Author’s note: With this post, I am restarting a previous tradition on my blog to report from time to time the findings from a single research paper. Now named “Research Focus”, these slightly shorter posts will summarize each research paper in accessible and practically relevant lingo. The focus is on what the research findings mean to practice. The research papers featured will be chosen from recently published or soon-to-be-published work as well as significant working papers that I consider to be highly relevant to loyalty marketing practice. The goal is to facilitate the dissemination of scientific research, build practice knowledge, and speed up the scientific discovery to practice cycle time. I hope you will enjoy the feature!
Loyalty program is everywhere, yet engaging consumers in a loyalty program remains elusive to businesses. Look at your own wallet or key ring, and you are likely to see at least a few loyalty cards that you no longer use. You are not alone. The 2017 Colloquy Loyalty Census reports that as many as 54% of loyalty program memberships in the US are inactive. A more recent loyalty program engagement survey of 1000+ consumers by CodeBroker shows that 65% of those surveyed are engaged with less than half of their loyalty programs.
The loyalty program (dis)engagement problem has various possible solutions. One solution is gamification, that is, introducing gaming into a loyalty program. Examples of this approach abound in practice, offered by familiar brands such as Victorial’s Secret, Domino’s Pizza, and Starbucks (see the picture at the beginning of this post for a screenshot of the currently running Starbucks Bonus Star Hopscotch game). In today’s Research Focus paper, to be published in Journal of Business Research, Professor Jiyoung Hwang and her colleague studied when and how gamification helps in a loyalty program context.
What Did They Do?
The researchers created descriptions of four different versions of a coffee shop loyalty program:
- A no-gamification program + reward points redeemable for free coffee and food;
- A gamified program with a bingo challenge board + reward points redeemable for free coffee and food;
- A no-gamification program + reward points redeemable for a donation to the local community;
- A gamified program with a bingo challenge board + reward points redeemable for a donation to the local community.
They randomly showed one of the four versions to each of 200+ consumers and asked their opinions about the program they saw.
What Did They Find?
Program loyalty and participation ratings were higher for the gamified programs than for the no-gamification programs. Gamification increased program loyalty and participation through two ways: (1) by making the program seem playful to consumers; and (2) by making people have more favorable feelings toward the program. Interestingly, the importance of playfulness doubles when the reward involves self benefits (i.e., free coffee and food) versus when it involves benefits for others (i.e., donation to the community). Not surprisingly, people preferred self-benefit rewards than other-benefit rewards.
What Does This Mean for Marketing Practice?
The biggest lesson learned from this research is how important playfulness is in driving people’s reaction to gamification. Playfulness makes people concentrate on what they are doing, makes them curious and gives them an overall enjoyable experience. An important part of that playful experience is a mind state called flow, where one loses oneself in a fully engrossed experience with the task at hand. (You can read more about flow in *this book by Dr. Csikszentmihalyi.) In order to generate the flow state, a game needs to provide just the right amount of stimulation, interaction, and challenge. Too simplistic and people will be bored; too hard to win and people won’t be motivated to continue. From a game design perspective, one needs to consider *the story, the mechanics, the aesthetics, and the technology behind the game. A touch of playfulness can be added to each of these components to create an overall fun experience.
Caution
Although gamification can be quite powerful, previous research also finds that games do not necessarily create a stronger connection with the brand. The trick is to provide sufficient integration between the game and the brand, and to give consumers the autonomy to interact with the game the way they want to and however long they want to, without feeling pressured or forced.
Reference
Hwang, Jiyoung and Laee Choi (in press), “Having Fun While Receiving Rewards?: Exploration of Gamification in Loyalty Programs for Consumer Loyalty,” Journal of Business Research.