How game mechanics can make your loyalty program more compelling

I am a sucker for loyalty programs. I am one of those who will go out of my way to book flights or rooms with certain airlines and hotels because of the points. I am a Reward Zone Silver Member at Best Buy, and Gold on two airlines (which only means I fly too much). And I keep returning to my auto dealership because they are great about reminding me when I need to come back, and offer me discounts to do so.

And I am not alone. Loyalty programs work, which is why so many businesses use them. People get addicted to points, and because of it, they share (knowingly or not) tons of information with the loyalty program owners. Loyalty programs that work well encourage their users to check in frequently, record every movement and interaction and reward their users for doing so frequently.

Retailers and restaurants are starting to encourage “mayorships” by rewarding mayors and those close to being mayors on Foursquare reduced prices, free drinks, badges and the like.

In a way, loyalty programs are like a game. The more I interact with my airline, the more miles they give me. The more miles they give me, the more apt I am to use them and find different ways to get even more points. I want to collect more and more of this currency. Companies then use the information collected to tweak products and services and tailor offerings and messages to me.

And speaking of games, there is a rise in a type of social gaming that combines the power of collecting with competition which make them particularly addicting. Two of the best known examples are the location-based social service foursquare and the Facebook applications by Zynga such as Mafia Wars and Farmville. A recent Ad Age article discusses these programs, as does a recent article in eMarketer.

Millions of people participate in these programs and are willing to share their status, pinpoint their location and annoy their friends all for the sake of collecting points and badges and gaining status by reaching certain levels or becoming mayors.

What these programs really do is play on two very powerful parts of the human psyche: competition and hoarding. Indeed, both are central to our survival and evolution and both are bred into our DNA. The need to compete – to win, to outdo others – is central to passing our genes along. It is competition for scarce resources that compels us as the most base level (because the individual best able to collect and use these resources is the more likely to be able to breed).

And collecting resources is something that we are also bred to do. From our deep human past as hunter/gatherers, we are compelled to collect resources when they are available so that we can compensate and take care of our needs in times of famine – again, increasing our likelihood that we will be able to breed.

Brands have been very active in creating loyalty programs that allow users to collect points: soft drink companies, credit card companies, airlines, hotels, casinos, retailers, restaurants, car dealerships, etc. use loyalty programs to reward users for buying and coming and to entice them to come back. As long as the rewards are valuable and attainable, they are powerful.

But these programs have usually lacked this second aspect of competition, which can make them even more addicting. The reasons why are generally obvious: you don’t want consumers to have a bad experience because they lose, or to feel like they won’t have a chance to win. Loyalty programs need lots and lots of members to be successful for businesses.

But games, especially the fun, social, and simple games like Farmville and Foursquare, offer brands the opportunity to add a little friendly competition to the mix. And the combination may prove to be extremely valuable.

These games offer brands the chance to associate with complementary addictive programs. They offer brands the chance to interact more often and offer rewards more frequently than they can do on their own – particularly for expensive and/or infrequent interactions. And the fact that they are local makes them especially enticing. Brands can really enhance their local presence with them.

For instance, retailers and restaurants are starting to encourage “mayorships” by rewarding mayors and those close to being mayors on Foursquare reduced prices, free drinks, badges, and the like. These programs encourage customers to visit more frequently, and have the added bonus of “virality” by the fact that status, etc. is sharable via social programs like Twitter and Facebook. The Auction USA Service Department gives free oil changes to its mayor.

For those in the automobile business, the most obvious opportunity is with dealerships. Because these are local businesses that are frequented for service calls, etc., combining social gaming with loyalty programs can be powerful ways to keep consumers returning, and keeping the dealerships top of mind.

Car companies have the opportunity to move past thinking about gaming only as an opportunity to brand a car or racing game, and to instead think about how their products can become valuable currency within social games. They should especially consider this for brands targeted toward younger users such as the Soul and the Scion.

I think it is still too early to determine who the winners or losers will be in this growing social gaming world. I find the Zynga games to be uninteresting and annoying myself. I strongly want to “unfriend” the people who play those games incessantly. But I do think that foursqure is onto something. The connection that they are making between gaming, loyalty, competition, and real-world businesses is potentially very powerful.

Brands should pay careful attention to these programs and the powerful effect they can have on their customers. Any brand with a physical storefront needs to consider how it best can get involved with Foursquare.

The key to making these programs successful will be based in a brand’s ability to think beyond the confines of a campaign timeline. These programs will not work in short bursts – they have to be part of sustained, meaningful programs. Brands who are willing to really dive into these programs and do them right will be rewarded.

Related links:

• All the World’s a Game, and Brands Want to Play Along; Advertising Age, 5.31.10
• Social Gaming Shows Potential; eMarketer, 6.10.10

Image credit:
Stitched foursquare badge image appears courtesy of The BrandBuilder Blog.