How Does Gamification in Loyalty Programmes Drive Engagement?

In this article, we'll be exploring gamification in loyalty programmes and how it drives customer engagement. Today’s customers expect more than basic points systems. In some ways, the modern consumer wants to be courted. They want brands to work hard and earn their loyalty. But there’s an opportunity in this.

In addition to their products or service, brands can differentiate from competitors by building truly unique customer experiences using gamification. Today, I’ll walk you through all the finer points of implementing gamification, its core elements and the different types (along with some case studies).

Let’s get to it. 

Contents:

• Key Takeaways

• What is Gamification?

• What’s the Relationship Between Gamification and Loyalty Programmes?

• Has Gamification Changed?

• What Are the Core Elements of Gamification in Loyalty Programmes?
  

• How Do You Implement Gamification in Loyalty Programmes?

• What Does a Successful Gamified Loyalty Programme Look Like? 

• What Does the Future of Gamification Look Like?

• FAQs
  
  

Key Takeaways

• Gamification has been shown to increase customer engagement up to 47% and brand loyalty by 22%.

• Core gamified elements include point systems, challenges, badges, leaderboards, and milestones. All of these should be compatible with mobile apps. 

• Successful implementation should begin with a good framework. Follow the five principles which include: Setting Goals, Choosing the Right Tech, Adhering to our Design Principles, Personalisation Efforts and Balancing Fun with Functionality.

• Mobile apps are crucial platforms for modern gamified loyalty programmes.

• Emerging technologies like AR, blockchain, and AI are pushing gamification into the next phase of its technical evolution.  

What is Gamification?

Gamification adds game mechanics at points of interaction between your customers and your brand. In loyalty programmes this usually looks like:

• Progress bars

• Badges and achievements

• Spin-the-wheel

• Streaks and consecutive play bonuses

• Mini games (like memory match or trivia quizzes)

• Levelling up via xp points

• Leaderboards

• Avatars and customisation

• Surprise boxes and mystery rewards 

In addition to a lot more. 

Gamification is a solid method of engagement as it goes way beyond transaction point systems and taps into a very human desire to – simply put – play. Add interactive elements, touchscreen compatibility, colourful design and satisfying sound effects and you’ve crafted an experience that keeps customers coming back for more. 

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What’s the Relationship Between Gamification and Loyalty Programmes? 

Gamification and loyalty programmes are a perfect match.

Research shows that when done properly, gamification uplifts customer engagement by up to 47%.

For a loyalty programme, that’s massive. You want your customers to see the benefit of your loyalty programme. With a powerful engagement tool like gamification, your best offers, incentives, benefits and rewards will be on their radar, exactly where you want them. Better yet, according to the same article, you’ll also see a:

• 22% boost in brand loyalty

• 15% increase in brand exposure

• 55% increase in wallet share
  

Not bad. But there’s even more benefits for churn and growth. Gamification has been proven to cut churn by 63% and drive growth anywhere between 6-10%. 

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Has Gamification Changed? 

Gamification has come a long way. We’re seeing increasingly dynamic and novel experiences like challenges and missions enticing customers into long term engagement. Making your brand interactions multi-faceted keeps the experience fresh and exciting. The only limit is the imagination. 

Take treasure hunts, for instance. Although they were hosted on mobile apps they increased foot traffic and product awareness in retail environments. And leaderboards are excellent for boosting app usage because they tap into our instinct to compete. Top all this off with personalisation, data-driven and tailored to the individual, and you’re onto an experience that’s highly relevant and enhanced like no other. 

I don’t think it’ll stop there. Not with AI and machine learning entering the picture. Just the implications alone, of predictive analytics and personalisation will knock gamification up another level. Gamified loyalty programmes will never be the same. 

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What Are the Core Elements of Gamification in Loyalty Programmes?

Okay, so now we’re at the core elements that you need to include for effective gamification. These are the most common game mechanics we see in loyalty programmes or implement for our clients. 

Mobile App-Based Programmes

Your gamified loyalty programme should be accessible where customers spend a lot of their time. For loyalty programmes, mobile apps now serve as a central hub. Main reasons are down to daily digital habits, convenience, an expectation for real-time interactions, and accessible engagement.

With that in mind, I’d argue that mobile compatibility is non-negotiable. Your users will expect it and your programme needs to meet them there. Plus, it opens the door for other components and mechanics that are essential for what we’re about to discuss below. This includes push notifications, in-app challenges to personalised rewards and seamless tracking. 

