Why Your Loyalty Program Needs Gamification: Key Benefits and Strategies

Who doesn't love a good game? The idea behind introducing gamification elements into marketing campaigns and loyalty programs is straightforward. By turning the shopping experience into a game, brands tap into people's love of competition and give them goals to strive for, triggering reward seeking behavior rooted in human psychology and releasing precious dopamine.

In 2021, the global gamification market was valued at almost $12 billion and is predicted to hit $40 billion in the coming years. Gamification is not a fickle trend any more, it is becoming the baseline of engaging marketing campaigns and loyalty programs.  

If you're looking to increase engagement, have a fun way to collect data and keep people interested, gamification is a great way to do it. To get started, explore this guide to learn why and how gamified loyalty programs work.

What is gamification?

Gamification means incorporating game mechanics into internal processes and marketing campaigns to get the target audience involved. With the rise of mobile devices, the gamification market is growing fast. Social media platforms also drive its growth by providing users with a quick and easy way to share experiences. Gamification is especially popular in loyalty programs as they are based on tracking and rewarding customer achievements.

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Why gamification in loyalty programs improves customer loyalty?

Gamification in loyalty programs is like a cherry on top of an already delicious cake. It takes the standard rewarding system and turns it into a much more fun and engaging game that customers can't resist. Think of it as a way to add some excitement and competition to the customer experience. Plus, it not only keeps loyalty program members coming back for more; it also strengthens their emotional connection to the brand.

By adding a touch of gaming magic to the loyalty program, customers feel more invested and stick around longer, resulting in higher engagement, bigger customer lifetime value and repeat business. Here are other benefits that come with increasing customer engagement through game mechanics:

• Gamification makes your rewards program stand out from other loyalty programs to delight loyal members and attract new customers.
• Brands can increase digital engagement, social interactions and social sharing with the proper gamification techniques.
• Gamified elements allow brands to incentivize program participation and increase purchase frequency without offering high-value rewards and perks.
• Gamified loyalty programs encourage customers to form new habits and regularly interact with a brand in a non-transactional way.

Gamification elements in loyalty programs

You might be wondering if gamification is the right strategy for all business verticals, and the answer is yes.  Any business can benefit from loyalty program gamification to some degree. Take a look at the following game mechanics that increase customer engagement listed from the easiest to hardest to implement and manage. Keep in mind that it's the interconnection of different gamification features that gives the best results.

1. Reactive messages

You don't have to start with colossal loyalty gamification projects straightaway. You can begin by utilizing more subtle tactics to incorporate gamification into your loyalty experience. Reactive messages are not an example of traditional gamification, but they form a solid foundation for driving and rewarding desired actions.

Reactive notifications demonstrate real-time responsiveness to the user's needs and behavior. For instance, if a user has specific items in their shopping cart but is hesitant to complete the purchase, a custom notification offering bonus loyalty points or member-only discounts can encourage them to finalize the transaction.

2. Loyalty levels (tiers)

Adding levels (tiers) to the loyalty program is a great first step in growing customer retention. Tiered loyalty programs dangle juicy rewards in front of customers, tempting them to spend more to get more or, in other words, level up.

Customers earn perks or discounts based on their spending level, so the more they spend, the more perks they can unlock. The key is to offer better incentives as customers rise through the ranks of your loyalty programs. This way, customers know what they’re working towards, and they know what they’ll be getting once they’ve reached their goal.

This type of reward-based loyalty program makes sense for both the customer and the business. By establishing an emotional connection with loyal customers, tiered programs deepen brand loyalty, keep customers engaged long-term, and, most importantly, drive sales.

Learn more: Explore 10+ types of loyalty programs

How to introduce tiers into your program with Voucherify?

Voucherify supports tiered-based loyalty programs. You can add as many tiers as you need and define them based on customer spending within a predefined time window. Each tier can differ in ways to earn and spend loyalty points. Moreover, thanks to flexible flash mechanisms, you can build loyalty levels with extra perks for a limited period of time.

3. Custom currency

Points are a fine approach. However, branded loyalty currency can elevate your gamified loyalty program with little to no development cost. Custom currency can be personalized to reflect the brand's identity, enhancing the customer experience and building an emotional connection between the customer and the brand. This increased brand engagement can result in deeper brand loyalty and a higher lifetime value for the customer. In the end, it is simply more fun to cosplay as Mario and collect stars, mushrooms and coins instead of points.

But you don't need to run a point-based program to leverage gamification. Alternative loyalty currencies, such as perks, special events, exclusive content, swag packs, or other rewards, can be successfully gamified in a level-based program structure.

How to introduce a custom loyalty program currency with Voucherify?

