Gamification of consumer loyalty programs
Increased competition in the digital environment leads to the search for effective tools to attract targeted traffic to websites. Search engine marketing, which includes search engine advertising, allows to achieve this aim by means of technical settings.
| Рубрика | Маркетинг, реклама и торговля |
| Вид | статья |
| Язык | английский |
| Дата добавления | 20.07.2024 |
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Gamification of consumer loyalty programs
Karmazinova Viktoriia,
PhD in Economics, Associate Professor of the Department of Marketing State University of Trade and Economics Kyiv,
Increased competition in the digital environment leads to the search for effective tools to attract targeted traffic to websites. Search engine marketing (SEM), which includes search engine (contextual) advertising (SEA) and search engine optimization (SEO), allows toachieve this aim by means of technical settings and consideration of marketing aspects in creating user experiences. The effectiveness of search engine marketing is tested in practice with the help of web analytics, which allows real-time tracking of traffic, its sources, and user actions, which helps identify the most effective tools and advertising campaigns. In the context of the emerging impression economy, improving the user experience of potential and existing customers at every touchpoint depends on the speed and convenience of achieving user goals in the digital environment. Search engine marketing is based on users' search queries in the face of actualized demand. Therefore, websites that are quickly accessible in search and contain a value proposition in accordance with the search queries of potential customers will be convenient for users, have a competitive advantage by providing positive impressions based on an improved customer experience. This approach ensures that the interests of both users and businesses are satisfied, thus achieving the goals of digital marketing and business efficiency in general. The aim of the recearh is to substantiate the relationship between search contextual advertising and search engine optimization as search engine marketing tools and to identify their synergistic impact on creating positive user experiences, increasing targeted traffic and increasing website conversion. In the reseach, the general scientific methods of analysis and synthesis, system-structural analysis, comparison, systematic, logical generalization were used. Based on the semantic mechanism of working with search queries, the article substantiates the relationship between search engine advertising and search engine optimization as search engine marketing tools and reveals their synergistic impact on creating positive user experiences, increasing targeted traffic and increasing website conversion. The proposed algorithms for search engine advertising and internal search engine optimization, taking into account the technical and marketing aspects of the implementation of these digital marketing tools, help in this regard. search marketing web analytic
Keywords: search marketing, web analytics, machine learning, websites, targeted traffic, search engine advertising, contextual advertising, SEO optimization, impressions, user experience, conversions.
КАРМАЗІНОВА Вікторія,
к. е. н., доцент кафедри маркетингу Державного торговельно-економічного університету, м. Київ,
ГЕЙМІФІКАЦІЯ ПРОГРАМ ЛОЯЛЬНОСТІ СПОЖИВАЧІВ
Посилення конкуренції у цифровому середовищі спричиняє пошук ефективних інструментів залучення цільового трафіку на вебсайти. Пошуковий маркетинг (SEM), який включає пошукову (контекстну) рекламу (SEA) та пошукову внутрішню й зовнішню оптимізацію (SEO), дозволяє досягати цієї мети за рахунок технічних налаштувань та врахування маркетингових аспектів у створенні вражень користувачів. Ефективність пошукового маркетингу перевіряється на практиці за допомогою вебаналі- тики, яка дозволяє в режимі реального часу відслідковувати трафік, його джерела та дії користувачів, що допомагає виявляти найбільш ефективні інструменти та рекламні кампанії. В умовах становлення економіки вражень покращання користувацького досвіду потенційних та існуючих клієнтів у кожній точці контакту залежить від швидкості та зручності досягнення цілей користувачів у цифровому середовищі. Пошуковий маркетинг базується на пошукових запитах користувачів за умови актуалізованого попиту. Тому вебсайти, які будуть швидко доступними у пошуку та містити пропозицію цінності відповідно до пошукових запитів потенційних клієнтів, стануть зручними для користувачів, матимуть конкурентні переваги завдяки наданню позитивних вражень на основі покращеного клієнтського досвіду. Такий підхід забезпечує задоволення інтересів двох сторін - як користувачів, так і підприємств, які таким чином досягають поставлених цілей цифрового маркетингу та ефективності бізнесу в цілому. Метою дослідження є обґрунтування взаємозв 'язку пошукової контекстної реклами та пошукової оптимі- зації як інструментів пошукового маркетингу, виявлення їх синергічного впливу на створення позитивних вражень користувачів, збільшення цільового трафіка та підвищення конверсій- ності вебсайту. При проведенні дослідження використано загальнонаукові методи аналізу та синтезу, системно-структурного аналізу, порівняння, системний, логічного узагальнення. У статті на основі дії семантичного механізму роботи з пошуковими запитами обґрунтовано взаємозв 'язок контекстної реклами та пошукової оптимізації як інструментів пошукового маркетингу та виявлено їх синергічний вплив на створення позитивних вражень користувачів, збільшення цільового трафіка і підвищення конверсійності вебсайту. Допомагають у цьому запропоновані алгоритми контекстної реклами та внутрішньої пошукової оптимізації, з урахуванням технічних та маркетингових аспектів реалізації цих інструментів цифрового маркетингу.
