Gamified Loyalty Programs: What They Cost Your Customers in Attention
By Alva Chew · Updated
In short A gamification loyalty program adds rules, such as badges, streaks, levels and spin-the-wheel prizes, on top of the reward. Each rule asks the customer for attention, and the research on whether that pays off is mixed and mostly comes from classrooms and apps, not counters. A points program gives customers one rule to learn, spend, earn and redeem, and it keeps their attention on the thing they came for.
What is a gamification loyalty program?
A gamification loyalty program wraps game elements around the reward. Typical pieces are badges for first visits, streaks for coming in several days running, levels, weekly challenges, leaderboards and scratch cards or spin-the-wheel prizes. The customer earns something for playing, not only for buying.
The idea is that play makes a routine purchase feel more interesting. That can be true. It also costs something that owners rarely count, which is the customer’s attention. Every element is a rule, and a rule has to be noticed, understood and remembered by someone standing at a counter with a coffee order and a queue behind them.
What does gamification cost a customer in attention?
Each game element asks the customer to do one or more of four things:
- Learn it. What counts as a streak, and does a missed Sunday break it?
- Track it. Which challenge is active, how far along am I, when does it end?
- Decide about it. Should I buy a second item today to finish the challenge?
- Trust it. Will the badge or prize actually be applied when I pay?
Compare that with spend, earn and redeem. The customer already understands money, and a points balance is one number. A 2019 KPMG survey of more than 18,000 consumers in 20 countries found that 60% said loyalty programmes are too hard to join or earn in, and 55% of members use them a few times a month or less.
| Finding | Scope | Source |
|---|---|---|
| 60% say programmes are too hard to join or earn in | 18,000+ consumers, 20 countries | KPMG, 2019 |
| 55% of members use programmes a few times a month or less | 18,000+ consumers, 20 countries | KPMG, 2019 |
Source: KPMG via PR Newswire, 2019. The survey covers loyalty programmes in general, not gamified ones specifically.
The attention cost also lands on your staff. Someone has to explain the challenge, apply the badge and answer the customer who says the streak should have counted. Our guide to launching a loyalty program at the counter covers why anything staff must explain in more than a sentence slows the line.
Does gamification actually work?
The honest answer is that it depends, and the best evidence is not from shops.
| Finding | Scope | Source |
|---|---|---|
| Gamification effects mostly positive but greatly dependent on context and users | Review of 24 peer-reviewed studies | Hamari, Koivisto and Sarsa, 2014 |
| Small effects: g = .49 on cognitive, .36 on motivational and .25 on behavioural outcomes | Meta-analysis of gamified learning, 19, 16 and 9 comparisons | Sailer and Homner, 2020 |
| Expected tangible rewards reduced interest in the activity itself (d = -0.28 to -0.40 across reward types, free-choice measure) | Meta-analysis of 128 studies, mostly lab tasks | Deci, Koestner and Ryan, 1999 |
Sources: Hamari, Koivisto and Sarsa, HICSS 2014. Sailer and Homner, Educational Psychology Review, 2020. Deci, Koestner and Ryan, Psychological Bulletin, 1999.
Read these with care. Sailer and Homner studied learning, so students and trainees, not people buying lunch. Deci and colleagues studied tasks in a lab and found that engagement-contingent, completion-contingent and performance-contingent rewards all lowered later interest in the task. Their own results also show that verbal praise raised it, which is a reminder that not every reward works the same way.
None of this shows that gamification fails in a café. It shows that the evidence for a small shop is thin, and that the effect on behaviour, which is what you are paying for, was the smallest of the three in the learning meta-analysis. Our page on the case for points only sets out the same pattern for tiers and vouchers.
What do game elements get right?
Two things, and a fair page should say so.
First, visible progress works. At a university café, customers sped up as they neared a free coffee. The time between purchases fell by about 20%, according to Kivetz, Urminsky and Zheng in the Journal of Marketing Research (2006). Second, a reward that feels close is a stronger pull than one that feels far away.
