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Key Trends in Marketing Gamification

Posted on May 15, 2019May 15, 2019

From entertaining Super Bowl commercials to wildly viral video campaigns, marketing has always had a flair for the playful. It is no surprise then that the concept of gamification is readily integrated into many aspects of marketing. Well-known examples include Starbucks’ creative use of gamification in its reward program and McDonald’s adaptation of the Monopoly Game. In this article, I’d like to outline several key trends I observe in the application of gamification in marketing.

Gamification and Branding

Good gamification and good branding share one thing in common: a good story. In a world of social media and user-generated content, a brand has to shift from hard sell to telling good stories about the brand to attract consumers. The new generations of consumers appreciate a brand that is authentic and relatable. Gamification will play an important role in brand storytelling by integrating bits and pieces of brand stories into gamified experiences. It can bring the brand story alive and let the fun experiences translate into memorable brand moments for users. Coca-Cola’s huggable vending machine is a good example of such experiences.

Using Gamification to Increase Customer Engagement

Games are engaging, and customer engagement is a valuable asset in today’s marketing. One brand adept at leveraging board game concepts is Starbucks. The Starbucks Hopscotch game that ran this spring challenged users to make specific purchases (e.g., buying lunch, mobile ordering) in order to hopscotch their way to 400 bonus stars. Compared to an old boring promotion, gamification keeps users on their toes and offers them the gratification of winning challenges and rewards. The result? An audience who won’t easily get comfortable or bored with a brand and who will want to be part of the exciting experiences that the brand has to offer.

A Closer Look at Starbucks Rewards Program Redesign

Posted on April 3, 2019April 3, 2019

Changes are coming to Starbucks Rewards. On April 16, Starbucks Rewards will be expanding its reward structure to five levels. A few other changes will be made to the program too. Will these changes make this leading loyalty program even better? What might be motivating these changes? How will the changes affect the program and its members? In this post, I attempt to dissect these changes and offer my assessment of the new Starbucks Rewards program design.

What Changes Exactly?

The biggest change to the program is the addition of more reward thresholds. Instead of a single reward threshold of 125 stars, it will feature five levels of rewards ranging from 25 to 400 stars. The new program will also erase the current difference between a Gold member and a base member, allowing both to enjoy the same set of benefits. The table below compares the current vs. the new program structure.

	Current	From April 16, 2019
*Earning Stars*	2 stars per $ spent	2 stars per $ spent (unchanged)
*Reward Levels*	A single level, at 125 stars	Five levels, at 25, 50, 150, 200, and 400 stars
*Reward Items*	A free food or drink item, excluding alcoholic beverages and multi-serve food and beverage items	25 stars: free drink customization (e.g., extra shot, flavor, etc.); 50 stars: a free hot brewed coffee or tea, or a free bakery item; 150 stars: a free handcrafted drink, hot breakfast, or parfait; 200 stars: a free lunch sandwich, protein box, or salad; 400 stars: a free select merchandise (e.g., gift) or at-home coffee.
*Membership Tier Structure*	Green and gold. Gold is qualified by earning 300 stars in a 12-month period.	Single tier
*Base Tier Benefits*	A birthday reward Free in-store refills of hot or iced brewed coffee and tea Early or extended access to some promotions and offers Personalized offers and coupons Can NOT redeem stars for free rewards until after reaching Gold level	Same as before, but now everyone has the same ability to redeem their earned stars for rewards. All members now also receive a monthly double-star day that used to be reserved for Gold members.
Gold Tier Benefits	All Green benefits The ability to redeem every 125 stars earned for a free reward A double-star day as selected by Starbucks A personalized gold card	Not applicable, as there will no longer be a premium tier. Gold members do not lose any benefits. They just have to share them with everyone else.
*Star Expiration*	6 months after the star is earned	6 months after the star is earned (unchanged)

More Complex Reward Thresholds

The new design significantly expands the reward structure of the program from one to five levels. What could be driving this change?

Research Focus: Who Benefits in a Coalition Loyalty Program?

Posted on March 25, 2019March 25, 2019

Many loyalty programs do not stand alone. Frequent flyer programs and hotel loyalty programs take on partners such as other airlines, hotels, restaurants, banks, and retailers. Other programs, such as Fuel Rewards in the US and Air Miles in Canada, are by design a coalition of businesses that come together to share a common program currency and reward structure. For consumers, such coalition programs are great because they allow consumers to earn points faster through many different means. But what about the participating businesses? Is it worthwhile to be part of such a program? If you do, should you set a generous point earning and redemption policy? In today’s Research Focus feature, I find some answers in a recent Marketing Science Institute Working Paper (Report No. 19-101) by Professor Stourm and her colleagues.

What Did They Do?

The researchers looked at a credit card based coalition loyalty program in Europe. In the program, card holders earn points by shopping at various partner businesses. Each participating business decides its own reward ratios, from less than 1% up to 3%. When a preset reward threshold is reached, consumers are automatically issued a reward voucher that they can use toward future purchases. Participating businesses can choose whether they accept reward vouchers or not. Accepting reward vouchers comes at a short-term cost as the program operator reimburses only 90% of the values of the vouchers.

In their analyses, the researchers focused their attention on one particular European city. They studied 1,636 consumers that used their card at least once across 40 partner stores located in the city. The research team was interested in finding out whether offering rewards created positive or negative impact among these partner stores, what businesses benefited, and how point devaluation as a result of an overall program policy change affected the landscape.