Gamification, i.e. the use of game-like mechanics in non-game contexts, has become a popular and powerful engagement tool across countless industries. In the loyalty space, too, where driving up engagement is central to success and competition is fierce, gamification offers businesses the opportunity to stand out. Milestones, tiers, badges and quizzes are just some examples of the different elements companies incorporate into their loyalty offerings to appeal to customers. Below, we look at the top 10 examples of gamification in loyalty programs and analyze the secret behind their success.
- The use of game-like mechanics in non-game environments has exploded in recent years, and the gamification industry is now set to reach $40 billion by 2024, according to Research and Markets.
- Acording to our annual Loyalty Trends research, gamification is one of the most important areas of investment for the upcoming years.
- Gamification is also enjoying popularity in loyalty, as more and more brands choose to incorporate features such as tiers, milestones, challenges and badges into their loyalty programs to boost engagement.
- While loyalty programs may often include a configuration of different gamification tactics, most brands focus on doing 1-3 really well instead.
- Subscription-based loyalty programs tend to invest heavily into gamification, making use of a wide scope of game-like features with great success. Therefore, the higher the monetary investment, the higher chance of gamification being implemented extensively.
- The simpler the rules, the easier it is for members to engage with the gamification elements of the program.
Gamification meets loyalty
While it may seem like gamification gained traction overnight, it’s been a trend at the top of loyalty marketers’ minds for quite some time now. In the 2023 edition of our Loyalty Trends Report, gamification was voted as one of the most impactful trends for the industry for the second year running. Similarly, one-third of respondents said they intended to invest in gamification in the coming year.
Given all of its proven business benefits, it’s no wonder the whole global gamification market is predicted to reach $40 billion by 2024, as reported by Research and Markets. When done right, the use of game design elements in non-game environments has been shown to stimulate engagement and retention, decrease churn, and offer a more complex look at customer motivations and preferences thanks to zero-party data which “81% of customers are willing to share in exchange for a more personalized experience”, according to a U.S. big data company, Formation.
As the trend develops, we see different brands approach gamification differently, making use of various configurations of game design elements. Some of the most popular mechanics include:
- Point-based tiers & tier recalculation
- Spending-based tiers
- Multiple milestones
- Referral milestones
From what we’ve seen so far, companies will typically focus on a configuration of one to three of the above elements to engage their customers. Below, we’ll take a look at these elements individually and analyze it in the context of the brand that has done it especially well, e.g. quizzes and Sephora.
Point-based tiers - MSI
While tiers may seem like a pretty common loyalty tactic, they’re also an effective gamification tool that can increase sales and engagement. Tiers are also quite versatile in that they can be configured around points or spending. In this case, we’re going to focus on the former, i.e. points.
A great example of a brand using point-based tiers as part of their rewards strategy is MSI, a world leader in gaming, content creation and productivity solutions, with a global presence that spans over 120 countries. The company is widely known for their high-quality hardware, such as laptops, monitors, graphic cards, and lots more.
MSI have a loyalty program called MSI Rewards Program, a multi-tier and point-based scheme where customers earn points for completing different actions, e.g. downloading the app or referring friends, and purchasing MSI products. Customers are also assigned to different point tiers depending on the number of points they have collected, and each tier comes with a unique set of perks for members to enjoy.
The program is divided into four tiers, which are:
- Bronze (0-199 points)
- Silver (200-999 points)
- Gold (1,000-1,999 points)
- Platinum (2,000+ points)
All tiers enjoy benefits such as birthday rewards and access to bonus points events, but the higher the tier, the more exciting the benefits. For example, silver, gold and platinum members can unlock exclusive rewards and receive partner awards. Platinum members also get access to invite-only events.
The points can be redeemed on things such as game vouchers, health and fitness memberships, and curated MSI wallpapers.
The use of tiers has been shown to be effective for a number of reasons. Most importantly, it provides customers with a clear incentive to continue spending and engaging with the brand, leading to repeat purchases and greater member activity.
What’s more, tiers also offer a sense of achievement (central to gamification) and exclusivity, as customers take pride in rising through the different ranks and reaping unique rewards. This reinforces the target behaviors and also leads to a potential increase in the frequency and value of customer purchases.
In short, point-based tiers offer a relatively simple way for brands to enjoy many of the benefits offered by the use of gamification tactics without having to invest into the more complex game-like mechanics.
Spending-based tiers - Farfetch
Though the two are focused on different metrics, spending-based tiers come with a similar host of benefits as point-based ones. Both reward customers for their engagement levels and encourage a higher purchase frequency, among other perks.