Ключові слова: пошуковий маркетинг, вебаналітика, машинне навчання, вебсайти, цільовий трафік, пошукова реклама, контекстна реклама, SEO-оптимізація, враження, досвід користувачів, конверсії.
Introduction
In the highly competitive world of modern business, creating effective loyalty programs is an important strategic task for companies. Traditional methods no longer always meet the growing expectations of consumers, who demand personalization and innovation. In this context, gamification is an important tool for creating unique and exciting loyalty programs. Every year, gamification attracts more and more attention from practitioners and academics due to its potential to stimulate interaction with customers and increase the effectiveness of marketing strategies. Gamification is based on the principles of game design and uses game elements to stimulate certain actions. An important aspect of its application is its role in loyalty programs. By introducing gamified elements, brands create a unique context for interaction with consumers. Personalized tasks and individual rewards help increase participation and strengthen the connection between the customer and the company's product. Rewards and competition create positive emotions, increase motivation and encourage participation in loyalty programs. Understanding these aspects allows you to more effectively implement gamification in consumer loyalty programs
Consumers show great tolerance for diversity, actively express their individuality and strive for original impressions. In today's business, it is impossible to successfully compete without taking these trends into account. It is precisely in this context that gamification becomes a necessary component of consumer loyalty programs.
The use of gamification allows companiaes to build long-term relationships with audiences, taking into account their unique needs and aspirations. This not only stimulates consumer interest, but also empowers them to express themselves and engage in creative interactions. This approach not only meets the expectations of the modern generation, but also ensures a positive impact on the brand, increasing loyalty and competitiveness of the company in the market.
Scientific studies show that gamification activates various aspects of consumer behavior. At the same time, the greatest attention is paid to the relationship between gamification and ensuring consumer loyalty. The problem of combining elements of gamification with loyalty programs is covered in the works of the following scientists and practitioners: Clock (May 27, 2023), O'Neill (January 25, 2022), Grochowska I. (2023), Hober, (November 30, 2023), Barney (September, 2023), Chang (2023), Prysiazhnikova, Kirnosova (2023), Mostova (2018) ), Iankovets, Cherneva (2022). Scientific studies devoted to the problems of gamification of loyalty programs reveal significant aspects of this approach. At the same time, the relationship between the level of loyalty and the gamified elements of the company needs to be researched. In this direction, it is important to focus on the methods of choosing gamified elements, while understanding the psychological aspects and taking into account the development of a comprehensive approach to the implementation of gamification in programs to ensure long-term loyalty.
The aim of the article is to substantiate the implementation directions of gamification in programs for ensuring long-term loyalty.
In accordance with the defined aim, the hypothesis was formulated that gamification is an effective tool for ensuring long-term consumer loyalty. Gamification also opens up opportunities to personalize long-term loyalty programs. The use of analytics and recommendation algorithms will allow for the creation of individual gamified tasks and rewards, taking into account the personal preferences and consumption habits of each client.
To test the proposed hypothesis, the following general scientific research methods were used: analysis and synthesis to present the main elements of gamification, their characteristics; empirical methods, system- structural analysis, comparison and graphic representation.
Despite the positive aspects of gamification in providing long-term loyalty programs, there are challenges associated with psychological reluctance, excessive pressure on the consumer and lack of balance in the combination of gamification elements.
