Game-changing in loyalty

Gamification and big data are transforming decades-old loyalty strategies

This story originally appeared in the Dec. 23 issue of Marketing

Gamification and big data are transforming decades-old loyalty strategies

You have to get to the movies really early to beat Danielle Restivo to a seat. She and her husband arrive at their local Cineplex well before the movie trailers start running, which gives her plenty of time to compete against other moviegoers in TimePlay, an app-based mobile film trivia game. Restivo battles to get to the top of the on-screen leaderboard in the game, which is offered in 20 select Toronto and Vancouver theatres. At stake? “It’s only 50 Scene points and a free drink or something, but I just feel like I’m getting something right away.”

For years, Restivo, who recently relocated from Toronto to the U.K. and manages corporate communications for LinkedIn, had little time for customer loyalty schemes. Whenever friends of hers talked about their Air Miles, Aeroplan or Shoppers Drug Mart Optimum cards she shook her head because she felt it took too long to win anything. That was before they talked the movie buff into joining Cineplex’s Scene program. Scene members rack up points toward free movies, as well as a 10% discount on concession snacks every time they go. She was sold on the value of getting smaller, but more frequent rewards than a larger, more distant payoff like a flight.

Restivo now describes herself as a Scene addict—and she’s far from the only one. One in seven Canadians carries a Scene card, which is an astounding penetration considering the program is a relative latecomer. It was introduced in 2007 to a population that is one of the most loyalty-card saturated on the planet. Scene, a joint venture between Cineplex and Scotiabank, revolves around a single, special activity—going to the movies, something that was supposed to have been a dying pastime. (Scotiabank customers can link their Scene cards to a Scene ScotiaCard for extra points.)

One of the keys to Scene’s success is fulfilling members’ desire to feel like they’re winning a game. The program has been incorporating “gamification,” behaviour-modifying techniques borrowed from videogaming, into more of its initiatives. Scene became the first Canadian loyalty program to win a Colloquy Loyalty Award for “Innovation in Loyalty Marketing” for its SCENEtourage initiative, which lets moviegoers earn more points if they see movies in a group.

Found at the intersection between behavioural science and technology, gamification is the harnessing of people’s inborn competitive drives to boost engagement with a brand. In practical terms, that can mean something as simple as rewarding consumers who answer a survey about their buying habits with a coupon. Its evangelists say the techniques of gaming can be used to tweak consumer behaviour at all levels, allowing the gathering of more accurate demographic information and enhancing the buying experience overall.

The most successful loyalty programs use gamification in some form, says David Klein, Aeroplan’s vice-president of marketing and innovation. “Gaming is about people setting goals and solving things and achieving their goals and being very active when they play that game. Ultimately, that’s the goal of loyalty.”

Whether it’s a prize or something more subjective—an inner glow from scoring an extra point or two more than someone else, maybe—gamification has become a key part of the loyalty toolkit. In just a few short years, it has gone from techy buzzword to an essential part of marketing. Although gaming structures have long been used in consumer contests like McDonald’s recurring Monopoly promotion and Tim Hortons’ Roll Up The Rim contest, the boom in digital technology has made it easier and more intuitive to “gamify” different kinds of marketing methods almost overnight.

In particular, smartphone growth has allowed brands to incorporate gaming elements directly into shopping and points-tracking apps, says Emmie Fukuchi, who runs digital strategy for the Air Miles Reward Program as associate vice-president of digital and new media with marketing firm LoyaltyOne. And gamification is rapidly transforming both long-established loyalty programs such as Air Miles and newer ones such as the Scene program.

Marketing took an in-depth look at the different flavours of loyalty in Canada, and how the shift toward gamification has helped and changed each of these programs for good.

Strategy 1: Design a real game

Cineplex’s TimePlay app is a great example of a straightforward way of introducing game theory into a brand interaction, and that’s building an actual game. In the minutes before movie previews begin, audience members use the app to play a movie trivia game. The app asks them to check into their specific theatre so they play against other moviegoers in the same room, in real-time. That gives the game a sense of immediacy and personalizes the experience.

Building a traditional game into a brand’s smartphone app is an obvious draw, but marketers should use caution here. Many of the apps with the highest download numbers are games such as Candy Crush, so adding games to shopping apps would seem to be a good way to boost download numbers. In-app games sound interactive and fun, and often get the attention of the client.

They also go wrong just as often, says Sep Seyedi, CEO of Plastic Mobile, an agency that handles app development for the likes of Air Miles and Rogers. When they were tasked by Pizza Pizza to build the first complete food-ordering app in Canada in 2010, they researched what their competitors were up to—and knew what not to do.

“It’s very important to have this game layer fit closely with what the business is,” says Seyedi. He gives the example of one app offered by a multinational pizza chain a few years ago. “They had thrown in a car game that was accessible from somewhere in the menu. You could drive a car and avoid hitting pizzas. That’s where it shows a bit of a disconnect. It might be a great game, but [the restaurant] is not known for delivering games, but for their food.”

Because Cineplex customers are already at the theatre to see a movie, answering film trivia questions is an organic game extension of their experience.

Strategy 2: Build a practical app with a challenging twist

For most companies seeking greater customer engagement, an in-app Bejeweled knockoff game is not going to appear convincingly integral to their brand or product. For Air Miles, the most intuitive way to gamify their mobile experience was to give members what they expect from the app—a way to check their points balance—and then layer on an extra incentive to return to the app again and again.

Before they partnered with Plastic Mobile, Air Miles had a functional app—it helped members track their points—with a very high number of downloads, says Seyedi. But the loyalty program was looking for a way to further increase user engagement.