Both effects come from a progress bar, not from badges, streaks or prizes. A points balance shown against the reward, such as 35 of 45 points, delivers the same cue with nothing extra to learn. That is the point of the stamp card versus points comparison: the pull comes from the visible gap to the reward, and points show that gap just as well.
What happens to the points you give away?
Complexity also affects what customers do with the reward. In a study of a retailer’s points scheme, about 3% of purchases carried a redemption, and 60% of customers never redeemed in 43 months. The authors, Stourm, Bradlow and Fader in the Journal of Marketing Research (2015), attributed the hoarding mostly to cognitive and psychological motives. That was one international home and hardware retailer with a straightforward 1% earn rate, so it is not a gamified scheme. It does show how often even a simple balance goes unspent.
Add a badge system or a challenge calendar and there are more things to forget about. Our guide to rewards customers actually redeem covers how to set a reward people can value at a glance.
How do you decide whether a game element is worth it?
Before adding any game element, run it through four questions:
- Can a new customer understand it in one sentence?
- Can a cashier apply it in under ten seconds?
- Does it change what customers buy, or only add a number to watch?
- Could the same effect come from the points balance on its own?
If an element fails the first two, it spends customer attention and staff time. If it fails the last, points already do the job.
What is the points version of a game?
Most game mechanics have a points equivalent that needs no new rules:
| Game element | Points equivalent |
|---|---|
| Progress bar to a reward | The balance shown against the reward, such as 35 of 45 |
| Streak or challenge bonus | A higher earn rate for everyone, set once |
| Level or badge | Not needed, the balance is the status |
| Spin-the-wheel prize | A fixed reward at a fixed number of points |
| Bonus-points event | Not needed, change the earn rate |
Source: Gimify comparison of how each design works.
A points program also has a cost you can calculate. Choose the earn rate and the reward, and you know the share of spend you give back. A game layer with variable prizes makes that sum harder to do. The glossary entry on points-based loyalty programs shows the arithmetic.
What should you do?
If you already run a gamified scheme, check two numbers before changing anything. How many members earned a badge or finished a challenge in the last 90 days, and how many redeemed a reward? If the first is high and the second is low, customers are playing and not buying. Move the reward back to a balance they can read.
If you are starting, begin with spend, earn and redeem. Add nothing until you can name the customer behaviour you want and show that points cannot produce it.
Gimify runs points only, earned in proportion to what each customer spends, with no badges, tiers, vouchers or games. The card sits in Google Wallet with a live balance, and the free plan covers one outlet with unlimited members.
Questions owners ask
What is a gamification loyalty program?
A loyalty program that adds game elements to the reward, such as badges, levels, streaks, challenges, leaderboards or spin-the-wheel prizes. The customer is asked to play as well as buy.
Does gamification increase customer loyalty?
Sometimes. A review of 24 empirical studies found mostly positive effects that depended heavily on the setting and the user. A meta-analysis of gamified learning found small effects, and the smallest were on behaviour. Few of these studies were run in a café or shop.
What does gamification cost a small business?
Two things. The first is set-up and upkeep, because every challenge, badge and prize needs rules, staff training and checking. The second is customer attention, because each rule is something a customer has to notice, learn and remember at the counter.
Can rewards make customers care less about the product?
In laboratory studies, yes. A meta-analysis of 128 studies found that expected tangible rewards reduced people's interest in the activity itself once the reward was gone. Most of that work used tasks, not purchases, so treat it as a caution rather than a forecast.
What is a simpler alternative to gamification?
A points program. The customer earns points in proportion to spend and swaps a set number for a reward. A visible balance such as 35 of 45 points already gives the pull of progress that game designers try to build.
Read next
Start free
Gimify is free for one outlet with unlimited members and no time limit. Unlimited outlets are one flat monthly price.
See plans