Gamification: The future of customer loyalty programmes?
‘Customer promiscuity’ is a term that makes even the most successful retailer nervous. While consumers have been deemed less loyal thanks to the popularity of online where choice is abundant, the success of effective loyalty schemes such as Tesco Clubcard and Sainsbury’s Nectar shows that with the right incentives across channels, consumers are attracted continue to value long-standing relationship with their favourite retailers. With this in mind, as retailers look to implement a loyalty programme that’s right for them we ask: what’s next for loyalty?
We often talk about the psychology of shopping and the ‘buzz’ we feel after bagging the final size of clothing on sale. This feeling can be put down to the sense of mastery and competition we feel, knowing that it is us and not another consumer who has succeeded in buying particular items. Before the popularity of the ecommerce industry took off, shopping in itself served these senses. Indeed so much so that TV programmes involving nothing more than that, such as Supermarket Sweep, made hugely popular game shows.
However, in online retail we have lost much of the social and exciting aspects of shopping in favour of convenience and speed. Everything is clearly laid out on a page and there is nothing driving a shopping frenzy such as the risk of losing out to another customer. An important question that we see retailers asking themselves today is: are consumers being rewarded for spending money, or is there in fact a basic human instinct that will incentivise spend and drive engagement?
Gamification in retail
This offers a significant argument in favour of the inclusion of gamification in online retail. And evidence certainly appears to back this up - Teleflora, a US florist, reports seeing conversion rate improve by 92% having built gamification into its loyalty scheme, rewarding customers who comment, review and share products on the site and social networks.
Inducing game thinking in consumers has long been talked about in marketing, but retailers have traditionally been slow to pick up the method to drive engagement online. Gamification does not mean that retailers have to create entire games online (although some have opted to trial this), but rather it means the introduction of competitive angles to a retailer’s offering. By introducing these angles, retailers can encourage shoppers to respond to their competitive instincts, as well as bring back the fun and social aspects of bricks and mortar shopping, to drive loyalty across channels.
Effective gamified loyalty schemes should involve minimal monetary investment from the consumer in order to build a longer, more engaged relationship with the consumer. Consumers are becoming increasingly aware of the benefits they provide to retailers, and want something in return. It is not enough anymore that retailers receive a plethora of data from a single consumer, and in return that consumer receives a discount on their next purchase. Instead, consumers are looking for enhanced experiences across channels, as well as incentives to spend money. However, one gamification technique that has proven popular which offers something for nothing, is the customer curation process.
The modern consumer is too time-strapped to search for the perfect collections and therefore look for curated collections to purchase, hence the popularity of website, Polyvore.com, on which consumers can curate boards of outfits with accessories and shoes. By implementing customer curated collections and adding a gamified aspect, retailers can drive higher engagement online; increasing loyalty.
Putting fun into shopping
A leading homeware retailer was drawn on the popular wish list function in this exact manner. With homeware, the possibility for ‘mix and match’ bundles that will suit certain home styles are endless, and customers are encouraged to create their own collections of products, sharing these with other customers to encourage them to purchase.
The ‘game’ is to create a dynamic bundle of goods, share with other customers and have the opportunity yourself to become a virtual trader. Consumers love sharing their (good) taste with friends – as indicated by the popularity of social sites such as Pinterest – and this particular process of gamification builds on that by confirming that you have great taste when other customers choose to purchase your bundle.
In this gamified loyalty scheme, although the opportunity to gain loyalty points is a driver, it is not the sole or necessarily the main driver. The process actually fosters a much more important sense of competition amongst customers on who can curate the most on-trend collection. This system puts the fun back into shopping, and provides stimulation for the mind, which is so often removed when browsing online. In addition, it draws on a sense of competition amongst customers to see who is creating the most popular collections, and becoming a ‘trendsetter’. Meanwhile, the retailer benefits from a wealth of data regarding engaged consumers, to reveal personal customer interests as well as popular trends and products, which can inform intelligent stocking decisions.
Elsewhere, GAME is a retailer that has embraced the spirit of its industry and rolled out a few simple tools to gamify the experience for customers. Users can receive accolades and rewards for doing certain things such as trading-in a game within 14 days of buying it, or buying a pre-owned game. This element of gamification is aimed at building a community to encourage loyalty. In a similar spirit, GAME also announced very recently that it plans to offer its loyalty scheme members free shares when it floats. Shoppers can either keep the shares or use the value to spend in store.
Clearly then, gamification has the potential to increase customer retention and can be integrated into a loyalty scheme, in a way that is right for the retailer. The process for a combined gamification and loyalty scheme is complex, retailers should have the correct technologies in place to ensure smooth operations across channels. However, put simply, gamification drives purchase by adding more levels of customer engagement to the retail experience, providing an experience online that customers will return to time after time. Customer promiscuity be damned!
Amit John is principal consultant at Tryzens.