Imagine that a neighborhood coffee chain asks you to develop a loyalty program for their customers. The task seems simple, but the bumps start when you’re trying to determine the purpose of the program. For what is loyalty? Let’s start with the definition and then think about how to build it, using gamification mechanisms, among other things.
The loyalty of your customer can be described as an effort towards preference. This means that a loyal customer makes an effort to choose (buy) your product. Thus having a great product or service is the best way to earn customer loyalty. If the coffee in your neighborhood chain cannot be compared with anything else in the world (all right, within your city or district), your problems are solved — customers will love the coffee so much they will be returning with not much further work on your side.
Unfortunately, this ideal situation is extremely rare in the market. More often than not — probably in this case as well — the product or service has a lot of alternatives that are likely to replace it. Another cafe on the way to work, the Yerba seller in the office — possibilities are nearly endless. But we can build loyalty not only around a product but also around the traits and values surrounding it.
Remember: a loyal customer is not only the one who buys. Loyalty (preference and effort) can manifest itself in several other areas or brand touch points. And it’s entirely up to you if you can transform this preference and effort into buying behavior. What are those brand touch points?
- Engagement — engaged customer visits you more frequently, talks and thinks about you, can define you clearly (which is a lot, most customers don’t care that much about you).
- Interaction — brand touch points mentioned earlier can be either static or interactive. Liking or commenting your post on Facebook, interaction with an employee handing out your leaflets, answering a newsletter or showing up on a coffee testing, all these are activities that build loyalty.
- Social influence — a customer with a developed real preference does not have to buy your products in order to drive your sales. If he brings his friends regularly, praises you publicly — he is valuable to you.
Fun while shopping
When you are going to build a preference that is based not only on the product but on the whole buying experience, then fun (the pleasure of experiencing your brand) becomes an integral part of your marketing strategy. Gamification (using game mechanics to modify the preferences of potential customers) can help you a great deal.
Gamification does not mean creating marketing-themed games. Such approach will bore your customers quickly. Gamification is based on three science principles: behavioral psychology, game design, and loyalty programs. It differs from the latter in that gamification focuses primarily on the fun, not on monotonous collecting points on your loyalty card. A well-planned loyalty program enriched with gamification elements rewards not only buying behavior, but also interactions and social influence. How do you start building it?
How to build a gamified loyalty program
The best example of loyalty is… your mobile phone’s screen. When you choose among several photo-taking apps we can assume they are competing for your attention with regard to satisfying the same need. You and your thumb decide which you are choosing the most. You can learn a lot from Facebook, Foursquare or Instagram. So how do you create a loyalty program with elements of gamification?
- Define primary action — a simple and easy to understand step that will be at the basis of your loyalty program. Defining it right is the key to success. Please note that the primary action does not have to be sales-related. In case of a coffee shop the mere presence of a customer in the shop is strongly correlated with buying, so you can reward for that. If you run a clothing store, consider rewarding people for trying on a piece of clothing in the changing room. Approach the primary action in a creative way and your loyalty program will stand out.
- Define variants of the primary action for several client types — see how Facebook is doing that. The primary actions are divided into passive/low engagement (reading and liking) and interactive/high engagement (posting, commenting). Your customers are the same — not all of them are engaged enough to go for high-engagement action, but if you provide some passive variant for them (and keep rewarding them for using it), they will grow more loyal. With your coffee shop perhaps voting on their favorite brand of java that should have promotional price during next week would be a good idea.
- Develop a point system for primary actions — if your customers are doing what you expect them to, they should be rewarded. And points are the basic signposts drawing their attention in the right direction (that is: larger prize in the future). Just remember one thing: mere gathering points is boring. In gamification it’s all about fun, so consider giving your points a funny name, you should also give names to the rewards points lead to. Think: if you’re a coffee snob, what would you like to collect? And if you consider yourself a fashionista? Start from there.
- Find a ritual to which you are able to pin the primary action — we are habit-driven creatures. Morning coffee, a weekend shopping getaway with a friend, checking Facebook during lunch break — these are all things we do with astonishing regularity. If you manage to connect your primary action to one or many of the rituals your customers have, your loyalty program is more likely to catch and survive. Pinning to the ritual is one of the most important elements of defining a loyalty program. Without the ritual, customers will forget about it.
- Plan a reward system — first intrinsic rewards, then external ones. The rewards in a loyalty program do not have to be material things with real-world value. What’s more: the physical prizes should be put at the very end of your customer’s journey. Start with giving your customers different statuses that are worth fighting for. Consider how army and corporations are doing it: ranks and positions are mere names, yet people are fighting to get them. Then comes access to things other people don’t have. Want to skip the line and order a coffee to go on your way to work in the morning? No problem, providing you visited us at least 19 times last month.
- Plan fixed and random prize schemes — the most effective reward system mixes fixed and random prizes. Your customer is certain that if he visits you 19 times in a month, he’ll get to skip the line — that’s a fixed reward and this certainty is extremely important. But if he gets a random reward on some Wednesday, 9 pm he’ll grow curious: can I repeat this experience at some other time? Mix certainty and curiosity and you have yourself a perfect reward system.
Do you want to know more?
There’s more to know about gamified loyalty programs. Structure of the prizes, best practices: I’ll be writing about all that. Sign up for the newsletter if you don’t want to miss the fun.