Point-Based Systems and Rewards Points

Point-based systems remain a firm favourite in loyalty programmes. Businesses today have modernised the concept with leaderboards and tiered structures. What once may have felt a bit like a chore, has now turned into an engaging experience of accumulating points. When they’ve hit a certain amount, customers earn recognition and tier-relevant rewards. 

Referral programmes also benefit greatly from gamification. Think of it this way; when you insert something as simple as a referral leaderboard, what do you think that will do in terms of brand advocacy? It grows…exponentially. 

Tiered Levels and Progression

Tiered levels in loyalty programmes create a sense of progression and achievement. For an uptick in customer engagement, make sure the benefits of each tier are clearly defined and the loyalty programme will do the rest. Most customers will stop at nothing to reach goals that are clear and worth striving for. And in the end, it’s that encouragement of interacting that we want to see from our gamification strategies. 

Quizzes and Surveys

Often at Propello, we talk about the importance of customer feedback. Gamification is a great way to incentivise customers to engage with your feedback loops. You could gamify them by… 
Offering points or badges for completing surveys or quizzes.

• Unlocking exclusive content or rewards after a certain number of completed feedback activities.

• Creating mini-challenges or trivia games related to your products or services, with incentives for high scores or consistent participation.

This will make feedback collection more appealing and fosters a sense of contribution and involvement. Both of which are essential for strengthening the customer’s connection to your brand.

Spin-to-Win and Chance-Based Rewards

Chance-based systems inject an element of excitement due to their chance-based nature. They’ve been shown to drive conversion by up to 30%. Better yet, spin-to-win games can be set up in-store as well as digitally. It might be something to consider if you want to increase footfall into your stores. 

Challenges and Missions

I highly recommend challenges and missions as a core mechanic in your gamification efforts. Think of them as a railroad for customers. They’re given tasks and earn rewards in return for fulfilling them. And best of all, the process is simple, fulfilling, and feels natural.  

Gamify.com talks about the three elements of automation. They apply these principles to gamification as a whole. But I think they’re highly relevant to challenges and missions too. These are:

• Autonomy - Don’t make your challenges and missions compulsory. 
  
  

• Mastery - Scale difficulty of missions and challenges and reward value with progression. 

   

• Purpose - Achieving missions and overcoming challenges is a fulfilling experience. Complement that with rewards that make sense to the customer journey e.g., early access to new products for customers with high purchase frequencies. 

Missions and challenges quite literally shape your customers’ behaviour. They tell them what to do and why they’re doing it. 

Treasure Hunts

Treasure hunts are another proven gamification technique. They bring attention to new products, incentivise footfall through store exploration, and are memorable to customers, contributing to improved brand recall. 

You can also make your treasure hunts uniquely yours. Align them with your loyalty programme and brand as a whole, and you’ll create a customer experience that no other business can mimic. For example, only Cadbury’s could pull off the Worldwide Hide. 

Badges, Trophies, and Virtual Rewards

Do you remember the last time you earned a badge or trophy? Do you remember that sense of achievement, fulfillment, and recognition? Many customers feel the same way when they’re rewarded for participating in a digital loyalty programme.

Sure, these visible symbols hold no real, tangible value. But they mean something to the many customers that earn them. They feel recognised by the brand. Maybe even appreciated. On top of this, if you give customers the ability to share their digital badges and trophies on social platforms, you’re tapping into a very basic (but powerful) desire most of us share; to be recognised and to gain status amongst our peers. 

As a result, your customers not yet participating may feel FOMO. Your brand’s visibility extends to people who might not yet be customers. And, you’ve reaffirmed positive behaviours, with the possibility of turning highly engaged customers into brand ambassadors.  

Social Sharing and Referral Programmes

Harnessing the power of customer networks, social sharing and referral programmes turn loyal customers into brand advocates. I suggest going the extra mile, beyond giving customers a chance to share their digital accomplishments. Give them a reason to advocate your brand. 

In addition to incentivising advocacy, why not gamify the referral process? It’s a win-win situation. The referrer enjoys a novel experience of bringing friends and family onboard. The new customer is instantly welcomed to your brand via an unforgettable experience. Inevitably, this will lead to accelerated acquisition and strengthen relationships with existing customers. 

Leaderboards and Competitive Elements

Leaderboards also inject that same sense of achievement, recognition and progression as badges and trophies. They add another aspect to the gamified experience. Again, tapping into yet another human desire; the desire to compete against others. 

When we add the paradigm of other people into our gamified elements, we’re effectively bringing customers together into a single community. Research shows that communities actually enhance customer engagement. This is because like-of-mind people are drawn to one another. They want to interact, whether to discuss your brand or compete against each other in your loyalty programme. 

