an average of 68%, along with a 22% increase in social share, after loyalty programs introduced gamification, according to Giga Information research.
  • One-third of companies using gamification in their loyalty programs improved registration conversion rates, Tech Validate noted in a report.
  • Gamification may be the key to attracting millennials, of which nearly one-third indicated they’d stay in a loyalty program if it had a competitive game or social aspect, according to a Colloquy survey.

Gamification for Business: How Brands Achieve Success

Several major brands are using gamification successfully to engage their customers and, for these efforts, they’re seeing the positive impact on their sales and revenue.

As part of its strategy to become the “most personalized brand in the world,” Starbucks Corporation launched its My Starbucks Rewards program, which enabled customers to earn gold stars each time they pay for purchases using their mobile app. The more they buy, the more stars they rack up and the higher levels they achieve, which can earn them a customized gold card and other cool benefits.

Starbucks takes this program steps further – guiding customers on their own individual journeys to onboard more easily, increase buying frequency and learn about new products. Integrating personalization with gamification has yielded significant results for Starbucks. Insights gathered from interactions with the My Starbucks Rewards enables the brand to better understand what incentivizes each customer, then deliver new and refined offers that are personalized to these preferences. Since launching the rewards program, Starbucks has been able to increase their marketing efficiency by 2x and speed marketing execution by 10x, while effectively reaching and engaging 18.9 million active members.

Gamification Strategy for Your Business

For your gamification strategy to succeed, you first need to make sure your game mechanics are designed to meet your goals - whether its education about a product or generating a particular response, such as increasing number of weekly visits or purchasing more during each visit.

The strategy should include three critical elements:

  • Context, or how it relates to your line of business and the audiences you seek to attract.
  • Value, or using status, rewards or knowledge to ensure consumers feel they're getting value from participating.
  • Success, or ensuring that goals, objectives or rewards are attainable, so consumers don't get frustrated and walk away.

You’ll also want to leverage your customer data to derive valuable insights to deliver targeted and relevant offers that really resonate and strengthen customer loyalty. Learn more about how Formation helps brands create and deploy offers that use behavioral economics to drive customer loyalty and revenue. Download our new white paper "Beyond the Fun, Gamification Adds Science to Your Customer Loyalty, now"