The main part of the article defines the key elements of gamification in loyalty programs, indicating their features, specifics of use and possible areas of use. An analysis of the dynamics of the use of gamified elements
by companies was carried out and a matrix of loyalty trends was constructed. The main stages of implementing gamification elements for building long-term loyalty and achieving the company's strategic goals are proposed.
1. Gamification: basic concepts and components
Gamification in business is recognized as an effective tool aimed at stimulating the participation of consumers and employees through the use of game elements. This approach significantly affects various areas of business activity, combining entertainment and business processes. The scientific approach allows considering gamification as an effective tool for achieving strategic goals in the modern business environment.
The biggest advantage of gamification in business is its ability to create interest and motivation of participants. Game elements such as contests, rewards, and virtual achievements encourage active participation and audience engagement. This is especially important in marketing and advertising, where competitions and awards can increase brand engagement and increase customer loyalty.
Gamification also has a positive effect on internal business processes, increasing staff motivation and productivity. Historically, for a long time, companies have tended to be more product-oriented in their operations. This traditional concept has been about maintaining an existing market position with a focus on short-term profits, mostly by cutting costs and increasing production revenues (Iankovets, Cherneva, 2022). The implementation of gamified motivation systems creates an opportunity to become the basis for effective change management and the development of team cooperation in the organization. In addition, gamification allows you to collect important data about the behavior of customers and employees, using analytical tools to further improve business strategies. This aspect enables businesses to adapt their approaches and offer personalized solutions. The interpretation of the term "gamification" can be viewed from several angles.
First of all, gamification is the application of game design and mechanics in a non-game environment. Its purpose is to increase the level of motivation and involvement of users, stimulate behavior change and achieve specific goals (Clock, May 27, 2023).
Gamification is a strategy that combines entertaining and engaging game elements into a non-game context to increase engagement and motivate certain behaviors. Gamification requires an understanding of the target audience, their motivations and the context in which the strategy is applied. For the effective use of hemification, it is necessary to take into account all the components (Figure 1).
Figure 1. Basic elements of gamification Source: developed and supplemented by the author from (Barney, September, 2023).
These elements work together to create a great gaming experience that encourages players to actively participate and achieve their goals. Each of the elements has its own role in achieving the goals (Table 1).
Characteristics of gamification elements
Table 1
|
Element |
Characteristic |
|
|
Points and honors |
It is a fundamental game mechanic that rewards users for achievements and progress. Users earn points when they complete certain actions or reach checkpoints; they are awarded badges for achievement or mastery in a particular field. These visual representations of progress encourage users to continue interacting (Barney, September, 2023) |
|
|
Social interaction |
The possibility of sharing experience, joint play and interaction between participants |
|
|
Tasks and challenges |
Setting tasks and challenges that participants must complete in order to receive points or rewards |
|
|
Progression and levels |
Allow users to progress through various stages of the game system as they complete tasks or earn points. This visual progression provides a sense of growth and mastery, and encourages continued participation. Unlocking new levels or accessing additional content creates a sense of anticipation and excitement |
|
|
Competition and leaderboards |
Identification of leaders and competition among participants, which increases motivation and stimulates activity. Displays the ratings of participants based on their results and achievements. They create a sense of competition, challenge and motivate users to take a higher position on the leaderboard. Leaderboards are good for motivating people to improve their skills and achieve goals (Barney, September, 2023) |
|
|
Personalization and customization |
Allow participants to customize their profiles, characters, or other gamification elements according to their preferences |
|
|
Time limits |
Set deadlines for completing tasks or achieving goals, which creates an element of urgency and tension |
|
|
Stories and narratives |
Weave elements of stories and narratives that make gamification more interesting and engaging |
|
|
Virtual rewards and incentives |
Participants receive virtual rewards such as medals, badges or trophies as recognition of their achievements |
Source: developed by the author from (Barney, September, 2023).
