From airlines to supermarkets to coffee shops, it seems that loyalty programs are now part of customer engagement strategies across all industries!
You may even belong to several loyalty programs, even if you don’t actively use all of them. One at your favorite coffee shop, one at your favorite shoe store — maybe even one at your local movie theater.
Clearly, these programs do well at driving business, or they wouldn’t be cropping up across every sector. But what makes these programs so compelling?
The answer lies in gamification.
Note: The brands discussed below were found during our online research for this article.
What is gamification in the context of customer loyalty?
To understand how gamification transforms customer loyalty, we need to first look at the “average” loyalty program.
Typically, loyalty programs are what’s known as “earn and burn.” Basically, a customer earns points for spending money with a company, and they can use these points to save money on their shopping at a later date.
The trouble with this kind of loyalty program is that it’s forgettable, transactional, and depersonalized.
Enter gamification: a digital-based tool that turns the process of earning loyalty points into a game. Examples include creating challenges and quizzes to reach certain rewards, offering bonus points when customers buy certain products or refer a friend, and the chance to win exclusive prizes by engaging in specific behaviors.
How can gamification impact customer loyalty?
The beauty of gamification is that it rewards your customers and your brand in tandem because your customers feel more compelled to buy from you, and you win more sales and repeat business as a result.
Here’s a closer look at how gamification boosts customer loyalty.
Emotional connection
A great gamification strategy does wonders for building an emotional connection between your brand and your target audience. For one, gamification enables you to show off your brand’s personality and also highlights to your customers that you care about giving them the best customer service experience possible.
More than that, at a psychological level, gamification boosts your customers’ sense of affinity to your brand.
Think of it this way: When you spend money with a company and they give you a fun, engaging reward for doing so, you’ll feel more incentivized to do the same in the future.
In fact, research from the University of North Carolina found that gamified loyalty programs directly boost customer motivation to purchase, as well as their overall sense of brand loyalty.
Engagement through rewards
Gamified loyalty programs are fantastic for driving customer retention. By offering customers rewards like points, badges, or exclusive products every time they purchase, you tap into human beings’ innate desire to seek out rewards, be competitive, and boost their status.
One brand that’s done this brilliantly is Marriott. Its app-based loyalty program cleverly combines a point system with ranked tiers.
The more points you earn, the more “status” you achieve within the Marriott ecosystem—and the more perks you unlock, from free stays to spa treatments to exclusive events with partners. Marriott’s compelling rewards program entices customers to stay with them time and time again.
Habit formation
Gamification harnesses the innate human inclination toward habit formation, making it a powerful tool for driving customer engagement and loyalty. The concept is simple: when people perform an action repeatedly and receive a reward each time, they’re more likely to develop a habit.
By integrating upfront rewards into your customer experience, such as offering immediate incentives every time they make a purchase or referral, you can effectively initiate a positive habit loop. Each transaction becomes associated with a reward, reinforcing the behavior and encouraging customers to engage with your brand on a regular basis.
This approach not only increases the frequency of customer interactions but also cultivates a sense of anticipation and satisfaction with each interaction. Over time, these positive experiences contribute to stronger brand loyalty and deeper connections with your customer base.
Community and peer connections
Taking gamification to the next level involves more than just offering rewards; it’s about creating immersive experiences that foster a sense of community and belonging among your customers.
By integrating elements like online communities, leaderboards, team challenges, and geo-based exclusives, you can empower users to connect with each other and with your brand on a deeper level.
These gamified features make the experience more engaging and enjoyable and instill a sense of camaraderie and shared purpose. When customers feel like they are part of a larger community of like-minded individuals and brand advocates, they are more likely to form emotional connections with your brand.
Rather than simply viewing your brand as a provider of products or services, they see it as a valuable and integral part of their lives. They align themselves with your brand’s values and mission, fostering a sense of loyalty and affinity that goes beyond mere transactions.
Examples of gamification elements in a loyalty program
So far, we’ve looked at gamification in loyalty programs at a high level. Now, we’ll dive into exactly how to weave gamification into your customer rewards system:
Points systems
Points systems are the foundational element almost all gamified loyalty programs are based on. These systems work by rewarding your customers with points every time they purchase from you—but that’s not the only way you can reward points.
As well as offering points for purchases—and typically offering more points the more a customer spends—you can also enable customers to attain points by referring friends, buying certain products, sharing feedback, or liking your brand on social media.