A good example of a loyalty program based on spending tiers is Farfetch’s Access Rewards. For those who aren’t familiar with the brand, Farfetch is a leading luxury fashion platform, available to customers in over 190 countries and hosting an upwards of 1,400 world’s top fashion retailers, boutiques and department stores.
Similarly to the luxury brands they collaborate with, Farfetch is highly committed to creating high-quality customer experiences that make customers feel appreciated. With that in mind, Farfetch launched its loyalty program, Access Rewards, to reward its top customers for their investment, and encourage others to want to move up the tiers.
Access Rewards is divided into five different tiers (see image below): bronze, silver, gold, platinum, and private client.
Customers are put into the bronze tier following one purchase; silver tier aftering spending €850; gold tier after €1700; platinum €4000; and finally, private client, following a spend of €10,000.
As customers progress through the different tiers, they gain access to more rewards, such free shipping, priority customer care, and personal styling.
Farfetch uses tier recalculation every 12 months, which means that in order to retain their tier level, they need to maintain the required spend level. This further boosts engagement, as most members will not want to lose their earned perks after investing in them.
Given the fact that the products Farfetch sells on its website tend to be priced quite steeply, it’s no surprise that they’ve chosen to focus on spending-based tiers. After all, they’re likely to be easier to manage and track both for the business, who only needs to look at how much a member has spent, and the customer, who knows how much they need to spend in order to move up the tiers. Incentivizing and reinforcing high spending from the get-go also makes sense for a brand dealing in luxury products.
Challenges - Kipling
Challenges are another powerful tactic used in gamified loyalty programs. From increasing engagement and participation, to encouraging customers to act as brand advocates, depending on how they’re designed, challenges can be extremely valuable to a business.
A good example of challenges being used in loyalty programs comes from Kipling, a global manufacturer of bags, luggage and others accessories, with an international presence spanning 80 countries.
Although Kipling’s loyalty program is quite simple and in many ways similar to many other programs doing the rounds (i.e. welcome discounts, birthday gifts, and points), Kipling has recently made itself stand out by incorporating gamification features into its offerings.
Kipling launched ‘Kipling Friends’, which means that when customers purchased an item, they were invited by email to talk about their purchase on social media platforms - initially only Facebook, but evolved to include other platforms due the program’s success among members. Upon posting about their experience with the brand, customers were awarded 150 ‘smile points’, which accrued as the number of their social engagements with the brand increased. For every 1000 points collected by the member, they received a discount.
‘Kipling Friends’ demonstrates how easy it can be for companies to make use of gamification and use the tools already at their disposal to grow their loyalty platform and turn customers into brand ambassadors.
Milestones - Costa Coffe
Milestones are another effective gamification feature frequently used in loyalty programs and beyond. Milestones are reached by collecting a set number of points or making a certain number of purchases. They’re typically rewarded with a special perk, e.g. a discount or a free item. The way in which milestones are configured will depend on the program and the company that runs it.
A good example of milestones in loyalty programs comes from Costa, one of the largest coffeehouses in the world and a leader in coffee loyalty schemes. Costa initially disrupted the industry in 2010 with its points-based loyalty program, the very first in the coffee industry. Since then, the company has won over six million loyal customers, while one-third of Costa’s sales are estimated to come from its loyalty customers.
In 2021, the brand rolled out a reiteration of its loyalty program, where it shook things up with its simple yet appealing value proposition. Part of that was its use of milestones to engage their growing customer base. As such, Costa rewards its members with a free beverage after they’ve purchased 8. As a way of doing their part of the environment, the chain gives the freebie to customers using reusable cups only after 4 drink purchases.
Thanks to Costa’s use of milestones, its customers get to feel a sense of progress and accomplishment when carrying out simple, everyday purchases. The rules are simple, which means members are always clear on what and how often they need to perform a specific action to earn their reward. Given that Costa Coffee Club enjoys almost unparalleled success, it’s fair to say that the brand’s approach to loyalty and gamification is paying off.
Multiple milestones - Delta SkyMiles
Multiple milestones are very similar to their singular counterpart. Also a frequent fixture in many gamified loyalty programs, multiple milestones refer to a number of different milestones offered to the customer. So, instead of one milestone as in the case of Costa Coffee Club, program members engage in different ones.
An example of multiple milestones comes from Delta Air Lines, one of the major U.S. airlines and one of the oldest airlines in the world currently in operation. Delta serves over 5,000 flights a day in 52 different countries, making it one of the largest airlines in terms of passenger count.
