Gamification-driving desired customer behavior

Gamification- It is powerful method to increase customer engagement. It is mostly used in two major contexts of building engagements: loyalty programs and customer communities. Despite the polarization of opinions the use of gamification has been growing in recent years.

The earliest form of gamification can be seen in airline industry as frequent flyer programs, which encourage customers to use the same airline for all their travel needs. Another example of TripAdvisor uses gamification to increase engagement.

Most importantly, gamification is aligned with converging technologies in the digital economy. Additional, gamification is smart way to collect customer data, both transactional and non transactional that is useful for customization and personalization. Customer tiering itself help companies to focus on the most important customer. Big data analytics also allow them to understand customer behavioral patterns that are useful for marketing automation(e.g in personalized selling, cross-selling and up-selling).

As per my understanding to use gamification for customer engagement, there are typically three major steps that marketers need to follow.

Step 1: Define actions to Trigger

There are several actions that a gamification program aims to influence. When customers complete required actions, they earn points. The most common actions that marketers try to influence are transactional actions such as purchases, referrals, and payments. The more customers buy, the more points they receive. In Starbucks Rewards, purchases add up to Star Rewards that customers can redeem for free food and drinks. A gamification program can also trigger customer referrals. Uber for example, gives away free rides or account credits for customers who invite friends to sign up and ride with Uber. In the case of LendUp — an online lender that gives loans to people with poor credit ratings and who banks normally decline — customers are encouraged to repay their loans on time to earn points. A Singapore-based start-up, Playmoolah, teaches kids how to manage money better with a gamification engine.

Step 2: Define customer enrollment and Tiering

Some companies enroll all customers automatically when they collect their first points, which acquire by making their first purchase, or when customers register and submit personal information Upon enrolling, customers are encouraged to complete additional tasks to accrue more points, will contribute to their status. Most companies classify customer status into tiers (e.g., bronze, and gold) to better manage the relationships and costs. Each tier is associated with certain privileges and hence certain costs to serve. With tiering, companies also aim to increase each customer’s lifetime value and focus on customers who are the most valuable. Hence, customers feel valued they receive better services as they achieve a higher status. Since the lifetime value and the costs serve can be estimated, companies can measure the profitability of each individual customer.

To continuously motivate customers while managing costs, some companies apply a penalty mechanism by which customers can have their tiers downgraded or even reset. The penalty is triggered, for example, when customers become inactive over a given period, miss a certain point requirement threshold, or have expired points. This gaming mechanism is optional for companies, depending on customer characteristics and the program’s cost structure.

Step 3: Determine recognition and rewards

The next step is to assign certain privileges and rewards that customers are entitled to within the tiers. A good privilege is having exclusive access, which is unavailable without enrollment in the program and is available only for customers in a particular tier. It can be access to better product offers or discounts. LendUp, for example, offers loans with progressively lower rates in higher tiers. It can be access to exclusive products and services, such as Sephora’s VIB access to new products. It can also be access to a certain customer interface — for example, a dedicated call-center line or a dedicated customer-service personnel for higher-tier customers.

Summary:

To drive customers from purchase to advocacy, marketers need a series of customer engagement tactics. There are three popular techniques that have been proven to increase engagement in the digital era. First, marketers can use mobile apps to enhance digital customer experience. Second, marketers can use social CRM to engage customers in conversations and provide solutions. Finally, marketers can use gamification to drive the right sets of customer behavior.

Reference: Marketing 4.0 Moving from traditional to Digital