Of course, points need to tie back to real-world benefits. Whether that’s product freebies, mystery bags, discounts, or access to exclusive deals and experiences, it’s a good idea to offer a number of flexible, personalized rewards that compel your customers to earn as many points as they can.
Achievement badges
Hand in hand with point systems go achievement badges, which reward customers for reaching certain milestones within your loyalty program.
These badges work especially well in community-based rewards programs, encouraging your customers to earn points to elevate their relative status.
Here are some of the most common examples:
- Newbie: A badge that rewards a customer for joining your reward program
- Bronze, Silver, and Gold: Badges that showcase the loyalty and participation of a customer, with gold being the highest.
- Top Contributor: A badge for customers within your online community who regularly contribute to posts.
Tiered levels
Tiered levels are similar to achievement badges in that they represent a milestone within your points system. When a customer shops frequently with you or earns a certain number of points, they can move up to a higher tier.
Each tier should offer different perks and rewards to your customer base, with the higher-level tiers offering more exclusive, enticing rewards than the lower tiers.
Challenges and time-limited opportunities
Another fun gamification element you can build into your rewards program is a time-limited quest or opportunity.
These exclusive, enticing challenges can spur your customers into action, encouraging them to buy from you even when they weren’t planning to.
When Victoria’s Secret launched its loyalty scheme last year, it harnessed the power of a time-limited challenge to drive sign-ups, enabling app users to win a trip to the Victoria’s Secret Fashion Show later that year.
Virtual goods and currency
To take your points system to the next level, you could even turn points into a virtual currency, which customers can use directly to buy your goods or services.
This is exactly what British Airways offers with its loyalty program. When members fly with the airline, they earn a rewards currency called Avios, which they can spend on flights and upgrades.
Social sharing incentives
If you want to give your marketing strategy a boost while rewarding customers, try gamifying your brand’s social media presence.
For example, you could give customers points or discounts for publicly posting about your brand’s rewards program on social media, tagging friends on your posts, or creating videos about your product.
For your customers, this is a fun, free way to earn points—and for your brand, it’s free customer-driven marketing!
The challenge of building a gamified loyalty system that people enjoy using
An excellent gamified loyalty system can dramatically increase sales and customer engagement. However, if building one was easy, every brand would do it.
Here are some of the major challenges brands often run into when trying to level up their rewards programs through gamification:
Meeting user preferences and expectations
Crafting a truly effective gamified loyalty program involves more than just offering generic rewards; it requires tailoring rewards to fit the unique buying behaviors, preferences, and motivations of different customer segments. However, achieving this level of personalization demands extensive research, data collection, and analysis.
One of the biggest challenges in creating a hyper-personalized loyalty program is the need for real-time data. As customer preferences evolve and shift, your program must adapt to meet their changing expectations in order to remain relevant and valuable.
This means continuously monitoring and analyzing customer data to identify trends, preferences, and purchasing behaviors, and then adjusting the program accordingly.
By leveraging real-time data, you can ensure your loyalty program remains dynamic and responsive, delivering personalized rewards and experiences that resonate with each customer segment. This enhances customer satisfaction and strengthens their loyalty to your brand, ultimately driving long-term success and profitability.
While building such a program may require significant investment in resources and technology, the payoff in terms of customer engagement and retention is well worth it.
Balancing fun gamified elements with simplicity
Creating an effective rewards program requires finding the sweet spot between offering a variety of enticing rewards and maintaining simplicity. While diversity in rewards is key to catering to different customer preferences, an overly complex program can deter participation and ultimately undermine its effectiveness.
To overcome this challenge, it’s crucial to design a framework for your loyalty program that is clear, intuitive, and easy to grasp.
This means establishing transparent tiers, straightforward rules, and a simple reward structure that anyone can understand within a matter of minutes. By ensuring accessibility and clarity, you eliminate barriers to participation and make it easier for customers to engage with your program from the get-go.
Keeping the loyalty program inclusive
Customer loyalty programs should be more than just a way to reward high spenders; they should be inclusive and welcoming to customers from all walks of life. While it’s important to acknowledge and reward those who invest more in your brand, it’s equally essential to create a gamified program that resonates with a diverse audience.
One way to achieve inclusivity is by incorporating point-earning mechanisms that extend beyond monetary transactions—things like social media challenges, video creation contests, and community contributions.
These gamified elements can empower customers to engage with your brand in meaningful ways beyond simply making purchases, diversifying the ways in which customers can earn rewards while fostering a sense of community and belonging among participants.
