Loyalty programs are one of the most effective strategies for retaining an organization’s customers, employees, and stakeholders and increasing companies’ revenue, but how will the future of loyalty programs evolve in the future thanks to AI? What will be the new scenarios and opportunities?
Using artificial intelligence (AI) and gamification in a loyalty program can bring significant benefits by increasing engagement, employee and network member engagement.
In this article, we will explore how artificial intelligence with names such as Chat GPT, GPT-3, Waston, Bert represent an absolute prominent topic today, a “hype” topic capable of bringing to the world’s attention all the benefits and implications of the AI world.
Below we will discover how AI and gamification can be used to personalize and enhance loyalty programs for consumers, employees, and members of a community, providing an engaging, unique, and personalized experience to exponentially increase results.
Loyalty programs are an important part of marketing for many retailers and service companies. They aim to reward loyal customers for their transactions and encourage further purchases by offering benefits such as discounts, reward points and exclusive access to products and services.
In this article we will explore the effectiveness of loyalty programs for both consumers and employees of companies.
First, we discuss the use of loyalty programs on consumers. Loyalty programs have been proven effective in retaining customers and increasing sales.
A 2021 study found that customers who participate in loyalty programs make 46 percent more purchases than customers who do not participate. In addition, loyal customers tend to spend 67% more than occasional customers.
In addition, loyalty programs can help build stronger relationships with customers because they provide a reason for customers to return and continue doing business with a company.
Loyalty programs can also help collect information about customers, such as their purchase preferences and contact contact, which can be used to better target marketing campaigns and improve the customer experience.
Loyalty program can be one of the best relational systems in an organization
Loyalty program can be one of the best relational systems in an organization
Let us now turn to the use of internal company loyalty programs for employees. Employee loyalty programs have been proven effective in increasing employee satisfaction and motivation, and consequently improving business performance. A 2022 study found that employees who participate in loyalty programs are 33 percent more likely to be satisfied with their jobs and 25 percent more likely to stay with the company for more than three years.
What are the benefits given by a loyalty program?
The general benefits of a loyalty program for a company that implements it include:
- Increased sales: loyal customers tend to buy more and more frequently.
- Increased customer loyalty: customers who join a loyalty program are less likely to switch brands.
- Increased customer knowledge: loyalty programs can provide valuable information about customers’ tastes, habits, and behaviors.
- Ability to offer customized offers: with customer information, companies can offer customized promotions and offers.
- Improved company image: a loyalty program can increase the positive perception of the company among customers and improve customer loyalty.
- For the internal area of the organization retain employees over time by decreasing turnover
- Generate hype and engagement on internal issues and corporate culture
- Achieving change in employee attitudes
- Enable greater communicationbetween teams with feedback management
- Increase cooperationand sense of participation in the organization.
Benefits for consumers are:
- Recognition and rewards for frequent purchase
- Access to exclusive offers and discounts
- Ability to accumulate points that can be used for future purchases
- Possibility of preferential treatment, such as dedicated customer service
- Opportunity to participate in prize draws and contests.
Employee benefits are:
- Increased satisfaction and motivation to work for the company
- Training and professional development opportunities
- Opportunity to participate in team building initiatives
- Ability to have a work-life balance
- Opportunity to have benefits and monetary incentives
Finally, creating a loyalty program for a company’s external network can be extremely useful for several reasons. First, it helps build and strengthen ties with suppliers, supporters and other professionals who are part of the company’s external network.
This can lead to increased interactions and collaboration, and you know value comes from exchange and “markets are conversations,” which can in turn increase the efficiency of communication, the perceived quality of the organization, services and products offered.
In addition, a loyalty program for the external network can help retain these stakeholders, encouraging them to continue working with the company and promoting its products or services. This can increase the company’s visibility and image, leading to increased business opportunities.
What are the typical features of a loyalty program?
- Reward points: customers earn points for every purchase they make and can use these points to earn rewards such as discounts, free products or access to exclusive events.
- VIP levels: customers can earn VIP levels depending on their loyalty level and get benefits such as bigger discounts or exclusive services.
- Cashback: customers can get a percentage of money back on purchases made.
- Exclusive discounts: loyal customers can get exclusive discounts on their future transactions.
- Early access: loyal customers can have early access to new products or services before others.
- Gift vouchers: customers can use the points earned to obtain gift vouchers for the purchase of specific products or services.
- Exclusive events: loyal customers can be invited to exclusive events such as product launches or company parties.
- Priority support: loyal customers can have access to dedicated customer support or a priority toll-free number.
- Personalization: loyal customers can customize their rewards or loyalty plans according to their preferences.
- Referral programs: customers can earn rewards for bringing new customers to the company through a referral system.
The role of gamification in a loyalty program
Gamification is a motivational framework that uses elements of play to increase users’ interest and participation in nongame activities.
In the context of a loyalty program, gamification can play a key role in the design, enabling storytelling and value-loading elements of a specific promotion or program.