Taking a page from Foursquare’s playbook, Plastic developed a new location-based version of the Air Miles app in 2012 that redesigned the user experience from the ground up. Just like the earlier version of the app, customers could still check their points balance and look up retailers where they could earn more. But now they could also play a game called the Check-In Challenge. If members physically visited stores where they could earn points, they could check in to those places using the app. There were approximately 10,000 locations included in the app.

The game was competitive: at the end of the month, the 50 Air Miles members with the most check-ins would have their points for the month doubled.

“Immediately, there was an incentive to check in,” says Seyedi. “There was a surge of check-ins that happened.” There was also an instant transactional lift of 5% to 20%, says Fukuchi. The Air Miles app has now been downloaded more than one million times, and users have logged 13 million check-ins.

A key reason that the gaming element was such an effective incentive to users was that it integrated intuitively with what they would be doing anyway. The activities of checking in and shopping were designed to feed into one another, explains Seyedi.

“In order to check in, it was location-based, so you had to be at the current store,” he says. And since users were already there, they made purchases. “They’re at the Metro, so they might as well shop.”

Finally, the prize of double points was an incentive to get as many Air Miles through the month as possible, just in case. “If you’re not shopping, then you’re doubling nothing,” says Seyedi. “It tied in well to how their business worked.”

Strategy 3: Go social

For Aeroplan, taking inspiration from a social website’s user engagement strategy also made sense, but in a different way. The collector program introduced a gaming element this year for the first time in a bid to increase members’ engagement with more of their participating retailers in their coalition.

In a promotion called “Star Challenge,” users collected stars by visiting new coalition partners, and a certain number of stars could be exchanged for Aeroplan miles. This year, participants on Facebook could also earn stars by watching promotional videos and answering questions about them.

Not only did 2013 see a 30% increase in the average number of partners visited during the promotional period, but Aeroplan found that members who earned stars through Facebook were more engaged in the promotion as a whole than non-Facebook users, talking about it and spreading the word as they registered.

“Close to 10% of members who registered for the promotion registered on Facebook,” says Klein. “Not only were they registering, but they were engaging in it by talking about it on social media.” The number of coalition members Facebook users interacted with was higher than the number for non-Facebook users, and they did better overall in the game.

Strategy 4: Integrate with consumers’ other shopping habits

To design a loyalty program that actually keeps customers loyal, marketers should find out as much as possible about an audience and know what their motivational trigger points are. Do they want rewards? An enhanced shopping experience? Do they like the feeling of winning a game more than they care about the reward?

Many, like film fan Restivo, don’t want to wait long—“people need to at least feel they’re getting a reward sometime in their lifetime,” she says—and value the prize more than playing the game. Most loyalty cards would love to have members as devoted as she is, but it’s not easy. What Restivo’s addiction demonstrates is that it’s important to know your customer.

For other kinds of customers, such as the most dedicated, active Shoppers Optimum cardholders, a longer wait before getting a bigger reward may be exactly what keeps them coming back. For them, it’s more about the challenge of piling up the points and getting a big payoff than getting regular, smaller rewards.

Psychologists have known for decades that some people inherently prefer immediate, small rewards and others prefer to wait it out and get a larger payoff later—and develop that tendency long before they reach shopping age. Consider the famous “marshmallow tests” performed in the 60s and 70s at Stanford University. Researchers would place a marshmallow in front of a child and tell her that she could eat it right away—or, if she waited for 15 minutes, she could eat two later. The kids who waited successfully (about 30%) ended up doing better at school and getting higher SAT scores later in life.

There are many kinds of customer and many ways to use a reward structure to draw them in. The secret is in knowing their buying habits as well as you can, with a high degree of what analyst jargon terms “granularity.”

The next wave of loyalty

Rajat Paharia, the founder of tech innovators Bunchball and author of Loyalty 3.0: How to Revolutionize Customer and Employee Engagement with Big Data and Gamification, argues in his new book that the more companies pay attention to and analyze the torrent of information on demographics and buying preferences being produced every day by customers, the stronger they can make the bond between buyer and brand.

“We’re all walking data generators,” says Paharia. “Every time I post an article, I share, I buy, I rate a movie—all those things can be considered the raw material and can be used in these next-generation loyalty programs.”

While traditional loyalty programs can incorporate gaming elements, Paharia argues that most of them—Air Miles and Aeroplan included—aren’t realizing the concept of loyalty to its full potential. He says rewards-centred programs still keep the focus on the prizes, rather than on building any affinity for the brand itself. Most loyalty programs are “mercenary,” he says, “complex discounting schemes.” Members only stay members as long as they’re getting a good deal, not because of any true loyalty to the brand itself. That means they’re susceptible to getting stolen by rival loyalty programs.

But according to LoyaltyOne’s Fukuchi, miles programs really do build traditional brand loyalty. Various studies performed by LoyaltyOne over the years have shown that after the deal is over and the transaction with a loyalty brand finishes, a “halo effect” remains around that brand. Consumers who have shopped there to earn points exhibit an increased spend there after the promotion ends, she says.

Paharia believes that “loyalty” as a concept will change. It will become more widespread through every company, not just traditional points programs. He believes every brand in the future will likely have some loyalty or gaming component as data becomes a more powerful tool.

More information is likely a good thing for regular loyalty cards to gather, too.

“I think that loyalty programs should start to personalize things a little more,” says Restivo. “For example, if you have a passionate shopper who buys so much makeup, maybe they get certain rewards based on the fact that they only buy that.”

Programs are moving in that direction. And if Restivo hadn’t found her ideal loyalty program based on what she’s passionate about—going to the movies—she’d likely still be telling her friends that their loyalty cards were a big waste of time.

For more ideas and insight into the future of loyalty marketing, subscribe to Marketing, available in print and on your iPad.

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