Gamification is used in a variety of industries, including education, marketing, employee training, healthcare, wellness, and customer engagement. For example, educational programs can use gamification to make learning more interactive for higher education students, while businesses can use it to improve employee productivity, encourage customer loyalty, or reward employees and consumers (Figure 2).
|
Scope of gamification |
||
|
Marketing |
Gamification elements can create unique interactive campaigns that attract attention and enhance interaction with the audience |
|
|
Education |
The adaptability of gamification allows teachers to adapt content for individual students, ensuring that each student receives an individual learning path, making education more accessible and enjoyable (Hober, November 30, 2023) |
|
|
E-trade |
It is a strategic approach aimed at attracting and retaining customers through the use of game elements and mechanics; provision of virtual bonuses that can be exchanged for discounts or gifts attracts customers and stimulates their activity; using gamified algorithms to personalize recommendation systems, which allows each customer to receive individually selected offers and discounts |
|
|
HR |
Badges, points and leaderboards motivate employees to learn the necessary skills and constantly improve; it creates a culture of continuous learning and professional development; leaderboards promote a sense of friendly competition among employees, encouraging them to surpass themselves and reach new heights in their positions (Hober, November 30, 2023) |
|
|
The sphere of entertainment and recreation |
Health and wellness apps and platforms, for example, use gamification to motivate people to lead healthier lifestyles; use gamified elements to track physical activity, set goals and reward users for achieving important results, this gamified approach encourages users to stay active and make healthier choices |
Figure 2. Possible application areas of gamification elements
Source: compiled by the author based on (Hober, November 30, 2023; Education Technology, September 28, 2023).
These are far from all areas in which gamification elements are integrated, since, according to statistics, they are increasingly used by various companies.
The study of gamification is an urgent task, since this tool will allow to study the complex processes of forming long-term partnerships between the company's staff and customers (Mostova, 2018). In the general context, gamification in business is an innovative tool that promotes interest, efficiency and interaction of all participants in business processes and creates additional benefits for the company.
2. Gamification: research and trends
The dynamics of the use of gamification at enterprises shows the gradual realization of its potential as an effective tool for achieving various business goals. The general trend indicates that businesses are increasingly incorporating gamification into their strategy to engage staff, drive productivity and increase customer loyalty. Confirmation of the growt in the level of gamification use is shown in Figure 3.
Figure 3. Global gamification market, USD billion Source: (Clock, May 27, 2023).
The global gamification market is projected to grow from USA 9.1 billion in 2020 to an expected USA 30.7 billion by 2025, at a CAGR of 27.4%. North America will remain the leader in the global gamification market, continuing to hold the largest share over the next five years. This is due to the high popularity of mobile Internet, which is used by 90% of the region's residents through smartphones (Chang, 2023).
At the same time, the gamification market in Europe is also expected to develop significantly during the forecast period. Active support from local authorities and key stakeholders will contribute to further growth. For example, political initiatives in Great Britain and France are aimed at holding conferences and events dedicated to gamification (Clock, May 27, 2023). Although North America and Europe remain the main participants, other regions plan to gradually increase the use of gamification elements.
Gamification finds its application in various markets, proving to be an effective tool for stimulating interaction and engaging the audience. In the field of retail trade, gamified loyalty programs and interactive contests help
increase sales and retain customers. In the financial sector, gamification is used to increase financial literacy and motivation for financial transactions. In the technology sector, gamification is used to improve productivity and develop skills. In the field of personnel management, gamified incentive systems become a tool for increasing employee motivation. Thus, gamification is a universal tool that adapts to various business sectors, helping companies to achieve their goals and interact with the audience at a new level.
According to research, the number of enterprises planning to use elements of gamification will increase, and today it is most often used by retailers (Figure 4).
Figure 4. Analysis of the use of gamification elements by industry distribution, % Source: (Fortune. Business Insights, Jun, 2020).
Predictions indicate that gamification is now an unstoppable industry. Many businesses, from large to small, see the benefits of engaging their customers and employees in the use of interactive technologies. And this is reflected in the numbers (O'Neill, January 25, 2022):
• according to estimates, by 2025 the global profit from the sale of gamification will reach USD 32 billion;
• it is expected that by 2025, gamified learning will be valued at USD 25.7 billion; USD 25.7 billion;
• in 2016, the international gamification market was estimated at USD 4.91 billion. The latest numbers predict growth of 142%, with the market now valued at USD 11.94 billion;
• 70% of global companies use gamification in one way or another;
• 50% of startups use gamification;
• 80% of US households own at least one gaming device - therefore people approach this technology with pre-developed gaming skills and knowledge and can be more receptive and adaptive to the system;
• companies using gamification can increase the conversion rate up to 7 times.