Delta runs a loyalty program called Delta SkyMiles, giving members the opportunity to earn miles by flying with the airlines or with its partner airlines, staying at its partner hotels or renting cars from partner rental companies, as well as using the Delta SkyMiles credit card.
Delta uses multiple milestones in its program, which means that members can earn bonus miles by travelling certain destinations, flying a set number of miles or segments, or by reaching a certain spending threshold on the Delta credit cards. The milestones vary depending on membership level, e.g. Silver, Gold, Platinum, and Medallion levels.
For instance, a loyalty program member who makes the Platinum Medallion level by flying 75,000+ miles within a calendar year would earn a bonus of 10,000 miles. On the other hand, someone who reaches the Diamond Medallion level by flying 125,000+ miles would earn an additional 30,000 miles.
The miles can then be exchanged for flight upgrades, deals on stays and rentals with Delta’s partners, as well as lots of other rewards, including experience-based ones.
Delta’s milestones program is designed to not only reward members appropriately for their loyalty, but also encourage them to keep flying with the airlines and its partners, and continue to earn more miles and rewards.
Referral milestones - Harry’s
Referral milestones share the same logic as the milestones-based programs described above, except they’re focused around the number of referrals a member completes. To illustrate this mechanic, we’re going to take a look at Harry’s, a DTC brand known for its shaving equipment and men’s personal grooming products.
Despite launching amid an already saturated market back in 2012 and having to compete with key players such as Gilette and Venues, Harry’s quickly found its feet in the industry, thanks in part to its ability to respond to customer pain points and its ingenious referral program.
Harry’s referral program implemented a milestones rewards system based on how many customers were brought in by the referrer. To make the program as simple as possible, Harry’s used a two-page microsite that collected email addresses. Following submission, users were redirected to the landing page (see above), where they could see their progress as well as more information regarding how many referrals they needed to make to win certain products.
Referral campaign configuration:
- Trigger: First purchase of the referee.
- Rule for Referrer: The referrer gets various rewards after reaching a specific number of successful referrals:
- Referred 5 friends - free shave cream.
- Referred 10 friends - free razor.
- Referred 25 friends - free shave set.
- Referred 50 friends - free blades for the whole year.
Leaderboards/rankings - NikePlus
Leaderboards and rankings are also a very popular gamification feature, and one that’s worked well in the context of loyalty programs. Creating a sense of competition among members, leaderboards lead to increased engagement in addition to elevating the value of the rewards earned through the program.
While Nike - as a brand - may not need much of an introduction, what many people aren’t as familiar with, however, is its subscription-based loyalty program, Nike+. Featuring leaderboards as well as challenges, the program rewards users for their activity levels. Members can also earn points by purchasing Nike products and engaging with the brand on social media. The points can be redeemed for a wide variety of rewards, such as exclusive products, discounts and access to “experiences”.
Most crucially, however, the program includes a leaderboard system, ranking users according to their activity levels and showing them how they compare to others. The leaderboards are well-designed and user friendly, and those who find themselves at the top also receive badges for their achievements. While Nike does their leaderboards well, the program makes uses of a whole assortment of gamification features such as challenges, milestones, and badges to appeal to its member base.
The data obtained about users throughout also allows Nike to offer personalized recommendations, relevant content and early access to exciting new products to said users.
Badges - WW Challenges
As alluded to above, badges are another gamification tactic popular with loyalty program members and brands alike. Their effectiveness comes down to serving as a visual representation of a member’s progress and achievements within the program. As such, they inspire a sense of pride and accomplishment within the user, thus reinforcing the target behaviours and boosting engagement.
Depending on the program, badges can also be used to differentiate members based on their tiers or other attributes.
A good example of a loyalty program doing badges well is WeightWatchers, a subscription-based weight loss and fitness program that rewards members for healthy habits such as tracking food and activity, recording their weight, and taking part in WW meetings. As members complete these challenges, they earn “wins”, which can then be exchanged for a variety of rewards from its partners, such as Kohls or Headspace, as well as experiential rewards.
Some badges that members can achieve can be seen below.
To take part, program members need to enrol in different challenges within the WW app, e.g. Weekend Warrior (tracking all three meals over the weekend). The challenges typically run for a week, occasionally a weekend, as in the case of the Weekend Warrior. Upon completion, members receive a badge on their profile and “wins”, the in-app currency, which they can trade in for different rewards.
