How Gamification Works

Marketing: Sign Up for Our Customer Rewards

Delta's SkyMiles program is a widely recognized example of gamified consumer engagement.
Delta's SkyMiles program is a widely recognized example of gamified consumer engagement.
Screenshot taken by HowStuffWorks staff

Marketing is all about creating buzz around a product. That means people are talking about it, whether or not they've bought it. Some people eventually get caught up in the excitement and shell out the cash or swipe their credit cards just to buy the item or service everyone's talking about.

Gamification is helping businesses create that buzz with a greater return on investment than ever before [source: Zichermann]. One way they're doing this is through customer rewards programs. Chances are you've used one of these programs, perhaps by getting a discount rewards card at a grocery store chain or starting a punch card at a local coffee shop. These programs feature some reward currency (like points) that you can accumulate with each purchase and, eventually, exchange for something you want.

If you grew up before the 1990s, you might remember one of the earliest customer rewards programs: S&H Green Stamps. Before the Internet and the ease of online shopping, S&H Green Stamps was an efficient rewards program that many businesses participated in to encourage customers to shop at their stores. With each purchase, you'd earn some number of actual stamps, each a little smaller than a postage stamp. Later, you'd browse the latest Sperry and Hutchinson (S&H) catalog, select your desired item, and exchange your stamps for that prize by mail or at an S&H Green Stamp store.

Today, customer rewards provide instant feedback and options to track your progress online. For example, Best Buy's Reward Zone program lets you earn points for every purchase, check your points online and decide on the reward threshold you want to reach before Best Buy sends a reward certificate. In addition, if you forget to take your Reward Zone card to the store with you, the cashier will look up your account and credit you with the points you earn that day.

Like S&H Green Stamps, some current customer rewards programs extend over multiple businesses. A credit card company, for instance, might offer frequent flier miles on a particular airline for every dollar you spend using its card. While the credit card and airline are separate companies, their game-based marketing partnership helps each of them earn more business.

Some businesses are using existing social networking tools like Foursquare and Gowalla to gamify their marketing. Both of these games include non-value rewards (like badges) you can earn by using a mobile device to check in at each of your destinations. Businesses capitalize on this by offering a reward that appears on the screen as soon as you check in. Claim your reward by simply showing the server or cashier the prize details displayed on your mobile device.

Gamification can help businesses reap lots of rewards, but it also has its challenges and drawbacks. Next, we'll look at some examples of gamification gone bad.