By incorporating non-monetary point-earning opportunities, you can create a more inclusive and dynamic program that appeals to a wider range of customers, ultimately strengthening their connection to your brand. After all, true loyalty is about more than just transactions; it’s about building lasting relationships based on shared values and experiences.
Adapting to technological changes
You should view your loyalty program as a dynamic and evolving aspect of your overall customer experience strategy, rather than a static initiative.
As technology continues to advance and innovations such as virtual reality and generative AI become integrated into society, it’s essential to ensure that your loyalty program remains relevant and up to date.
To stay ahead of the curve, it’s crucial to adopt a flexible and adaptable approach to your loyalty program’s digital infrastructure. By building your system on scalable infrastructure, you can future-proof your program and accommodate new creative ideas and technological advancements as they emerge.
This approach allows your team to innovate and experiment with new features and functionalities, keeping your loyalty program fresh and engaging for customers.
Whether it’s implementing immersive experiences using virtual reality or leveraging AI to personalize rewards and offers, the key is to stay agile and responsive to the evolving needs and preferences of your customer base.
3 brands that have successfully implemented gamification in loyalty programs
While there are some challenges to overcome when building a loyalty program using gamification, it is entirely possible to do. Just look at these examples of brands who have built next-level gamification-based rewards schemes for their customers:
1. Starbucks: The Starbucks Rewards Program
Starbucks’ rewards program is simple to understand, yet motivating for users. The premise is straightforward: for every dollar spent online or in-store, customers earn a star in the mobile app. Once they accumulate 100 stars, they unlock the coveted reward of a free coffee or baked good.
But the perks don’t end there; customers can also redeem more indulgent treats at 200, 300, and 400 stars, further enhancing the value of their loyalty.
However, what sets Starbucks’ rewards program apart is its commitment to keeping members engaged and excited. Through a variety of initiatives such as bonus star challenges, double star days, and exclusive games, Starbucks continually rewards its customers for their patronage.
These additional incentives add an element of fun to the program and encourage customers to stay loyal to the brand, knowing that their continued support will be duly recognized and rewarded.
2. Sephora: Beauty Insider Program
Sephora’s Beauty Insider Program is another standout example of a gamified reward system that caters to beauty enthusiasts of all levels. With three tiers—Insider, VIP, and Rouge—based on annual spending, Sephora ensures that its program remains accessible and rewarding for all customers, regardless of their purchase frequency.
At its core, Sephora’s loyalty program operates on a simple yet effective points system. For every dollar spent, members earn one point, with 500 points translating to a $10 discount. This straightforward structure allows members to accumulate rewards effortlessly while indulging in their favorite beauty products.
Sephora goes above and beyond to spoil its loyal customers with a plethora of additional benefits. From complimentary shipping on all orders to special birthday gifts that cater to individual preferences, members get a VIP experience from start to finish.
Moreover, access to exclusive events and the weekly “Rewards Bazaar” adds an element of excitement, allowing members to redeem their points for a curated selection of coveted products.
By offering a combination of tangible rewards and exclusive experiences, Sephora’s Beauty Insider Program incentivizes purchases and fosters a sense of community and appreciation among beauty enthusiasts.
3. Nike: Nike Membership
Nike’s loyalty program stands out from the crowd by forgoing the traditional points-based system in favor of a community-centric approach. Rather than merely incentivizing purchases, Nike rewards its members with a diverse array of benefits that foster a sense of belonging and excitement.
At the heart of the Nike membership experience lies the element of surprise. Instead of points-based rewards, members receive exclusive discounts, special offers, and unique experiences delivered unexpectedly. This element of unpredictability adds a thrill to every interaction with the app, keeping members engaged and eager to see what’s next.
Beyond the allure of surprises, Nike’s membership program offers a host of additional perks designed to enrich the lives of its members. One standout feature is access to the Nike Run Club, an online community where members can connect with fellow runners, participate in challenges, and access personalized training plans. This vibrant community fosters motivation and accountability, inspiring members to push their limits and achieve their fitness goals.
On top of that, members can access a wealth of free workouts, ranging from high-intensity interval training to yoga, catering to diverse interests and fitness levels. Additionally, engaging in activity challenges adds an extra layer of fun and motivation, encouraging members to stay active and healthy.
By prioritizing community engagement and holistic well-being, Nike has created more than just a loyalty program—it’s a lifestyle. Nike not only rewards members for their purchases but also for their active participation in the Nike community. This inclusive approach fosters a sense of belonging and camaraderie, transforming the act of shopping into an immersive and rewarding experience.