The best positive dynamics of the use of gamification elements is demonstrated by the food retail industry, namely the use in building customer relations with the help of marketing tools. Companies use gamified loyalty programs, contests and promotions to attract and retain customers. This allows businesses to compete effectively on the market and provide consumers with a new level of interaction with the brand. One of the examples of the effective use of gamification elements is the project with the integration of AR-books: "Alice in the Wonderland" and "Alice through the Looking Glass", implemented by the ATB product network. The condition of participation in the program was the purchase of goods for a certain amount. The assortment of goods was the same for all stores and was not limited to specific categories of goods. 275 000 books were printed. The mobile application was supposed to "revive" the pages and the characters on them. The effectiveness of augmented reality in marketing, according to live animations, increased the frequency of purchases by 25%, their number by 30%, and the time of interaction with the product seven times. According to the results of the promotions, 718 000 AR-books were sold in ATB. This is an absolute record for Ukraine, because for comparison, according to the Book Chamber of Ukraine, the average circulation of one children's book in 2017-2018 was about 2 700 copies. Another retailer, namely Silpo, held promotions with action figures of fantastic characters - "Stikeez". According to the retailer, the figurines, of which there were about 20 million of pieces ran out even before the end of the first promotion. During the campaign, the average check increased by 7%, the number of new customers - by 2% during the first campaign and by 6% after the second, and the retailer's market share increased by 8%. 75% more buyers participated in this promotion than in similar promotions with other toys (RAU, 2022).
As such, gamification is growing in popularity in businesses as it helps improve various aspects of business, including HR, marketing and training. This trend shows that enterprises recognize it as an effective tool for achieving strategic goals and improving both internal and external business processes.
3. Elements of gamification of loyalty programs
Loyalty programs are one of the most effective tools for retaining customers and building long-term loyalty. Loyalty is considered as a component of three elements: trust; commitment to values; long-term relationship. Consumer loyalty is defined as their preference for the product, services, service, trademark, logo, appearance, personnel, service system of a particular enterprise (Prysiazhnikova, Kirnosova, 2023).
Gamification, as a concept of using game elements in non-game contexts, is an important component of marketing strategy implementation. Let's consider the impact of gamification on the effectiveness of loyalty programs and ways to use this approach to attract and retain customers.
Figure 5 shows two key insights into loyalty marketing trends: their greatest impact over the next 2-3 years and the urgency of investment in 2023.
On the one hand, it identifies the importance of the trends that have the greatest impact on customer loyalty marketing, including strategies and tools that will be a key to successfully securing customer loyalty in the near future. On the other hand, the urgency of investments in 2023 is taken into account, showing which trends require the most attention and resources in the current year for effective implementation.
This allows companies and marketers to direct resources to the most promising and important aspects of loyalty marketing in the near future, ensuring an optimal relationship between strategic planning for the long term and current investment needs in the current year.
2023 Gamification, experience-based rewards and predictive analytics are named as key trends that will impact the loyalty industry over the next 2-3 years. The top three trends that marketers plan to invest in next year are pretty much the same, with the exception of marketing automation replacing predictive analytics.
Experts confirm that gamification and attracting customers in a nontransactional way is becoming a decisive way to stand out from the competition. The fact that marketing automation is one of the key trends that marketers plan to invest in is also no surprise, given its potential for things like data collection, personalization and, most importantly, creating memorable customer experiences. Companies' focus on collecting and using data to deliver more personalized experiences remains an ongoing challenge, especially as customer expectations rise and Gen Z becomes a key segment. An increasingly strong connection between payment systems and loyalty is developing, which will also be a key in the coming recession (Grochowska, 2023).
Figure 5. Loyalty Trends Matrix
Source: (Open Loyalty, 2023).
In 2023 it was noticed a noticeable shift in approaches to key trends that were relevant in previous years, particularly in the areas of mobile applications and mobile payments. This unexpected turn may indicate either a change in priorities in the business environment or a rethinking of what can ensure maximum investment efficiency in today's unpredictable environment.
