The ability of a business to retain customers, rather than always trying to acquire new ones, can be the difference between the company surviving or going to the wall. Sixty-six per cent of businesses have no fundamental understanding of customer lifetime value (CLV). With the economic challenges facing many companies, understanding and building customer loyalty and engagement is essential in today’s environment.
Alex Lawrence writing in Forbes in 2012, quoted figures from Bain and Co indicating that a 5% increase in customer retention can increase a company’s profitability by 75%. Gartner Group advises that 80% of a company’s future revenue comes from 20% of its existing customers. While these figures may be nine years old, they are still as applicable in 2022 as when Alex quoted them in 2012.
In fact, creative marketing strategies to build customer retention and engagement are even more essential in 2022. Companies and brands compete more fiercely for customer attention, engagement, and loyalty, while potential customers are using more strategies to avoid advertising. The 2019 Edelman Trust Barometer Report: In Brands We Trust, found that 3 out of 4 respondents were using one or more strategies to avoid advertising, such as using ad blockers, and 39% had managed to avoid all advertising. The definition of advertising has also expanded to include referencing sponsored TV and radio ads, sponsorship of events and teams, product placement and branded messages in social media or digital/print magazines.
The consequence of these challenges is that it is increasingly challenging for businesses to communicate their brand assets using conventional channels and get a share of consumers’ attention .
Gamification marketing has become an engaging way of bridging the gap between consumers and brands, tapping into the human instinct of playing. It creates positive experiences that build brand awareness and drive loyalty and conversions .
Gamification integrates game processes into a system, product, or service to motivate users to achieve a task. In business, gamification marketing is simply achieved by making business activities fun by turning them into a game .
Gamification uses game-related elements and principles in non-game situations to attract customers and increase engagement and retention .
Some of these benefits have already been mentioned. For example,
When considering gamification and how to encourage customers to be active with your brand, it is vital to understand the intrinsic and extrinsic motivators that drive people.
Intrinsic motivation is the personal desire to keep playing, mastering, exploring, or otherwise enjoying the world of a game. Intrinsic motivation comes from within the person rather than extrinsic factors, which are external to the person.
Examples of intrinsic motivation are the quiet happiness and satisfaction the person receives from engaging with the game. Players following intrinsic motivators often feel like they are participating in something worthwhile and uplifting. Usually, this is closely twinned with creative urges. Intrinsically motivated players could be described as enchanted rather than retained. They are the most likely player to promote a marketing story .
Extrinsic motivation is often about the reward the game provides, such as a particular power-up or cash. Extrinsic motivators can be strong drivers of play but at the expense of creative problem-solving. Players in search of Extrinsic Motivators will often be retained rather than enchanted .
Understanding intrinsic and extrinsic motivators are essential when considering the rewards' impact. Rewards can make or break your gamification strategy. According to research conducted by Colloquy, 75% of customers want to participate in loyalty programs that offer relevant rewards.
The following techniques can help assess the best way to reward your customers is:
Status describes a visible ranking that indicates the connection between customers and your brand. For instance, Starbucks Gold Card is a physical representation of status available only to elite Starbucks drinkers.
Access provides customers with unique opportunities to interact in a special way with your business through sneak peeks, tickets to events, group purchases etc.
Power allows players to be in positions of superiority over other players. This might be in the form of coaching new customers, moderating forums or giving them a voice in developing product messaging or events.
Prizes for completing quests or challenges can be all the incentives you need to keep the number of active users high.
Another very effective gamification technique is giving members a random reward or freebie at unexpected times .
For gamification strategies to be effective, businesses must understand the motivators of their customers because how most of their customers are motivated will decide the type of reward provided. However, it is equally important to understand the kind of player your customers are, not just their motivators.
When considering what type of players most of your customers are creating a gamification strategy, it is essential to understand the kind of player they are. This is where a business’s data on customers' needs, preferences, and interests are crucial to analyse. In previous articles, we have written about the importance of using the data that is collected to understand clients’ needs and interests.
Psychologist Richard Bartle has identified four types of players :
The player type of your consumers will influence the gamification marketing strategy that is most effective in motivating and engaging them.
Gamification strategies may be split into online and offline. Online methods include games deployed on digital channels such as apps, websites, platforms, and social media like Instagram, Facebook, WeChat, etc. At the same time, offline strategies include in-store and on-premise implementation, such as events and activations. Other examples include:
Transmedia: this is where one media property is extended into a different one to capitalise on it and increase the audience. Nintendo’s 007: Golden Eye is an example of a gamification strategy that became a business line in itself.
Through-the-line (TTL) and below-the-line (BTL): brand information may reside on the game’s screen, above or below the actual frame.
Advergames: these start from an already established name and later are redone to match a particular brand and its products or services.
Leaderboards: provide players with the opportunity to track their performance alongside others. The desire to appear on leaderboards drives players to earn more achievements, effectively driving retention and engagement. Nike’s successful app, Nike+, keeps users engaged through leaderboards to see who is pulling ahead .
Gamification gives businesses and brands a different way to engage and build customer retention; however, it requires companies to think through the strategies they will use to engage customers and to build effective motivators and rewards based on the type of players their customers are.