The program also includes point-based tiers:
- Tier 1 (1,500 wins)
- Tier 2 (3,000 wins)
- Tier 3 (4,000 wins)
As we can see, the program is very well-developed and comprehensive, offering a broad scope of gamification features to engage its members - i.e. challenges, badges, milestones, tiers and progress bars. However, what makes WW different from all the other programs that we have looked at in this article is the fact that they’re a subscription-based program, which means that they have the means and resources to elevate the customer experience with a snazzy, gamified app and experiential rewards.
It isn’t hard to see why the app/program works, as every aspect of healthy living is turned into a fun, manageable challenge that comes with real-life as well as in-app wins.
Quizzes - Sephora
Quizzes are yet another gamification feature that works well in the context of loyalty programs. Their use offers tangible benefits to both the brand and the end-user. For the latter, quizzes are a fun way to either earn extra rewards or find out more about various things. For the former, quizzes represent an opportunity to learn more about the customer and use the information to offer tailored experiences and market products/services that the customer may not have been aware of.
An excellent example of a brand utilizing quizzes as part of their loyalty program is Sephora, a global retailer of personal care and beauty products, offering cosmetics from approximately 340 brands in addition to its private label.
Sephora is also renowned for its loyalty program, Beauty Insider Program, which has an upwards of 17 million members in North America alone. Many different aspects make up the success of the brand’s Beauty Insider Program, but it could be argued that its beauty - pun not intended - really lies in Sephora’s commitment to catering to individual experiences and personalizing the shopping experience. This can be seen in its use of various gamification tactics, particularly quizzes, which allow it to get to know its customers better and offer them products that suit their unique traits.
Sephora offers a wide range of quizzes for its loyalty program members. Examples of these quizzes include its makeup quiz, a skincare routine builder quiz, or its lipstick shade quiz, all of which ask members to answer a few questions about themselves, their beauty routines, and their physical traits, in order to then provide them with insights about what products would suit them best. This is clearly a win-win, as customers benefit from some handy tips, which no doubt increases their loyalty, while Sephora benefits from engaged loyalty program members it can recommend extra products to.
We can therefore see how well quizzes can work as part of a larger loyalty strategy, helping the brand market all of its products more effectively. Quiz results, in Sephora’s case, act as a trust marker, making customers more open to suggestions and more likely to spend more. All thanks to a quiz!
Punchcards - Cafe Nero
Punchcards are another effective gamification feature often used in loyalty programs. A simple and cost-effective way for businesses to track and encourage repeat business, punchards also create a sense of accomplishment for customers who keep coming back for more.
A brand that has successfully integrated punchcards into its loyalty proposition is Cafe Nero, a UK-based coffeeshop chain boasting 1000+ coffee shops in over 10 countries. While it struggles to compete with the main coffeeshop players, Starbucks and Costa, Cafe Nero still rakes in significant profits - £135.7 million in the first half of 2022 in the UK alone, a 200% increase on the same period the previous year.
Cafe Nero has made use of punchards for many, many years now; promising users a free cup of coffee after they’ve collected nine stamps. In 2017, however, the coffeeshop chain followed suit of its competitors and took steps to revamp its loyalty program.
Although their new app has taken its loyalty game to the next level with a number of gamification-based campaigns, a loyalty payment app and a wide selection of rewards, Cafe Nero did not do away with its punchcards. Instead, it migrated them onto its app. What’s more, it responded to its consumers’ desire for environmentally conscious products, by rewarding those using reusable cups with an extra digital stamp.
Cafe Nero’s punchcards have always been popular with its customers, and it’s apparent that the brand appreciates this fact. Despite creating a brand-new loyalty engine, punchcards continue to play an important role in the coffeehouse’s loyalty strategy.
Now that we’ve gone through a lengthy list of different gamification features and the ways in which brands have been taking advantage of them, you should have an idea of what successful implementation of gamification looks in loyalty. If we were to summarize all of the above examples, however, what emerges is the conclusion that simple does it.
Rather than overcomplicating their proposition and trying to clumsily pack countless gamification features into one program, the brands in the above examples have instead chosen to focus on a few and do them well. Given the success we know they’re enjoying, this approach seems to have worked.
However, that isn’t to say that heavily gamified loyalty engines can’t work well. On the contrary, when significant resources are invested into doing so, the results can be astonishing. This is something that we’ve seen in the examples of Nike and WeightWatchers, both of which are subscription-based loyalty programs, and can therefore afford to make the necessary investment. These brands also tend to offer experiential rewards and other rewards that may fall outside of the scope of standard loyalty software for obvious reasons.
To learn about the best gamification software for your own loyalty program, click here.
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To get some loyalty program inspiration, check out the Top 100 Loyalty Programs report, or peek into the future of the loyalty industry with our Loyalty Trends 2023 research.