In this context it goes without saying that loyalty programs as we know them to date based on the traditional loyalty card are destined to disappear for goodand be supplanted by the use of virtual cards linked to mobile applications. And this is where everything changes and applications for promotions, giveaways and collections based on gamification enter the field, where it becomes possible to customize promotions, mechanics and referral logics ad personam capable therefore of developing a whole other level of involvement.
For example, a loyalty program that uses gamification can use a system of levels and challenges to encourage customers to continue shopping, with rewards becoming increasingly attractive as customers reach higher levels. Levels for example could be obtained not only by ‘ accumulation of points obtained in a linear way from purchases but also by specific actions, such as engaging a friend or making a post on your social profile …etc etc.
Through this different approach, gamification can then be used to create a sense of belonging to one’s community through the creation of a social ranking system and the ability to interact with other program members.
The Octalisys model is one of perhaps the most succinct and best expounded examples of the functional framework of gamification, a framework that succeeds in touching all the motivational levers of an individual .
This model is based on eight key elements: opportunity, goals, feedback, competition, image, status, belonging, and challenge. All these elements work together to create an engaging and motivating gaming experience.
Today, many loyalty programs use gamification to become more attractive. Gamification allows you to create an engaging gaming experience for customers and offer rewards and incentives that encourage them to continue participating in the program.
In addition, gamification allows companies to collect customer data and tailor offers to meet the specific needs of individual customers.
Gamification, the ingredient needed to ensure data collection
A couple of loyalty program case studies using gamification
Starbucks Rewards: Starbucks launched its loyalty program, called Starbucks Rewards, which uses gamification to incentivize customers to keep shopping. The program uses a system of levels and challenges, where customers earn points for purchases and can use them to earn rewards such as free drinks and discounts on store items. The program also has a game function called “Star Dash,” in which customers can compete with friends to see who can earn the most points in a given time period. As a result, Starbucks experienced a 20 percent increase in participation rates and a 30 percent increase in the value of customer purchases.
NikePlus: Nike has launched its loyalty program called NikePlus, which uses gamification to incentivize customers to continue to exercise and purchase sporting goods. The program uses a system of goals and challenges, where clients can set exercise goals and record their progress using an app. Customers can also compete with friends and earn rewards for achieving goals. The program has seen a 20 percent increase in participation rates and a 25 percent increase in the value of customer purchases.
How will AI profoundly change the outcomes of a loyalty program?
Artificial Intelligence (AI) can help increase the attractiveness of loyalty programs in several ways:
- Personalization: AI can analyze customer data to understand their shopping preferences and behaviors, and use this information to personalize an experience, offers, and loyalty program rewards based on each customer’s specific needs.
- Targeted communication: AI may use customer data to send targeted and timely communications, such as promotions on items that may be of interest to a specific customer.
- Data analysis: AI can analyze data collected from the loyalty program to identify trends and opportunities, such as which rewards are most popular among customers or which customers are most likely to drop out of the program.
From “one to many” to “one to one” loyalty programs
4 Developing new offers: AI can help develop new offers and rewards, based on collected data and market trends, to keep the loyalty program attractive and competitive.
5 Automation: AI can automate many loyalty program tasks, such as managing points and rewards, calculating levels, sending notifications, and generating reports, saving the company time and resources.
In general, the use of AI in a loyalty program can increase the attractiveness of the program, improve the customer experience, and increase customer participation and purchase value.
Blockchain and AI, the convergence of multiple technologies
Blockchain and tokenization are already changing the way organizations manage their marketing activities and loyalty programs. The blockchain will increasingly enable expanded use, from the creation of “private” tokens to the creation of an autonomous exchange system, an ecosystem in which each organization can manage its employees and contractors independently and securely.
Tokenization will make it possible to create digital tokens that can be used as exchange tools within this system. These tokens will be able to be used to reward employees and contractors for their efforts and contributions to the company. In essence, the creation of a tokenization system will allow for greater transparency, immediacy of management and traceability of economic rewards or recognition.
In addition, the use of AI may help to further improve these systems by automating some tasks and increasing security. For example, AI could be used to analyze data on employees and contractors to identify those with the greatest potential to receive rewards or participate in training programs and interacting in this way with them and the entire community to enliven the program. In addition, AI can be used to monitor the tokenization system and ensure that tokens are used properly, a guarantee that companies today in terms of compliance value highly.
In summary, blockchain and tokenization, in combination with AI, may increasingly enable organizations to manage their employees and contractors more efficiently, transparently and securely, enabling the creation of personalized, automated and more secure loyalty programs and reward systems.
So?
Let us prepare for change!
In conclusion, the use of artificial intelligence (AI) and gamification in loyalty programs can bring significant benefits to companies and their customers, but much depends on the proper implementation of both.
The collection of data through processes of gamification a massive data collection action is essential. This is a necessary condition to feed the AI and thus achieve a specific personalization level Of loyalty programs.
However, the future will see many industry players engaged in both compliance and infrastructure and technology management of the entire ecosystem.
Companies with the now imminent advent of AI will realize. within a few months of the competitive impact that the use of these new technologies will have in marketing and loyalty programs…and if what we have already witnessed in the last few years seemed to be a strong acceleration, what will now fall on the entire industry should be considered exponentially.
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