How to create a gamification strategy for your loyalty program members
Now that we’ve inspired you with some awe-striking examples of gamified loyalty programs, it’s time to discuss how to build your own. Here’s how:
Define your objectives
When launching a loyalty program, it’s important to define clear objectives that align with your business goals and desired outcomes.
Whether you aim to drive customer engagement, increase purchase frequency, grow your social media following, or achieve a combination of these objectives, establishing key performance indicators (KPIs) is essential to bring focus and accountability to your program.
By clearly defining your goals and KPIs up front, you can measure the success of your loyalty program and track its impact on your business metrics. This data-driven approach allows you to identify areas of strength and areas for improvement, enabling you to refine your program and optimize its performance over time.
Moreover, it’s crucial to ensure that your loyalty program objectives align with your company’s overarching goals and strategic priorities. When your program objectives are closely aligned with broader business objectives, it becomes easier to secure executive buy-in and support.
Understand your audience
Tailoring a rewards program to specific demographics requires a nuanced understanding of your target audience’s characteristics, preferences, and behaviors.
Whether your audience comprises men over 50 or college students, gaining deep insights into their demographics, psychographics, and purchasing habits is essential to crafting a program that resonates with their needs and motivations.
Start by conducting thorough market research to uncover valuable insights into your target audience’s demographics, such as age, gender, income level, and geographic location.
Additionally, delve into their psychographic profiles to understand their values, interests, lifestyle choices, and pain points. By gaining a holistic understanding of your audience, you can identify unique opportunities to tailor your rewards program to meet their specific needs and preferences.
Armed with these insights, you can begin designing a rewards program that speaks directly to your target audience, addressing their pain points and providing incentives that align with their motivations.
Whether it’s offering exclusive discounts on products and services they value or providing personalized rewards that cater to their interests, customization is key to fostering long-term engagement and loyalty.
Select appropriate gamification elements
As we’ve noted, different audiences have different preferences when it comes to gamification, so you’ll need to choose your gamified elements strategically.
For example, if your target audience is time-pressed and uses your product or solution for work, you’ll want to offer quick, simple perks that seamlessly reward their repeat business.
Alternatively, if your target audience is potential brand advocates, you’ll want to harness gamified elements that encourage social media output and online interactions.
Note, too, that you may have several target audiences, which is why it’s so important to offer flexible, personalized gamification elements, so you can appeal to as many of your customers as possible.
Build on existing loyalty programs
Don’t think you have to overhaul your existing loyalty program to introduce gamification. In fact, if you already have a loyalty scheme in place, this gives you a head start!
By introducing gamification into your current rewards framework, you’ll entice customers who already love your product even more—as well as encourage newer customers to sign up for your program.
If your current loyalty management system already has gamification features, then it will be simple to get started. If not, you may need to look at migrating existing customer data to a solution that supports these types of features.
Test and optimize your program design
Before you launch your new and improved loyalty app, it’s imperative to engage in beta testing with a small selection of loyalty program members. This is crucial to discovering and ironing out any bugs—as well as ensuring your gamification elements are easy to understand.
To ensure you get as much feedback as possible, incentivize (yes, gamify!) the loyalty program review process for your chosen members, offering them fun rewards like a bunch of points or discounts for their efforts.
Once your program has launched, you’ll need to keep on top of application optimization, learning about what gamification elements work well so you can use them again and removing features that people aren’t using.
Tools like Bitly can help here, with trackable QR Codes and links that help you easily understand what elements of your loyalty program your customers feel a connection to, down to their demographic and location.
Tips for making sure your gamification strategy creates loyal customers
You’ve now got the recipe for building a gamified loyalty program. But how do you ensure your program fosters strong, long-term digital connections?
Here are the must-know tips to keep in mind.
Offer meaningful rewards
In order to truly captivate your audience and encourage active participation in your loyalty program, it’s essential to offer rewards that are compelling, deeply meaningful, and fulfilling to your target demographic.
This means understanding their interests, preferences, and expectations and tailoring your rewards accordingly.
Ensure fair play and accessibility
Here’s another thing to keep in mind: A good game is a fair game. That means your rewards system needs to be accessible to all of your potential customers—no one should feel left out.
On top of that, your points system needs to be inclusive. Be wary of gamified elements that favor certain customer cohorts over others, as this can actually harm customer loyalty in the long term.