Think of leaderboards as the cherry on top of your engagement-enhanced game engine. 

Milestones and Streaks

Try milestones and streaks for rounding off the gamified experience. They drive consistent engagement because they feel natural. As long as they’re not pushy. Avoid chastising customers for not doing something, like not engaging on a day. 

Focus instead on what they’ve done. Send a push notification congratulating them on five days of logging in. It just adds to the overall experience, seeing a celebratory banner notification at the top that says ‘you’re on fire’ - for  doing something as simple as logging in.

That comes down to positive affirmation, the bedrock of habits, which in turn are a core ingredient of successful engagement. So if your customers repeat certain behaviours e.g., logging in or repeat purchases, recognise, celebrate and reward it. 

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How Do You Implement Gamification in Loyalty Programmes?

In this section, I’m going to give you five guiding principles for setting up gamification in your loyalty programme. These are everything you need for an engaging ecosystem that aligns with your brand and drives measurable business outcomes. 

Where to Start When Planning Gamification? 

As with everything in business, start your new project with setting goals. Doing this ensures your gamification efforts are informed, effective and coherent. Without them, you could end up with an experience that doesn’t make sense, failing to resonate with your customer base. 

Firstly, consider your outcomes. With gamification, the aim is always to drive engagement. But engagement challenges can look different business-to-business. For insurance businesses, engagement is typically low in the quiet middle. A B2C retail business may see low engagement with a specific line of products. Below is a table to help you pick the best one:

How to Design Your Gamified Elements? 

Good design starts with a deep understanding of your audience. What drives them? Are they motivated by competition, achievement, social interaction, exploration? Understand their motivations and you’ll know which mechanics will resonate best. 

Keep these principles in mind:

• Make the experience enjoyable, fun and engaging. Whatever you do, don’t make engaging with your games feel like a chore.

   

• Keep it intuitive as overly complex mechanics will frustrate users and drive them away.

   

• Whether intrinsic (sense of accomplishment) or extrinsic (discounts, perks), rewards should always feel meaningful. 

Gamified elements work best when aligned with the interests of your user interests, when they offer a sense of progress and reward.

How to Personalise Gamification?

In short, the best route to personalising your gamified experience is data. Any worthy loyalty programme relies on data. In fact, without datasets, a loyalty programme won’t function or deliver a truly exceptional customer experience. 

Personalisation speaks to the individual. It’s shouting the customer’s name in a sea of loud voices. Adding it to gamification makes your brand come across as being dedicated to the individual customer. It’s telling them that this game was made for you. 

So how would this look? Well, you could try: Consider the following strategies:

• Customising your reward offers with product recommendations or incentives, based on past purchases and what the customer has browsed.

• Make your challenges adaptive in terms of difficulty. Eventually, as you add more core mechanics, you’ll gather a decently sized data set too. Use this to adjust the type of challenges you offer to users, based on their engagement history. 

• Lastly, personalise your communication. Do the basics, such as using names, contacting them on preferred channels, and messaging them when they hit milestones. You could even send them an anniversary message of when they hit those engagement milestones. 

If you craft an experience that makes every user feel like it was designed just for them, your personalisation efforts will not have been in vain. 

Why Should you Balance Fun with Functionality 

The 'fun' factor is, it goes without saying, essential in gamification. That said, be careful not to lose sight of functionality. Your programme should be enjoyable whilst also delivering clear value to your customers. Strike a balance between entertaining elements and practical rewards that genuinely benefit your customers. Balance also ensures that your engagement translates into other business results (like retention and acquisition). 

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What Does a Successful Gamified Loyalty Programme Look Like? 

The loyalty space right now is in a gamification galore. You’re spoilt for choice with loads of examples online. To save you time, I’ve handpicked my top three examples. These are, in my opinion, standout, textbook successes of gamified loyalty programmes.  

Victoria’s Secret - Trivia Games & Quizzes

Industry-specific. Resonates with their intended audience - the fashion conscious consumer. Victoria's Secret's PINK Nation app struts its stuff on the gamification catwalk, fully confident in a handcrafted experience, which includes:

• Daily trivia contests and user polls.

   

• Points for social media sharing.

   

• Exclusive fashion show sweepstakes.

They’ve leaned their gamification efforts heavily into the very essence of their brand. Especially with the relevance of rewards associated with the gamified experience; fashion show tickets. Not only is that reward relevant to customer interest, it offers an aspirational experience. 

Key lesson: Tailor your gamification efforts to your industry. Like Victoria’s Secrets, invite customers into your world. 