Voucherify is an API-first loyalty engine. Our API is currency-agnostic – giving you complete freedom over how loyalty points will be displayed in customer-facing touchpoints. You can use diamonds, stars or fully branded names for points members earn and spend.

4. Progress bars

Progression is an inherent element of most games. Why not add it to your customer loyalty program? Progress bars provide a visual representation of a customer's progress towards earning rewards. This visualization has several benefits, including increased motivation and transparency. Progress bars make the rewarding process much more tangible, encouraging customers to keep working towards their goals and making repeat purchases.

How to build progress bars with Voucherify?

We believe that each brand is unique. And so Voucherify doesn't offer ready front-end components – we built the API-first loyalty engine that fills in the gaps in your customer-facing applications. However, brands can use our fully branded customer cockpits (dashboards) to let customers track their progress and exchange points for rewards on their own.

5. Quizzes & trivia games

In 2023, brands are all about customer data which is increasingly difficult to get and attribute. Customer loyalty programs are a fantastic source of first and zero-party data. Quizzes and trivia games can help you fix two critical issues – lack of customer data and challenges with  personalization based on relevant customer preferences.

Learn more: How to collect zero-party data with loyalty programs?

Quizzes are a fun and low-effort activity that we all enjoy doing – I am sure you filled in a quiz defining what kind of a baguette you are at least once. You can turn this game mechanic into a powerhouse of zero-party customer data that can be further used to profile customers and personalize products, services and promotions offered to particular user groups. Additionally, quizzes and trivia games can encourage social sharing, increasing the reach and visibility of the loyalty program.

Not all quizzes are created equal – try to make your customer surveys more visual and lighthearted. You can take inspiration from popular gamified apps like Tinder and create a visual swipe quiz to ask customers about their preferred styles or products. These types of interactive quizzes are more engaging and enjoyable than traditional text-based multiple-choice quizzes.

Learn more: How to increase personalization in your rewards program?

6. Personal best and leaderboards

The competitive spirit in people is alive and kicking. Personal best tracking and leaderboards are fantastic ways to encourage loyalty program interaction and foster friendly competition, Customers can earn points and climb the ranks by performing tasks such as making purchases or sharing their experiences on social media. The leaderboards provide a visual representation of where they stand compared to other customers, making it easy to track progress and strive for higher rewards and, ultimately, the highest score.

7. Bonus activities and flash quests

Even the best gamified loyalty program will quickly get stale if there are no new activities and events for loyal customers to participate in. Your loyalty marketing team should always be on the lookout for new ways to trigger and reward specific user behavior.

By offering bonus activities, businesses can also encourage customers to try new products, services or features and learn more about the brand. Even better if those reward actions are limited in time to drive urgency and FOMO (fear of missing out).

How to create flash earning rules in Voucherify?

Voucherify allows you to build an unlimited number of reward actions (earning rules) for both traditional and non-standard user activities specific to our brand. Each earning activity can be limited in time with a set expiration timer for a more engaging gamified loyalty program.

8. Badges and challenges

Badges and challenges are a great example of loyalty program gamification. They reward customers for their hard work and make them feel valued for their contributions. With each milestone achieved, customers can receive a badge that shines bright on their profile, serving as a symbol of their progress and membership status. It's a visual reminder of the effort they've put in and the rewards they've reaped.

Loyalty professionals often end up in the vicious cycle of awarding points and granting discounts, resulting in subpar customer engagement. Giving customers a badge of recognition for a specific action goes a long way. Badges also serve as a way to showcase the brand's unique personality and voice, which is often missing in traditional loyalty programs.

How can Voucherify support you with loyalty program gamification?

Gamification has never been easier with Voucherify. Set up and run all of your gamification initiatives with ease, and boost the effectiveness of your loyalty program by combining it with other incentives to offer the most attractive rewards to your customers.Our Promotion Engine provides ultimate customization options, allowing you to adapt and adjust your gamified campaigns to align with your changing business objectives.

At Voucherify, we believe in empowering businesses with the tools they need to create and run successful promotional campaigns, whether through referrals, coupons, loyalty programs, or a combination of all. That's why we never limit the functionality of our software and understand that personalization is the key to success.

Learn more: 10 examples of promotion gamification

Learn more: Explore Voucherify's Open Source Loyalty Accelerator

Summary

It's always a good idea to brainstorm and explore ideas – after all, that's why you are here. However, starting with a clear set of business objectives is key when crafting a gamification strategy for your loyalty program. Take a step back and ask yourself what you aim to achieve with the program, then design the gamified elements around these goals. Knowing your target audience and their preferred technologies is also crucial in creating enjoyable and accessible experiences for everyone.

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