The popularity of mobile applications and mobile payments, which used to be widely recognized, has now lost its relevance. Instead, the emphasis is shifting to experience-based rewards, which have not previously been valued in the industry. This indicates a change in perception and approaches to how to achieve maximum profit in the uncertain conditions of today's market.
Gamified loyalty programs have an amazing ability to retain experience-oriented consumers over time, building relationships and communities among participants. Gamification encourages consumers to interact with the brand regularly and make more frequent purchases, and also provides an opportunity to collect important customer data. Let's consider the stages of introducing gamification into loyalty programs, which can increase consumer engagement in online and offline environments (Figure 6).
Figure 6. Stages of implementation of gamification elements to build long-term loyalty
Source: compiled by the author.
When considering the importance of implementing gamification elements in loyalty programs, it is important to consider all stages of this process. From initial concept to implementation and further refinement, every step is important. At the first stages, you need to clearly define the purpose of gamification and the goals of the loyalty program. A thorough analysis of the audience and its needs allows you to collect key information for further consideration in game design.
The next stages are the development of game mechanics and elements that meet the defined goals. It is important to create an engaging gaming experience that will encourage participants to be active and participate.
One of the most responsible stages is the implementation of the gamified program in the real environment. At this stage, it is necessary to ensure convenient access and effective integration with existing loyalty systems. Constant monitoring and analysis of results allows timely identification of weak points and optimization of gamification elements to achieve maximum efficiency.
This article examines the main elements of gamification and characterizes each of them. These elements are actively used by companies in loyalty programs, in addition to generalized elements; it is worth providing examples of ideas that are effectively applied in practice (Adact, November 10, 2023). These elements include:
• wheel of fortune (wheel of fortune spins can reward consumers with discounts, free products or services and other prizes of their choice; consumers will not only enjoy the game, but also be more likely to return for future purchases);
• boxes with prizes (simple logistics compared to the excitement of opening a box and receiving some kind of gift can make people very enthusiastic about the game; the company can even create different levels, depending on the conditions of the loyalty program);
• rewards for targeted actions (answering questions, watching videos, going to the site, finding an error, passing a test, etc. - all these targeted actions can be supported by a reward for the consumer);
• puzzles or quests, quizzes (a unique game that allows you to demonstrate to consumers how much the company understands them and how much consumers are loyal to the company in return; for each successful game, consumers can also receive a reward, in addition to the interesting aspect of the game, a special prize will motivate people to continue playing and doing everything right);
• scratch cards (this element of a gamified loyalty program works in a similar way to lottery tickets, where customers can scratch a card and receive a reward if they are lucky enough to collect the right combination; this is a fun way to attract customers and give them something of value at the same time).
Considering all stakeholders is critical to the successful implementation of gamification in loyalty programs, creating an engaging, exceptional experience for consumers and ensuring the building of long-term loyalty.
Conclusions
The effectiveness of the functioning of domestic companies is determined by the formation of long-term relations with consumers. That is why every year marketers pay more and more attention to the management of loyalty programs. An important direction in ensuring long-term consumer loyalty is the development of a comprehensive approach to the implementation of gamification by domestic companies. The effectiveness of its implementation determines the need to structure its main elements (points and honors, social interaction, tasks and challenges, progression and levels, competition and leaderboards, personalization and customization, time limits, stories and narratives, virtual awards and incentives) and systematization of stages. This composition of elements will allow solving the problem of psychological insensitivity and excessive pressure on the consumer.
The results of the research indicate that for domestic companies the main stages of gamification implementation should be: evaluation of the existing loyalty program and analysis of the marketing environment; definition of goals, definition of the target audience; selection of gamification elements; determination of targeted actions for which benefits for consumers will be accrued; KPI setting; introduction of gamification elements into the loyalty program; performance evaluation and control; updating and supplementing gamification elements in the loyalty program. Such phasing will allow to rationally determining the components of the gamification process, which will generally increase interest in the corresponding loyalty program.
Further research will be aimed at developing a comprehensive approach to the implementation of gamified elements in order to form a positive attitude towards loyalty programs of enterprises and increase consumer involvement.
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