Nectar - Scratch and Win 

Nectar's approach is a masterclass of reimagining the traditional – a remake, remodel if you will. A concept so familiar most demographics can play it without needing explanation. Nectar has digitised the scratch-and-win experience. It’s simply brilliant. As an age-old concept, scratch-and-win stands the test of time. The feeling of anticipated rewards it invokes is universal and perpetual. 

Here’s what they’ve done: 

• Digital scratch cards via push notifications

   

• Instant gratification with immediate point rewards

   

• Cross-brand point accumulation

Digitising a familiar concept makes engagement effortless. It’s a low-barrier, high-reward incentive that keeps adults of all ages coming back for more. 

Key lesson: You don’t need to reinvent the wheel. Just modernise it. A digital twist on a classic is easy to launch, familiar with most customers, and keeps everything exciting.

Virgin - Creating a Movement

This one’s probably my favourite. I understand that not every business has Virgin’s resources at their disposal. That said, there are lessons to take away here. At this point, Virgin has basically patented the entire notion of  treasure hunt campaigns. The experience is accessible on their Virgin Red app. Think of this as their key which unlocks an experience customers will not get anywhere else.

Why it works: 

• Nationwide virtual and physical treasure hunts are truly unique to the Virgin brand that many others could simply not pull off. 

• Adds a sense of narrative, by rewarding customers with mystery point values for every coin they find. The digital traverses into real life, with certain challenges linked to finding real-world city and the country landmarks. 

   

• Exclusive 'vaults' with premium rewards adds to that air of exclusivity. 

If there’s one word to describe these campaigns; epic. It builds Virgin’s brand identity and brandishes an experience in the mind of their customers probably for the rest of their lives. The element of mystery in point values is just another lovely touch that adds that extra layer of excitement. 

Key lesson: Think outside the box. Even the digital one! In an increasingly digitised world, a tangible gamified experience helps you stand out. 

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Future Trends in Gamification for Loyalty Programmes

If one thing’s for certain; gamification is here to stay. I’ve been looking at some trends recently to see where gamification is heading. Here’s what I’ve found: 

Technologies Emerging in Loyalty Gamification

The future of gamified loyalty programmes is intrinsically linked to technological advancements. We're seeing exciting developments in:

• Augmented Reality (AR): Imagine loyalty programmes that put digital rewards in the real world. As this technology becomes widespread it could be the workaround smaller enterprises need to create immersive treasure hunts. 
  
  

• Blockchain: A technology that practically walks in hand with point systems. Not only will this make them more secure, transparent, and even tradable between users – the gamified experience may extend across platforms and even veer into video game DLCs, skins and other downloadable content. 
  
  

• Internet of Things (IoT): Connected devices could automatically track customer behaviours and award reward points, supplementing or augmenting the data-gathering of existing loyalty programmes. 

Customer Expectations

As technology evolves, it’s inevitable that customer expectations do too. We anticipate:

• Hyper-personalisation: As personalisation improves, customer experiences will feel increasingly familiar to customers. A break from that could cause serious disruption to engagement. Customers will expect programmes to understand and cater to their individual preferences with unprecedented consistency.
  
  

• Instant gratification: The digital world spins. Modern consumers have grown accustomed to immediacy. That means gamified experiences will need to integrate real-time rewards. Instant recognition is quickly becoming the norm.
  
  

• Ethical rewards: As consumers become more socially conscious, they'll look for gamified programmes that speak to their personal values. This could vary from sustainability to social responsibility. But does gamifying such things trivialise them? 
  
  

• Omnichannel integration: Gamified loyalty programmes will need span across all touchpoints. In a world of heightened convenience, customers are used to the experience following them, engaging them wherever they may be; whether on social media channels or in-app. 
  
  
  

AI and Machine Learning

AI and machine learning are revolutionising personalised loyalty programmes. These technologies enable:

• Predictive analytics: AI anticipates customer behaviour. This means brands can be more proactive and accommodating in their engagement strategies.
  
  

• Dynamic reward systems: AI and ML algorithms have the ability to adjust rewards in real-time. Adjustments are based on detailed customer profiles that describe preferences and behaviours of customers on the individual level. 
  
  

• Sentiment analysis: With time, AI will improve its methods of reading customer sentiment across multiple channels. It will automate more nuanced and timely interactions based on customer feedback, behaviour and engagement levels. 
  
  

• Fraud detection: AI and ML continues to refine its protocols of identifying potential fraud and bad actors. Meaning you’ll be safe in the knowledge that the gamified elements you use improve engagement, are invulnerable to loyalty programme use.
  