Keep the experience fresh
On top of offering your points system, badges, and/or tiers, you can spark your loyalty members’ interest and excitement by introducing new and limited-time gamification elements at certain points in the year.
For example, you could introduce holiday-themed challenges during December, offer exclusive deals related to upcoming events, or create social media challenges for upcoming product launches.
All of these new experiences show your customer base that you’re constantly thinking of them and are committed to giving them a great, exciting experience all year round.
Foster a sense of community
Community-building features like leaderboards, team challenges, and message boards are fantastic for turning customers into loyal brand advocates.
By using these features, you encourage customers to think of and engage with your brand even in moments they’re not buying from you—which helps build a deep sense of loyalty.
Communicate clearly (and consistently)
Last but certainly not least, you’ll want to make sure you provide clear and consistent communication about how your gamified loyalty program works. This should include:
- A dedicated page on your website and/or app explaining the different aspects of your rewards program, including how to earn rewards and how customers can use points.
- Social media and email updates advertising your loyalty program, with unique updates for new features or seasonal challenges.
- Regular app notifications that encourage users to use the points they’ve accumulated, or offer discounts for users who haven’t shopped with you in a while.
How Bitly can help you build successful gamified loyalty programs
The best gamified loyalty programs are agile. Great brands work iteratively, learning from their customer reactions to build bigger, better, and more meaningful loyalty programs that drive engagement.
And Bitly has the data-driven prowess to help you do it.
Track engagement through link analytics
All loyalty program sign-ups start with a click or scan of a QR Code. To understand who is engaging with your program—and when and how—it’s crucial to turn these interactions into actionable insights.
With Bitly Analytics for short links and QR Codes, it becomes effortless to understand what elements of your program are most engaging and how users are navigating through your gamification pathways.
Enhance campaign performance with data insights
Armed with insights on reward program performance, you can tailor your strategy to drive engagement.
For example, if you notice that people aren’t signing up for your program in certain stores, you could introduce special promotions or challenges for those stores to encourage users to join.
Similarly, if one of your new in-app gamification elements is performing incredibly well, you might want to make it a permanent fixture.
Personalize customer experience with custom links
Bitly’s URL shortener empowers you to create custom links and personalized experiences that cater to your different audiences.
You can build multiple links that offer different reward pathways to different members, based on factors like their shopping preferences, membership level, or location.
On top of that, you can design branded links to harmonize with your brand’s style guidelines, ensuring that you deliver a consistent and professional appearance across all gamified content.
Integrate Bitly with other marketing tools
To harness the power of your customer data effectively, it’s crucial to establish seamless connections between your analytics tools, customer relationship management (CRM) system, and social media analytics platform.
This integration enables you to gain a comprehensive, real-time understanding of your customer base, unlocking valuable insights that can drive the success of your loyalty program.
Bitly offers an Apps and Integration Marketplace that streamlines this process, facilitating seamless integration with your digital marketing and sales ecosystem.
By linking Bitly Analytics with your CRM system and social media analytics platform, you can access a wealth of actionable data that empowers you to optimize and personalize your loyalty program with precision.
Monitor in real time for immediate adjustments
Customers enjoy exclusivity and (pleasant) surprises, as exemplified by brands like Starbucks and Nike. To create an amazing customer experience and get actionable insights from it, you need robust real-time monitoring capabilities for your link activity—a capability that Bitly provides.
With Bitly Campaigns’ real-time monitoring capabilities, you can track link activity as it happens, gaining instant visibility into user engagement and behavior.
This allows you to identify trends, patterns, and opportunities for optimization in real time, empowering you to make quick, data-driven adjustments to your gamification program.
By leveraging real-time data insights, you can adapt your rewards program on the fly to align with live user engagement trends and preferences. Whether it’s launching impromptu promotions, adjusting reward structures, or introducing new gamified elements, you can iterate and optimize your program to ensure it remains as compelling and engaging as possible.
Supercharge your gamified loyalty program with Bitly’s insights
Ultimately, if you’re yet to gamify your rewards program, now is the time to do it! Gamification is a surefire way to boost customer loyalty, increase sales, and stand out in a crowded marketplace.
While rolling out a rewards program requires an initial investment, the returns you’ll receive in terms of repeat purchases and customer affinity will be boundless.
Remember, too, to ensure you combine gamification with data-driven analytics, using Bitly’s tools to turn customer clicks and interactions into insights that you can harness to elevate and refine your program over time.
Ready to get started? Take the first step with Bitly today.