  

Integration with Broader Customer Experience Strategies

The future of loyalty programmes lies in their seamless integration with overall customer experience strategies. We foresee:

• Holistic customer profiles: Loyalty data will be combined with other customer data sources to create comprehensive customer views.
  
  

• Experience-based rewards: Beyond traditional points and discounts, programmes will offer unique experiences that align with the brand's overall customer experience strategy.
  
  

• Predictive customer service: Loyalty data will inform customer service interactions, allowing for preemptive problem-solving and personalised support.
  
  

• Cross-brand ecosystems: Loyalty programmes will increasingly collaborate, creating broader ecosystems of rewards and experiences.
  
  

Even the Playing Field with Gamified Loyalty Programmes

Not every brand has the resources and funds to orchestrate a Virgin level treasure hunt. But with the rise of gamification in loyalty programmes, digitised alternatives are becoming a viable loyalty programme strategy for small to mid-level enterprise brands. 

With a wide selection of gamified elements to choose from, you can craft a truly unique customer experience that launches engagement into the stratosphere. As long as you follow the best practices I’ve shared with you, you should be in a position where you can choose the best core elements that will serve your brand best. 

The five pillars of implementation are just a starting point. More than anything, they are guiding principles for you to operate within a framework that guarantees success. But if you’d like actionable steps, feel free to download our guide below.

Similarly, if you’d like to discuss anything we’ve covered in this blog, you can contact us here. 

FAQs 

1) What is gamification in loyalty programmes?

Gamification in loyalty programmes is essentially game-design elements designed for increased customer engagement. It turns everyday customer interactions into dynamic experiences using challenges, rewards, and competitive elements. 

2) How does gamification improve customer engagement?

It taps into basic human motivations like achievement, status, anticipation and community-building. An interactive experience embedded in your loyalty programme is – in and of itself – a rewarding experience. Challenges, leaderboards and other similar elements keep experience novel and fresh. 

3) What are some common gamification elements used in loyalty programmes?

Common elements include point-based systems, tiered levels, challenges, badges, leaderboards, and milestone rewards. Each of these invoke one or several feelings that are integral to successful gamification, including: a sense of progression, achievement, and competition. 

4) How can businesses implement gamification in their loyalty programmes?

Businesses should align gamification with objectives and customer preferences. Choose a loyalty platform solution that offers scalability, flexibility and automation. Effective engagement should also be informed by customer data, which can be used to personalise experiences.  

5) What role does mobile technology play in gamified loyalty programmes?

Mobile technology is crucial, offering convenience and constant accessibility. Analysis of recent trends show that mobile compatibility sets the stage for modern gamification. Apps serve as a homeground for gamified elements, enabling real-time engagement through push notifications and other essential features.

6) How does personalisation enhance gamified loyalty programmes?

Personalisation tailors the gamified experiences to the  individual. It takes notes of their  preferences and past behaviours based on customer data. As a result, it’s able to offer relevant challenges, rewards that resonate and reach customers on preferred channels.

7) What are some emerging trends in loyalty programme gamification?

Emerging trends include augmented reality (AR), blockchain for secure and transparent point systems, and Internet of Things (IoT) for automated engagement. AI and machine learning are also becoming better at hyper-personalisation and predicting customer intent and behaviour. 

8) How can gamification in loyalty programmes drive business growth?

Simply by increasing engagement. Well-designed digital engagement mechanics like gamified elements often lead to higher retention due to unique customer experiences. They also keep brands top of mind and make customers feel seen, recognised and appreciated. 

9) What challenges might businesses face when implementing gamified loyalty programmes?

Challenges vary from technology, to designing elements that are brand aligned, to data security and keeping things fresh enough to sustain long term interest. There’s also the issue of balancing complexity with user-friendliness and functionality with funness. 

10) How can businesses measure the success of their gamified loyalty programmes?

Businesses can use several key metrics such as engagement rate, purchase frequency, average order value, and customer retention rate. Track programme-specific metrics e.g., challenge completion and point redemption rates. Customer feedback and satisfaction surveys also provide qualitative insights into effectiveness.

Mark Camp | CEO & Founder at PropelloCloud.com | LinkedIn

Mark is the Founder and CEO of Propello Cloud, an innovative SaaS platform for loyalty and customer engagement. With over 20 years of marketing experience, he is passionate about helping brands boost retention and acquisition with scalable loyalty solutions.

Mark is an expert in loyalty and engagement strategy, having worked with major enterprise clients across industries to drive growth through rewards programmes. He leads Propello Cloud's mission to deliver versatile platforms that help organisations attract, engage and retain customers.